Closing the Gender Pay Gap

In 2022, the gender wage gap in the United States narrowed to a record low,¹ with the median working woman receiving 78 cents for every dollar earned by their male counterpart, regardless of the number of hours or weeks worked in the year. Meanwhile, women working full time, year-round received 84 cents on the dollar.²

This gender wage gap occurs in almost all occupations,³ at every level of educational attainment,⁴ and in every state.⁵ It means that women have less income to spend, save, or invest,  depriving them and their families of the full economic value of their work—particularly those who are breadwinners, most often Black mothers.⁶ The gap also contributes to women being more likely than men to be financially insecure,⁷ live below the poverty line,⁸ and experience economic insecurities into older age.⁹

The gender wage gap exists for a variety of reasons, including occupational segregation, women’s disproportionate caregiving responsibilities, and direct discrimination.¹⁰ The adverse consequences of the gender wage gap extend beyond just women and their families, causing a direct drag on the U.S. economy.¹¹ If the gender wage gap continues on its 2000–2022 path, the gap for women working full time, year-round would not close until 2067.¹²

Such progress is by no means guaranteed.

That is why closing the gender wage gap is an important issue for women voters. In 2022, 76 percent of women voters said that “strengthen[ed] equal pay laws for women” were “one of the most important things Congress can do,” or were “very important,” with support strong across Republican, Democrat, and independent voters.¹³ Notably, support was higher among Black, Hispanic, Asian American, and Pacific Islander and American Indian and Alaskan Native women—groups that are often affected by the gender wage gap more acutely than white women.¹⁴

Fortunately, policymakers at the federal and state levels have a suite of policy options ready at their disposal to continue to make long-overdue progress on closing the gender wage gap. This includes raising the minimum wage,¹⁵ passing pay transparency and paid leave laws, improving funding for anti-discrimination enforcement, and banning the use of salary history in hiring decisions.¹⁶ This chapter of the “Playbook for the Advancement of Women in the Economy” details the problem, the economic benefits of resolving it, and the federal and state policy recommendations for doing so.

The problem

If the gender wage gap had not existed in 2022, then the typical woman working full time, year-round earning the equivalent wage of her male counterpart would have received an additional $9,900 in wages—more than what earners in the 40th to 50th percentile spent on average on food or rent in 2022.¹⁷ The gender wage gap is larger for many women of color, who face intersecting gender, racial, and/or ethnic biases.¹⁸ In 2022, the typical Black woman working full time, year-round received 69 cents for every dollar received by the typical white, non-Hispanic man, while all Black women working received 66 cents.¹⁹ Meanwhile, the typical Hispanic woman working full time, year-round received just 57 cents for every dollar received by the typical white, non-Hispanic man, and all Hispanic women working earned just 52 cents on the dollar.²⁰

Mothers also face additional wage penalties that increase with the number of children they have.²¹ For mothers, having a child causes a loss of earnings immediately after childbirth that persists over time, with no corresponding financial penalty for fathers.²² In addition, the gender wage gap compounds over the course of women’s lives,²³ affecting women’s economic security into retirement, with older women more financially insecure than older men.²⁴

The gender wage gap is caused by a range of factors that showcase the gendered nature of the U.S. economy, traditional social norms, and a lack of accommodative policies.²⁵ One of the primary drivers of the gender wage gap is gendered differences in representation in different jobs.²⁶ This is a feature of the labor market known as occupational segregation, where men are overrepresented in high-paid work, including as lawyers and bankers, but women are overrepresented in low-paid work, such as in child care and as tipped workers.²⁷

In addition, women tend to have fewer years of paid work experience than men²⁸ and work fewer hours,²⁹ both of which are largely driven by the gendered nature of caregiving responsibilities. Women often have to take time off or work part time to care for others.³⁰ However, another large part of the gender wage gap remains unexplained, but is generally attributed to discrimination.³¹ (see Chapter 7) This means that even when accounting for differences in where men and women typically work, their hours worked, or years of experience, women—particularly women of color—may still not be paid equally to men.

The unexplained part of the gender wage gap also differs across occupations.³² Notably, it is often largest for women working in high-wage occupations.³³ This likely results from limited flexibility because women are penalized if they do not work the long, often in-person hours required in these professions, such as finance and managerial jobs.³⁴

The economic benefits

Increasing the wages of women and closing the gender wage gap will help create economic security and stability for women and their families, providing economywide benefits as women can spend, save, or invest more and are more likely to remain in paid employment.³⁵ On average, working women lost more than $1.6 trillion in 2022 as a consequence of the gender wage gap³⁶—equivalent to 6.3 percent of U.S. gross domestic product (GDP) in 2022.³⁷ From 1967 to 2021, women experienced a cumulative loss of $61 trillion in wages due to the gender wage gap—nearly double the U.S. government debt in 2023.³⁸

Women’s wages are not just critical for them and their families but also for U.S. economic growth. Higher wages boost spending and investment, two of the fundamental drivers of economic growth.³⁹ The gender wage gap also hampers women’s participation in the U.S. labor force, contributing to the persistence of gender gaps in labor market participation.⁴⁰ Women who receive a lower wage than their male family members face a lower opportunity cost when deciding who will forego income to take on caregiving responsibilities in the absence of alternative and affordable care options. As a result, women are more likely to work fewer hours or drop out of the labor force to take on caregiving responsibilities.⁴¹

Prior work from the Center for American Progress and the Center for Economic Policy Research found that if women had not increased their work hours from 1979 to 2012—and had subsequently experienced wage gains relative to men—then U.S. GDP would have been nearly 11 percent lower, showcasing the importance of women’s additional work hours and earnings to the economy.⁴²

The policy recommendations

Historically,⁴³ changes in technology, including the introduction⁴⁴ of oral contraceptives;⁴⁵ changes in social norms to women working; and women’s relative educational attainment gains⁴⁶ have helped make progress toward reducing the gender wage gap, as have concrete policy actions such as the Equal Pay Act of 1963, which protects workers from wage discrimination on the basis of sex.⁴⁷

Yet, despite slow incremental progress, the gender pay gap persists.⁴⁸ Federal and state policymakers have an important role to play in raising wages, reducing financial penalties associated with caregiving, and addressing discrimination to finally close the gender wage gap.

Federal policy recommendations

There are ready-to-enact policy solutions at the federal level that would more swiftly make equal pay a reality in the United States. These include:

• Pass the Paycheck Fairness Act: Doing so will strengthen equal pay protections for workers codified in the Equal Pay Act, prohibit retaliation against workers who discuss their pay or challenge pay discrimination, and limit employers’ reliance on salary history.⁴⁹
• Increase the minimum wage and eliminate the tipped minimum wage: Raising the minimum wage to at least $17 per hour⁵⁰ by passing the Raise the Wage Act⁵¹ is critical to raising wages for women,⁵² particularly Black women and Latinas,⁵³ given that they are overrepresented in low-wage occupations.⁵⁴ In addition, eliminating the tipped minimum wage is critical to increasing women’s wages as women comprise more than two-thirds of tipped workers.⁵⁵
• Increase pathways into high-paid occupations: Efforts must be taken to better attract and retain women in high-paid occupations, in which women are underrepresented,⁵⁶ including by investing in apprenticeship and pre-apprenticeship programs, which are proven diversification tools.⁵⁷ (see Chapter 8) In addition, prioritizing women in the implementation of the Infrastructure Investment and Jobs Act,⁵⁸ the CHIPS and Science Act,⁵⁹ and the Inflation Reduction Act⁶⁰ is critical given the male-dominated nature of the jobs⁶¹ these laws are expected to create, particularly in construction and manufacturing.⁶²
• Improve enforcement of anti-discrimination laws, including the Equal Pay Act: (see Chapter 7) This requires more funding for the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP).⁶³ In addition, restoring federal pay data collection from large employers, broken down by race, ethnicity, and gender, will allow both federal agencies to better evaluate and address pay disparities.⁶⁴
• Invest in the care economy: Passing paid family and medical leave (see Chapter 6) and sustained public investments in child care (see Chapter 3) and elder care (see Chapter 4) will better help families manage paid work and care responsibilities. Importantly, these investments would limit the financial penalties women often experience from being disproportionately responsible for caregiving.
• Enhance collective bargaining: (see Chapter 9) Efforts to improve worker power have long been shown to help raise wages and reduce the gender wage gap. This includes finally passing the Protecting the Right to Organize (PRO) Act.

State policy recommendations

States across the nation are leading the way in implementing equal pay policy provisions, but more can join the effort. State recommendations for equal pay include:

• Enact salary range transparency laws: An increasing number of states have passed salary range transparency laws to help level the playing field in negotiations and reduce gender gaps in hiring wages.⁶⁵ It is paramount that more states take this step to help achieve better pay outcomes.
• Enact salary history bans: Relying on the use of prior salary perpetuates and exacerbates the gender wage gap, and therefore prohibiting the use of salary history is a critical tool that states can take up to advance pay equity.⁶⁶
• Eliminate the tipped minimum wage: Ensuring tipped workers⁶⁷ receive the full minimum wage is essential to raising wages for women workers, particularly Latinas⁶⁸ and Black women.⁶⁹ So far, only seven states have eliminated the federal tipped minimum wage of $2.13 per hour, with an additional 28 states and Washington, D.C., taking some steps to pay above the federal tipped minimum wage but still below their own state minimum wages.⁷⁰
• Increase state minimum wages: Because women are overrepresented in low-wage occupations, raising the minimum wage is critical to directly raising the wage floor for women.⁷¹ Thirty states and Washington, D.C., have taken steps to raise their minimum wages above the $7.25 federal minimum wage level.⁷² Other states must follow suit to raise their wage floors and help close the gender wage gap in their states.

Conclusion

Pay equity must be a critical priority for policymakers who want to grow the U.S. economy and drive more inclusive and therefore stronger and more sustainable economic growth. Federal and state policymakers have a range of policy options that they can enact to raise women’s wages and close the gender wage gap. Failure to do so will continue to limit the economic security of women and their families, as well as continue to hamstring the broader U.S. economy because working women are key drivers of economic growth.

The author would like to thank Molly Weston Williamson, Sara Estep, Lily Roberts, and Kyle Ross for their helpful feedback and assistance.