WOMEN’S FINANCIAL INDEPENDENCE: Playing Catch-Up
Consider this scenario: A woman and a man each graduate from the same college with the same advanced degree. Each is hired for a promising job in their chosen professional field at similar-sized companies. Each one is well-qualified, dedicated to their career, and puts in countless hours in pursuit of climbing the company’s ranks. The only difference? The woman will be paid less.
This is an example of the controlled gender pay gap where both a man and a woman are equally qualified and both perform the same job, yet the man receives a higher salary. The most recent statistics from the Payscale 2022 State of the Gender Pay Gap report 2022 State of the Gender Pay Gap Report | Payscale Research show that women earn $.99 for every dollar earned by an equivalent man. This is essentially a comparison of apples versus apples as the woman who is doing the same job with the same qualifications is being paid less for no attributable reason.
The uncontrolled gender pay gap is the gap between the median salaries of all working men and women in the U.S., regardless of worker seniority or the job being performed. Currently, a woman earns $.82 to a man’s dollar, unless she is a woman of color, which results in an even larger disparity in pay.
Why is there such a difference in pay?
Have you heard that girls are bad at math? While facts do not support this and other broad generalizations like “women are better at caring for others” or “boys are better at science,” gender role stereotypes continue to funnel young people toward careers which supposedly cater to their strengths.
A report by the American Association of University Women (AAUW) Fast Facts: Occupational Segregation – AAUW : Empowering Women Since 1881 reveals that more than 2 million women work as teachers in the U.S., outnumbering men roughly 3 to 1. In nursing, women outnumber men by nearly 8 to 1. The Bureau of Labor Statistics Employment in STEM occupations : U.S. Bureau of Labor Statistics (bls.gov) found that in 2021 the median annual wage for STEM occupations (science, technology, engineering, and math) was $95,420, versus $40,120 for Non-STEM jobs, and Census Bureau statistics Women Making Gains in STEM Occupations but Still Underrepresented (census.gov) show that women are nearly half of the U.S. workforce, but only 27% of STEM workers. This occupational segregation is a significant issue that continues to reinforce the pay gap as more males enter higher-paying professions.
Other Contributing Factors
A woman who chooses to have children is likely to be the family’s primary caretaker (link to our blog on Financial Impact Women Face as Caretakers) and spend more hours working in the home than her male partner. She may prioritize employment that offers non-financial benefits like shorter hours, flextime, or telecommuting. If she returns to a full-time position after a period of unemployment, she may find that she is offered a lower salary. And while there are laws to prevent discrimination, the simple fact is that, while sometimes hard to prove, gender bias continues to exist and impact a woman’s salary.
The AAUW reports Deeper in Debt: Women & Student Loans – AAUW : Empowering Women Since 1881 that as of 2021, women carry an average of $31,276 in student debt. Women outpace men in earning advanced degrees, yet a woman with a bachelor’s degree can expect to earn an average of $35,338. That is 81% of what men can anticipate earning, making it much harder for her to pay off her student loans. As her debt compounds and her earnings are smaller, she will also face greater challenges in saving for her future. Lower lifetime earnings will also result in less in Social Security and pensions.
What Can Women Do?
- Make sure you’re getting an appropriate salary for your position. Using a search engine or site such as Salary.com com – Salary Calculator, Salary Comparison, Compensation Data you can research comparable salaries for your profession, experience, and geographic location to know if you’re receiving a fair wage.
- Is it time for a raise? It can be expensive for a company to replace an employee, sometimes costing tens of thousands of dollars in recruiting and training fees to find a suitable new hire. If your research leads you to feel that your compensation is not on par with that of other professionals in your field, it may be appropriate to ask for a raise, especially when you can approach your employer with facts about your positive track record with the company.
- Know what is important to you. You might be a mother of young children and want to stay at home with them while also continuing to work. A job that allows you to continue earning a salary while working remotely or a job with flexible hours might be the perfect fit. These careers may come with some financial compromise but will provide you with a better work/life balance that suites the life you are building.
- Encourage the next generation of young women to pursue their dreams boldly. In the sixth grade, Jasmin Moghbeli did a book report about a Russian cosmonaut who was the first woman in space and, as a result, got excited about the idea of becoming an astronaut. With highly supportive parents who encouraged her dreams, Jasmin graduated from Baldwin High School on Long Island and furthered her education by earning advanced degrees at the Massachusetts Institute of Technology and the Naval Postgraduate School. She became a decorated U.S. Marine Corps Major and test pilot, has been assigned as commander of the SpaceX Crew-7 mission to the International Space Station scheduled to launch in August 2023 and she is one of 18 astronauts who make up NASA’s Artemis Team, which the agency intends to send to the moon in 2024. Jasmin may become the first woman to ever set foot on the moon. In addition to her accomplishments, Jasmin is married with twin daughters. Young women are equally capable of becoming pioneers in STEM-based careers if they are given the same exposure to potential opportunities as young men receive and have the drive to succeed.
- Speak with a financial advisor. From saving for retirement to balancing the household budget, earning less money can make it more difficult for a woman to achieve the financial success she wants. Careful planning is essential. A financial professional can help create a strategy that balances life goals and financial achievement.
While some progress has been made, it will take many years to close the gender pay gap. In the meantime, women can individually take steps to ensure that they are receiving fair pay for their work and continue to pursue the life and work goals that are important to them. If you’d like more information, please contact us.