Closing the Gender Pay Gap: Sooner or Later?

Various predictions have been made on the closing of the pay gap. The factors impacting the number of years it will likely take to close the gender pay gap in the U.S. will be discussed. The expectations on different demographics and states will be presented. The chapter also explores the expectation for gender pay equality to be achieved in the rest of the world.

Chapter Learning Objectives

  • • Learning Objective 6.1: List the factors impacting the calculation of the projections to achieve gender parity.
  • • Learning Objective 6.2: Describe the various predictions for closing the gender pay gap.
  • • Learning Objective 6.3: Discuss the projections by IWPR for the first and last five states to achieve gender pay equity.
  • • Learning Objective 6.4: Discuss the prediction for gender pay equity by race according to IWPR.
  • • Learning Objective 6.5: Describe the projections for closing the gender pay gap around the world.

How long will it take to achieve gender pay equality? A long time! Many women might not see it during their lifetimes. Members of the Baby Boomer generation might not see gender pay equality in their lifetime as is likely with Generation X. Millennials might see gender pay equality during their lifetime.

The projection for the year to achieve gender pay equality depends on the methodology' used, the definition of income used in the calculation, and the length of past data used in the projection. When using linear projection, we use past data and assume that the female-to-male earnings ratio growth rate in this past data will continue in the future. However, the female-to-male earnings ratio grew at different rates during different times.

  • • The 1980s and the 1990s saw a large improvement in the gender pay gap. During the 1980s and the 1990s, the real median weekly earnings increased by an average of 1.1% annually for women, while they almost stagnated for men (average annual increase of 0.1% and 0.2% respectively).This helped the female-to-male earnings ratio increase by an average of 0.98% and 0.90% during the 1980s and the 1990s respectively.
  • • This improvement has stalled since 2000. From 2000 to 2015, real median weekly earnings increased by a mere 0.5% annually for females and 0.1% for males.The improvement in the female-to-male earnings ratio stalled as well. It increased by an average of 0.37% annually.

Therefore, if we include data from the 1980s and the 1990s in our projection, the year to achieve gender pay equity' will be sooner than if we do not include these two decades. Another factor is the type of income being used in the projection. For example, using a linear projection and the median usual weekly earnings for full-time wage and salary workers,

  • • If the female-to-male earnings ratio grows at the same rate as it did from 1980 to 2018, we will achieve gender pay equity' in 2051.
  • • If the female-to-male earnings ratio grows at the same rate as it did from 1990 to 2018, we will achieve gender pay equity' in 2072.
  • • If the female-to-male earnings ratio grows at the same rate as it did from 2000 to 2018, we will achieve gender pay equity' in 2089.

In the following sections, we will examine different projections for closing the gender pay gap that are estimated by organizations. Furthermore, we will explore closing the gender pay gap predictions disaggregated by state and race.

Predictions on Closing the Gender Pay Gap

The Institute for Women’s Policy Research (IWPR) Predictions

The Institute for Women’s Policy Research (IWPR) estimates the length of time it takes women to reach gender pay equity'. The IWPR uses the median earnings for full-time, year-round workers from 1985 to 2018 and calculates the year in which women in general and women of different races reach pay equity with white men. The IWPR (IWPR #Q077, November 2019) found that women in general will reach gender pay equity in 2059. It differs by race: white women will reach equity in 2055, black women in 2130 and Hispanic women in 2224.' This means black women have to wait more than a century, that is 100 years, to achieve pay equity with white men. Hispanic women have to wait even longer, double the time! They have to wait over 200 years to achieve pay equity with white men. This is unacceptable!

Even going back to 1960, data doesn’t change the time to achieve pay equity.2 Using a longer data set from 1960 to 2018 for full-time, year-round workers, the IWPR (IWPR #Q076, September 2019) found that women will reach gender pay equity in 2059.3 There is no change from their previous estimates. The IWPR uses median earnings for full-time, year-round workers.

To show its impact in a different way, let’s consider the following example: A new baby girl just born in 2019, what is her chances of seeing gender pay equality during her lifetime? The answer depends on which state she works/ resides in.

A baby girl born in the U.S. in 2019:

  • • Life expectancy 87 years.4
  • • By age 65 (year 2084), 11 states will still have a gender pay gap.
  • • By age 70 (year 2089), seven states will still have a gender pay gap.
  • • By age 87 (year 2106), two states will still have a gender pay gap.
  • • By age 100 (year 2119), Wyoming will be the only state with a gender pay gap.

The American Association of University Women (AAUW) Predictions

Using data from 1960 to 2017, the AAUW’ forecasted that we will achieve gender pay equity in 2059. Using the slower rate of growth in the female-to- male earnings ratio since 2001, the AAUW used data from 2001 to 2017 and predicted that we will achieve gender pay equity in 2106. In its prediction, the AAUW used the median annual earnings for full-time, year-round (FTYR) workers. The AAUW’s prediction means that if the twenty-first century growth rate for the female-to-male earnings ratio continues, women have to wait until the twenty-second century to achieve gender pay equity.

Goldman Sachs Predictions

Goldman Sachs'’ estimates that it will take 100 years to achieve gender pay equity. This is one full century. Goldman Sachs looked at the current gender pay gap and the improvement in it over the last 10 years. Their estimate of the gender pay gap in 2019 is 20%. Over the last 10 years, the gap has narrowed by only 2%. If the same trend continues in the future, Goldman Sachs estimates it would take 100 years to close the 20% gap we have noted in 2019.

World Economic Forum Predictions

The 2020 World Economic Forum Global Gender Gap Report7 shows that global gender pay equity would be achieved in 257 years (year 2277). This is longer than last year’s report, which predicted it will take 202 years to achieve global gender pay equity. The report acknowledges that none of us and probably none of our children will see pay equity in our lifetime.

For North America (which includes the United States and Canada) the 2020 World Economic Forum Global Gender Gap Report estimates that it will take 151 years to achieve gender pay equity.

Glassdoor Predictions

In its 2019 study, Glassdoor8 estimated two scenarios for how long it will take the U.S. to close the gender pay gap. Using data from 2010 to 2018, the adjusted gender pay gap decreased by an average of -0.09 percentage points annually. If this trend continues, Glassdoor estimates that it would take an additional 51.8 years to close the gender pay gap. In this scenario, the U.S. will achieve gender pay equity in 2070. This is their conservative estimate. The second scenario, the more optimistic estimate, uses data from 2011 to 2018, where the adjusted pay gap decreased by an average of-0.27 percentage points annually. If this trend continues, Glassdoor estimates that it would take an additional 16.9 years to close the gender pay gap. In this optimistic scenario, the U.S. will achieve gender pay equity in 2035. This shows how sensitive the result is to any change in any of the variables used in the calculation: time, methodology, definition of income used, ... etc.

 
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