The State of the Gender Pay Gap in 2021
The State of the Gender Pay Gap in 2021
New survey data from PayScale reveals how organizations perceive pay equity and what they are doing around diversity, equity, and inclusion (DEI).
In observance of Equal Pay Day (March 24, 2021), PayScale has updated our Gender Pay Gap Report for 2021 with additional data on the Racial Wage Gap to fully explore the intersectionality of pay inequity.
Since we have started tracking the gender pay gap, the difference between the earnings of women and men has shrunk, but only by an incremental amount each year. There remains a disparity in how men and women are paid, even when all compensable factors are controlled, meaning that women are still being paid less than men due to no attributable reason other than gender. As our data will show, the gender pay gap is wider for women of color, women at higher job levels, and women in certain occupations and industries.
The economic turmoil fueled by the COVID-19 pandemic and stay-at-home policies has disrupted various occupations and industries, many of them female dominated. In addition, women and people of color have disproportionately faced unemployment throughout this crisis. Women’s labor force participation is at a 33-year low as more women take on caretaker roles at home due to remote schooling. When women do return to the workforce, they may face the unemployment penalty. This penalty refers to the lower wages typically observed when people return to the workforce from unemployment. Because of this, COVID-19 may impact the gender and racial pay gap for years to come.
Our research shows that the uncontrolled gender pay gap, or opportunity pay gap, which takes the ratio of the median earnings of women to men without controlling for various compensable factors, has decreased by $0.08 since 2015. In 2021, women make only $0.82 for every dollar a man makes, which is one cent more than they made in 2020. However, this improvement could be attributable to lower paid women leaving the workforce due to layoffs or family care. The opportunity pay gap measures the barriers women face in attaining the higher paying positions of power that men often hold in society.
The controlled gender pay gap, which controls for job title, years of experience, education, industry, location and other compensable factors, measures equal pay for equal work. The controlled pay gap has also decreased since 2015, but only by $0.01. Women in the controlled group make $0.98 for every $1.00 a man makes, meaning that women are still making less than men even when doing the exact same job.
To illustrate the importance of the gender pay gap in more detailed terms, we also looked at the top 20 jobs with the highest gender pay gap. Here, the controlled gender pay gap increased to as much as $0.78 for positions such as Waiters and Waitresses, showing that the gender pay gap is very real and larger for women in certain occupations – especially in the wake of the COVID-19 recession.
The State of the Gender Pay Gap in 2021
In 2021, women earn 82 cents for every dollar earned by men.
This figure is representative of the uncontrolled gender pay gap (sometimes referred to as the “opportunity pay gap”), which looks at the median salary for all men and women regardless of job type or employment characteristics. As PayScale’s crowdsourced data weights toward salaried professionals with college degrees, the uncontrolled gender pay gap reported is likely smaller than what occurs in the overall workforce, which includes more lower paid and hourly workers. For analysis by race, we look at only those with at least a bachelor’s degree.
Among our sample, the median salary for men is roughly 18 percent higher than the median salary for women. This figure represents a 1 percent improvement from 2020 and an 8 percent improvement from 2015, when the median salary for men was roughly 26 percent higher than the median salary for women. However, we can’t necessarily take this improvement at face value.
Due to the economic turmoil of COVID-19, women, especially women of color, have disproportionately faced unemployment at higher rates than in typical years. As more women of color, women at lower job levels, or women who are paid less leave the workplace, it may ultimately move the average median pay for women up – slightly closing the gap between men and women’s pay overall. When unemployed women do return to the workforce, they could face a disproportionate wage penalty from being unemployed compared to men, suggesting that the gender pay gap could widen again in subsequent years. Because of the disproportionate impacts of unemployment on women, we must be cautiously optimistic in recognizing this smaller pay gap as an improvement of equitable outcomes for women in the workforce.
What is the gender pay gap once all compensable factors such as experience, industry and job level are accounted for? It’s not zero.
In fact, when men and women with the same employment characteristics do similar jobs, women earn $0.98 for every dollar earned by an equivalent man. In other words, a woman who is doing the same job as a man, with the exact same qualifications as a man is still paid two percent less for no attributable reason. This controlled gender pay gap is the same as last year. The closing of the controlled gender pay gap has slowed in recent years, shrinking by only a fraction of one percent year over year. It has shrunk a total of $0.01 since 2015.
How much do women make compared to men?
Uncontrolled gender pay gap
This “opportunity pay gap” measures median salary for all men and all women.
Controlled gender pay gap
This measures median salary for men and women with the same job and qualifications.
The Gender Pay Gap Over Time
Using PayScale’s compensation data sourced from online profiles
Uncontrolled Gender Pay Gap (Opportunity Pay Gap):
Measures median salary for all men and all women regardless of job type, seniority, location, industry, years of experience, etc.
Controlled Gender Pay Gap (Equal Pay for Equal Work):
Measures pay for men and women with the same job and qualifications.
Why are women paid less than men?
Why is the uncontrolled pay gap so much larger?
The uncontrolled pay gap is an indicator of how gendered wealth and power is within a society and is driven by many forces. Occupational segregation is one large driver of the overall pay differences between men and women. For example, education and healthcare support are female-dominated occupational groups while architecture & engineering is a male-dominated occupational group. Education occupations have much lower median pay than engineering occupations, which helps explain the large differences we see in average pay for men and women when data are uncontrolled
Occupational segregation can be influenced by gender and racial stereotypes. As an example, women are often perceived as caretakers or bad at math. Such perceptions can lead to a lack of confidence and steer life decisions from a young age. For example, research shows that girls consistently receive undeservedly lower scores in math than boys, which could ultimately serve to discourage them from pursuing STEM careers. Likewise, girls are much more likely to face expectations of caring for children or elders within a family or community. Ultimately, the skills they gain in these areas from an early age could propel them into service-oriented careers such as healthcare support and education workers.
Men and women choosing different careers doesn’t mean that the uncontrolled pay gap is less significant than the controlled pay gap. The uncontrolled pay gap reveals the overall economic power disparity between men and women in society. Even if the controlled pay gap disappeared – meaning women and men with the same qualifications were paid equally – the uncontrolled pay gap could persist if high paying positions were disproportionately accessible to men.
The opportunity gap, which we discuss in more detail below, also explains the uncontrolled pay gap. This measurement is an indicator of the barriers women and people of color face in attaining the same positions of power and prestige as white men. Gender and racial biases can create obstacles to hiring, raises, referrals, promotions, and leadership. Due to the social expectations placed upon women to be mothers and caretakers, women often step out of the workforce and are penalized later on when they return to their careers. The overall differences in women’s and men’s pay and career outcomes goes beyond gender preferences and can only be explained holistically through gender and racial bias.
The state of the racial wage gap in 2021
Uncontrolled observations of the racial wage gap show women of all races and ethnic groups earn less than white men. Men of color generally earn less than white men, but all men out earn the women within their racial ethnic group. American Indian and Alaska Natives see the largest uncontrolled pay gaps relative to white men; women in this group earn $0.69 and men $0.86 for every dollar earned by a white man. Possibly influenced by the COVID-19 recession, this pay gap has worsened by 6 cents from last year for women, when American Indian and Alaska Native women had a pay gap of $0.75.
Equal pay for equal work is not a reality for many people of color. When we control for education, years of experience, occupation and other compensable factors, most men and women of color still earn less than white men. The controlled racial pay gap is a comparison of pay between white men and people of color who have the same job and qualifications. As we see below, our research into the racial wage gap shows us that racial bias persists in the U.S. workforce.
Among the controlled group, Black men and women have some of the lowest earnings compared to white men. Black women earn $0.97 for every dollar earned by a white man with the same job and qualifications. Black men see a controlled pay gap of $0.99. The median pay for white men in our sample is $75,000, thus the controlled median pay for Black women is $73,000 – 97 percent of white men’s earnings in the same job. For Black men, controlled median pay jumps to $73,900. This suggests a $2,000 pay disparity for being a Black woman and a $1,100 pay disparity for being a Black man. As we see from our analysis on lifetime earnings later on, these differences in annual earnings can amount to hundreds of thousands or even millions of dollars less for people of color over the course of their careers.
Download our special DEI report
The Racial Wage Gap
The Covid-19 impact on the racial and gender pay gap
COVID-19 has had profound and unprecedented effects on the U.S. economy, which have disproportionately impacted women and people of color, highlighting the vulnerabilities and systemic injustices they have historically faced in the U.S.
According to the Bureau of Labor Statistics (BLS), the unemployment rate for Black or African Americans in 2020 was at 11.4 percent. For Hispanics, it was 10.4 percent. Asian workers, 8.7 percent. For whites, it was 7.3 percent. These shocking unemployment rates are often more than double the rates observed in 2019. In almost every group, with the exception of Black or African American males, women have higher unemployment rates than men. The pandemic has only exacerbated the pressures and expectations women face to take care of family and children, given the shift to at-home schooling.
The higher rates of unemployment seen by women and people of color only worsen the gender and racial pay gaps. In PayScale’s prior research on unemployment penalties , we found that on average and controlling for relevant factors, those who were unemployed at the time of receiving a job offer make 4 percent less than someone who was not unemployed. In addition, those unemployed for longer periods face larger unemployment penalties. Someone who was unemployed for more than a year experiences a 7.3 percent wage penalty.
BLS Unemployment Rates in 2019
BLS Unemployment Rates in 2020
The uncontrolled pay gap widens among laid off workers
In fact, we found that respondents who reported being laid off at some point during the COVID-19 crisis saw larger pay gaps compared to those who were not laid off. In the uncontrolled group, women who were laid off earned $0.79 for every dollar earned by men who were laid off. When controlling for compensable factors, women earn $0.98 to an equally qualified man’s dollar. In other words, unemployed men who returned to the workforce saw higher job offers than unemployed women returning to the workforce. This is in comparison to those who were not laid off, but still had their work hours decrease, where women saw an uncontrolled pay gap of $0.88 and controlled pay gap of $0.99.
Rather than layoffs, some organizations might have turned to pay cuts. Those with decreased pay saw larger pay gaps. Women who experienced pay cuts had an uncontrolled pay gap of $0.80 whereas women with increased pay had an uncontrolled pay gap of $0.88. This suggests that women experienced steeper pay cuts than men and that hazard pay or other pay increases helped women close the gap to men’s earnings; however, such pay increases might only be a temporary response to the pandemic.
The uncontrolled pay gap widens among workers with decreased pay
A deeper dive into the gender pay gap
Explore the gender pay gap by data cut
The gender pay gap widens with job level and age
The pay gap widens as women progress in their career, with women at the executive level making $0.94 to every dollar a man makes even when data are controlled. In the uncontrolled group of executives, women make a shocking $0.70 to every dollar a man makes. This is an improvement of only $0.01 since last year in the uncontrolled group and $0.01 worse in the controlled group.
Pay gaps often widen by age and job level, a sign of white men’s salaries increasing at a faster rate than other groups as they progress in their career. In looking at the career progression for women holistically, it’s clear that the gender pay gap widens as women ratchet up the corporate ladder, creating an even greater deficit in possible lifetime earnings at higher salaries than the median.
Gender wage gap by age
Women also tend to move up the career ladder at a slower pace than men. We call this phenomenon the opportunity gap. For example, a roughly equal percentage of men and women begin their careers as individual contributors, i.e. they do not manage people. In 2021, 75 percent of men and 76 percent of women ages 20 to 29 are in individual contributor roles. However, by age 30 to 44, 36 percent of men became supervisors or managers while only 30 percent of women did. Finally, men are much more likely to be directors or executives than women by age 45 or older. A total of 7 percent of women make it into an executive level role at any time of their lives while 12 percent of men do.
The opportunity gap widens as women progress through their career
Career Progression: Men
Career Progression: Women
Assumptions about what kinds of work women are best suited for is often based on gender norms and can preemptively funnel women into lower-level and lower-paid positions. The most predominant gender norm is that women are meant to have children and will eventually become mothers and homemakers (whether or not they actually do or want to), which can also result in assumptions about their proficiency, productivity levels, or commitment to their careers. Women who return to the workforce after having children are also shown to incur a wage penalty. This is the motherhood penality or the childbearing penalty. Some research suggests that having a child (or having the potential to bear children) is the primary or true cause for the gender wage gap. Indeed, a study commissioned by Bright Horizons and published in 2019 found that 41 percent of employed Americans perceive working moms to be less devoted to their work and a third judged them for needing a more flexible schedule. Men, conversely, do not experience a penalty in compensation after becoming parents. Some men are paid more after having children.