You have a colleague, and you both have the same working hours and the same work to do, yet being a woman, you get less pay compared to your male co-worker. Did you know on average a woman in the US makes 82 cents for every dollar paid to men? Don’t you think that’s unfair? That is called the Gender Pay Gap. This is an issue that widely exists across industries and professional levels. There are various methods by which the pay gap can be analyzed but in the end, no matter how you measure it, the gap remains.
According to US census data, women’s earnings in 1963 were 56% and in 2016 it has increased to 76% for men. This clearly states that we have been dealing with gender pay inequality since that period, although slow and steady the pay gap is getting narrow but hasn’t been equal.
There are many factors behind this issue. It is because of the occupational differences, men and women working in different fields, different situations, or because of the working hours, and maybe because women take more time off to fulfill their family responsibilities. One of the major causes is Occupation segregation. What is occupation segregation? It is the distribution of workers across or within occupations based on demographic characteristics. Segregation is generally based on race, gender, sexual orientation, or social class. A recent example is how Amazon experimented with the use of artificial intelligence for hiring which favored male candidates.
Gender discrimination is another reason why women face pay inequality. According to the Joint Economic Committee, women of color are at a greater disadvantage than white women because they are more likely to hold jobs that “offer fewer hours and more likely to work part-time involuntarily”. However, a woman of every race or ethnic group earns less than men of that same group. Another reason for Wage inequality is parenthood. We have seen mothers leave the workforce temporarily to take care of their children. when mothers happen to take long parental leaves, it results in reduced wages and loss of status to mothers.
Societal ideas of gender roles have also influenced gender pay equity. Men doing jobs that are primarily seen as women-focused jobs such as nurse or childcare workers face a lot of criticism in their work fields. The media showcases these specific roles in a way that creates gender stereotypes. These gender stereotypes depict what kind of job a woman and a man should do which however creates discrimination. Leading to women finding themselves in a position that does not have the same benefits as males. However, these reasons are so complex, that there is no simple solution to them. And because of this, there are major consequences faced.
Here are the top three consequences due to Gender pay equity:
- First and foremost, the global economy. Researchers have estimated that a decrease in the gender wage gap from 17% to 16% would increase GDP per capita by approximately $260. I could only imagine if 1% of difference can affect the GDP in such a way, what overall removal of pay inequality could do to the global economy. Pay inequality leads to reduced customer spendings. People with a low pay scale intend to spend less. As a result, businesses may see a decrease in demand in their products leading to slower economic growth. Wage gap often increases poverty rates, this has a negative effect on the overall economy. Pay inequality can also contribute to political polarization, as those who are not benefitting from the current economic system may become more politically disengaged or more likely to support radical political movements. This causes a more unstable political environment, which has negative economic consequences.
- Gender pay inequality has an adverse effect on families. Low-income families depend even more on women’s earnings. This means that when women earn lower wages than men, their families suffer as well. Their overall income is less, and the children are more likely to grow up in poverty. Therefore, they’re more likely to suffer from poor health, have behavioral problems.
- Women often tend to lag when it comes to retirement planning. Considering the fact that women earn less enables them to participate in the pension plans. The European Commission argues that the pay gap has significant effects on pensions. Since women’s lifetime earnings are on average 17.5%, lower than men’s, they have lower pensions. As a result, elderly women are more likely to face poverty: 22% of women aged 65 and over are at risk of poverty compared to 16% of men.
Seeing these consequences it is clear that the gender pay gap needs to be fixed, but the question is, how? As said earlier there are various methods to calculate a pay gap, similarly there are various methods to even fix that pay gap. Here are some measures that can be taken to reduce the pay gap:
– It is important for organizations to be clear about how much they will be paying their employees. Pay transparency is an important asset in the job market where every employee wants a clear picture of their wages. In order to achieve pay transparency employers should conduct regular audits to discover the pay differences. Employees should be allowed to discuss their salaries with the managers. Setting fixed salaries for new hires based on their salary history should be eliminated.
– Government should initiate different programs at low cost to narrow down the pay difference. Paid sick days or paid parental leaves should be given to the employees for them to fulfill their family responsibilities and also which would not affect their work.
– Women earn less because they work less hours. This is a common structure of the organizations to pay less to the ones who work less. Providing flexibility at the workplace to the parents will be a great help for them to manage their families as well their careers.
– Women who belong to labor unions earn more when compared to non-union women. In fact, unionized women have more benefits such as health, retirement plans, and insurance when compared to others.
Closing the gender wage gap is important, but ending it is more difficult. Eliminating this difference will provide benefits for both genders. The Canadian federal government’s Pay Equity Act, which went into effect in January 2021, requires all federally regulated private-sector employers to ensure workers receive equal pay for work of equal value and is meant to help women and other minority workers get fair compensation for their labor.
However, this law now applies to federally regulated workers whereas a large percentage of workers in Canada are under provincial jurisdiction. Measures are definitely taken but the gender pay gap still exists. It is a difficult task to achieve as it will require changes in society.
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