This week, Equal Pay Day reminds us that the gender pay gap is alive and well. It highlights the cumulative effect this gap makes on women’s long-term financial security. Even with these advances in education and an increased awareness on the part of women, the gender pay gap continues. This wage gap affects their ability to save for and build generational wealth. According to the World Economic Forum, it would take at least 134 years to close the global gender pay gap. This timeline would influence the lives of at least four to five future generations.
For full-time workers in the United States, women can expect to make 83 cents on the dollar compared to men. This gap makes women work into the new year simply to earn what men made the year before. It really drives home the extent of entrenched inequality in our social order. The gap is particularly acute when controlled for race and gender, exposing even more systemic inequities.
She calls the pay gap a “hidden tax” on women. The financial impact of the pay gap is huge. In fact, American women, on average, put a total of $1,825.18 each month into their savings accounts compared to men who are saving $2,352.34 on average. Women plan to have $9,463.98 saved per year. On the other hand, men aim at an annual savings goal of $17,963.13.
The most important part is not just that [women] make less, it's what that turns into — the wealth gap. - Cary Carbonaro
A multitude of reasons explain why the pay gap persists. For one, women tend to cluster in fields that pay less. They often end up quitting their jobs or going part-time to juggle caretaking duties. Further compounding this is the fact that systemic bias underlies all of those issues.
The World Economic Forum highlights the need to prioritize financial returns to maintain DEI initiatives over the long term.
Where diversity, equity, and inclusion [DEI] efforts are longer lasting, the returns follow. - World Economic Forum report
Counter to these developments, in the U.S. many DEI efforts are being rolled back or outright banned, showing a major shift in political priorities. This trend endangers even greater regression toward pay equity.
Responding to the call to close the gender pay gap will require a multifaceted approach. Tackling systemic biases, fostering equitable access to entry into higher-paying fields, and creating pathways for women’s career progression are essential first steps. Beyond policy, financial literacy and personal planning and budgeting are critical to ensuring women can make the most of what they earn and save.
Step one is a budget: what's coming and what's going out. - Cary Carbonaro
Spend less than you make. It's so basic, but it's the most important building block to securing your financial future. - Cary Carbonaro
Even though there is educational attainment equality, important income gaps remain. Women are still underrepresented in executive leadership roles all along Northern America. The gender pay gap has been shown to have a direct negative impact on women’s current economic insecurity. It jeopardizes their long-term financial security, inhibiting both retirement savings and wealth building.
