The U.S. Loses ~500 Billion Due to Existing Gender Pay Gap

Updated: Dec 17, 2019

It’s 2019 and U.S. women only earn 70 cents (on average) per dollar compared with their Caucasian male counterparts. According to the American Association of University Women (AAUW), this pay gap is not project to close for at least next ~100 years (until 2119) with minority groups facing the largest impact. Additionally, the Institute for Women’s Policy Research (IWPR), has published that the United States would gain $500 billion in its national economy, while the IMF states that the United States’ GDP would rise by about 5% if the existing gender based wage gap was eliminated. The same IWPR report also concluded that poverty in working women and their families would decrease by more than 50% if the participation of women in the workforce was equal to that of men. Furthermore, The World Bank believes that closing the gap in gender inequality would grow the global economy by $160.2 trillion and increase personal wealth by $23,620. This would raise each nation’s wealth by 14%.


Lawmakers attribute hiring policies and practices as part of the reason for the existing gender-based pay gap. According to an article published by Berkeley University, some states are taking action by creating laws that ban employers from enforcing pay secrecy and asking job applicants their current salary. Because women generally start with lower salaries, these laws would prevent them from being penalized in their future salaries, which are typically based on previous pay.


Moreover, reports suggest that women are not as successful with salary negotiations, which could be attributed to the lack of gender pay transparency. The UK requires large companies to report their salaries by gender according to the BBC. Currently, the U.S. lacks any national legislation that requires corporations to report gender disaggregated salaries. However, a few states such as Alaska, Illinois, Minnesota, and New Hampshire have taken action and reports show that gender disaggregated salaries have smaller wage gaps (as shown in the infographic).


The gap also widens with women not only being underpaid, but also underemployed, unemployed, and unpaid for both support and care work. According to a UN 2015 report, the female labor force participation rate in the United States (U.S.) is only about 56 percent. The U.S. is the only Organisation for Economic Co-operation and Development (OECD) country that does not provide maternity care or a leave policy for its women. By failing to provide adequate provisions for maternity leave, maternity care, childcare or elderly care policies and a family-based taxation system, women are being even further impeded.


Another possible reason for the existing pay gap is occupational segregation. Even though women are progressing towards occupying jobs previously held by their male counterparts (including legislative roles), change has been stagnant in some industries according to an IWPR report. UN Women suggests that gender balanced parliaments introduce much more effective and responsive gender-based policies. In 2019, women will occupy 23% of U.S. congressional seats – that is 2 out of 10 seats – while the remaining 8 are occupied by men. Although, this is the highest representation of women in the history of U.S. Congress, women in the U.S. are extremely underrepresented in leadership roles in both the public and private sectors compared to the population. Women need to be involved in decision-making roles in order for there to be balanced and inclusive growth. States that have higher representation of women in legislation, have better laws and policies focused on narrowing gender gaps. For example, the state of Colorado, which includes about a 40% share of women in its legislature, has a far narrower gender-based pay gap compared to states with lower representation of women.


Overall, eliminating gender pay inequality would not only benefit women from a social point of view, but also society as a whole. Fixing this issue starts with legislation expedited by the need for females in government.





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