The Economic, Educational, and Health-Related Costs of Being a Woman
The persistent gender wage gap is a stark reminder of the gender, racial, ethnic, and other systemic biases rooted in our economy. According to the most recent available data, the average woman working full-time, year-round earned around 83 cents for every $1 earned by the average man. This pay gap is even worse for most women of color. Although women’s labor force participation rates and educational attainment have significantly increased in recent decades, the wage gap endures across every occupation and level of education. The causes of the wage gap are multifaceted but can be partly attributed to systemic occupational segregation, differences in available work hours, and gender-based pay discrimination. Overall, these factors significantly contribute to the fact that women still continue to experience higher rates of poverty than men.
Lost wages for women—many of whom are primary or sole breadwinners for their families—can have dramatic impacts on their economic security throughout their lives. Furthermore, the heightened costs women face compared to men in their day-to-day lives—from higher costs for products and services to greater out-of-pocket health care costs—illustrate that the harm of the wage gap is even more egregious than at first glance.
The wage gap’s cumulative impact
The wage gap does not just impact women’s day-to-day pocketbooks—it also compounds over time. Over the course of a 40-year career, the wage gap costs women working full-time, year-round $417,400. For Black and Hispanic women—who experience some of the largest wage gaps—these losses are even greater, at $976,800 and $1,156,440, respectively.
The Costs of Being a Woman
Although the wage gap for full-time, year-round workers is staggering, it is important to note that it does not encapsulate the workplace experiences of part-time, seasonal, and gig workers, many of whom are women of color. Thus, the comprehensive wage gap—which includes part-time workers—is much more reflective of many Black, Hispanic, Asian American, Native Hawaiian, and Pacific Islander (AANHPI), and Native American women’s economic experiences. Further analysis of the wage gap experienced by part-time workers their loss in annual earnings is necessary for a holistic understanding of the costs incurred by women of color.
The wage gap’s impact on retirement
These earnings losses due to the wage gap play a significant role in women’s retirement security. As a baseline matter, because Social Security benefits are based on a person’s earnings in their 35 highest-earning years, women’s lower earnings due to the gender wage gap mean that many receive lower benefits than they would have if they had been paid the same as men throughout their career.
In fact, recent data from the Social Security Administration shows that the average annual Social Security income received by women aged 65 and older was just 78 percent of those received by men. Lower earnings also mean that women are able to save less through employer-sponsored retirement plans and their own retirement accounts.
The gap also significantly restricts the ability of women to save for retirement within the investment market, and modeling those savings underscores the magnitude of the wage gap’s impact on women as they age.
As Figure 2 illustrates, if 100 percent of the loss in earnings due to the wage gap were invested over a 40-year career, women working full-time, year-round could amass nearly $1.6 million in retirement savings, which alone would allow them to live off of $65,000 a year. Black and Hispanic women would accumulate around $3.8 million and $4.5 million, respectively. However, even lower rates of investments would usher in significant retirement savings. Investing just 20 percent of those lost wages, for example, would bring over $300,000 in savings.
The intersection of the wage gap and other costs incurred by women
While the above examples reinforce the significant consequences of the wage gap taken on their own, it is critical to keep in mind that the serious economic harms that women face due to the gender wage gap do not exist in a silo.
To start, not only do women earn less than men, but women also often pay more for products and services than men do. Studies have documented examples of gender based pricing, also called the “pink tax,” which include markups on items and services such as women’s razor blades, women’s haircuts, and even products in colors such as pink and purple. Even worse, 27 states currently classify medically necessary menstrual products as luxury items, which carry commensurate taxes.
Furthermore, women are often targeted by predatory lenders and face higher interest rates for mortgages and cars overall. In addition, other expenses—such as student loan debt—also disproportionately impact women. The American Association of University Women found that, on average, women’s accrued student debt was about $1,500 greater than men’s after completing a bachelor’s degree, with Black women taking on more debt on average than any other group.
Moreover, women tend to incur greater health care costs than men across their lifetime. According to the Peterson-KFF Health System Tracker, health spending during women’s reproductive years—in particular, between ages 19 and 44—is much higher when compared with men’s health spending. For example, in 2019, average annual health spending for women ages 19 to 34 was $4,709, more than double men’s spending in the same age range, at $2,261.
Some of this difference in health expenditures is due to the exorbitant cost of maternity care, including pregnancy and delivery. The average cost for delivery alone is staggering: According to Health Affairs, in 2015, out-of-pocket spending for women with employer-based insurance was around $4,500. And while the Affordable Care Act expanded insurance coverage; reduced many out-of-pocket costs; and prohibited both discrimination in health coverage and charging higher premiums based on gender, women of color are still more likely to be uninsured than women overall, leading to delays in seeking health care or forgoing care altogether.
Finally, the lack of a robust care infrastructure continues to disproportionately harm women, as they are the strong majority of unpaid caregivers in their families and also nearly 90 percent of paid caregivers. When it comes to the lack of investments in caregiving, in fact, the consequences are often an economic double-edged sword. For example, the cost of child care amounts to nearly one-third of the average woman’s income, forcing many out of the workforce during their prime working years in much higher numbers than men. At the same time, one-fourth of early childcare providers need multiple jobs in order to make ends meet because of their low pay.
The lack of a national paid family and medical leave program only worsens this state of affairs. In an average year, women in America cumulatively lose over $7 billion because of unpaid or partially paid parental leave and over $2 billion because of unpaid or partially paid caregiving leave.
In an average year, women in America cumulatively lose over $7 billion because of unpaid or partially paid parental leave and over $2 billion because of unpaid or partially paid caregiving leave.
The systemic disparities in U.S. health care and education systems intersecting with the gender pay gap make it clear that the cost of being a woman in America is complex. When these disparities combine with other systemic biases, communities at the intersections of race, gender, sexual orientation, immigration, and disability status face even greater obstacles to economic mobility. Closing the gender wage gap, eliminating gender-based costs, and ensuring long-term economic stability for women of all identities and experiences requires a multipronged policy approach.
It is essential that policymakers advance critical reforms such as the Paycheck Fairness Act—a historic piece of legislation that would strengthen existing equal-pay protections; prohibit retaliation; and limit employers’ reliance on salary history. Furthermore, expanding affordable health care coverage, child care, investing in a paid family and medical leave program, and passing the Equality Act would ensure that the most vulnerable workers have the support and protections they need to live healthy and productive lives. In addition, reforming our postsecondary education system, raising the federal minimum wage, and eliminating gender-based pricing would all significantly benefit women and their families.
Overall, it is essential that policymakers take a holistic approach to addressing women’s economic security and recognize the complex nature of women’s experiences and how those experiences affect their families and communities. Closing the gender wage gap and addressing entrenched gender-based disparities would not only eliminate the disproportionate costs incurred by women but also advance a more equitable economy for all.
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Policy and Advocacy Manager
Senior Director, Women\'s Initiative