How Women Can Break Through the Gender Wage Gap Barrier

Fact checked by Vikki Velasquez

Many traditional gender roles have disappeared. Men and women perform the same jobs, have similar career trajectories, and even take turns as stay-at-home parents. But one gender-based distinction that remains is the wage gap. For every dollar men earn on average, women earn about 84 cents. 

While not directly tied to the wage gap, the Investopedia and REAL SIMPLE 2024 Her Money Mindset survey identified areas in which earning more money could benefit women greatly.

For example, 54% of surveyed women said they are struggling to cover at least one monthly expense, and 44% said they have just $250 or less after covering bills each month. That said, 60% of women have never asked for a raise, and fewer than 1 in 4 women who talk with their friends about money are transparent about how much they make.

To help women feel empowered to take control of their income, and support other women doing the same, here’s what to know about the wage gap, and how individual actions can build barrier-busting wealth.

Key Takeaways

• The wage gap refers to the disparity in earnings between men and women in the workplace.
• Societal factors play a significant role in perpetuating the wage gap.
• Negotiation skills are crucial for women to achieve fair compensation and benefits.
• Skills development and education can help bridge the wage gap.
• Pay equity depends on improving workplace policies and practices.

Understanding the Gender Wage Gap

The gender wage gap is the difference between what men and women earn. There are many ways to analyze and express the gap, but the most common is to measure the difference in median earnings of women vs. men.

Over the past several decades, Congress and state governments have passed a number of laws to address the gap. For example, the Equal Pay Act of 1963 prohibits employers from paying men and women different wages for performing similar duties under similar conditions. Despite those efforts, the gender pay gap persists.

As of 2022, women earned 84 cents for every dollar men earned in the United States. However, the difference varies widely by region. California and Vermont have the smallest gaps, where women earn 89 cents for every dollar men do. Conversely, women in Louisiana and Utah lag far behind men, earning 75 and 73 cents respectively. There are a multitude of reasons why the gender wage gap exists.

Societal Factors at Play

Society has come a long way in treating men and women fairly. However biases take generations to entirely disappear, and women still face numerous challenges in perception—and compensation—in the workplace, such as:

• Gender discrimination: Discrimination has many forms, but societal biases around job performance and compensation are especially problematic. Women generally have to work harder to gain equal recognition. And women who advocate for more compensation or better treatment are often cast as troublesome or unaccommodating.
• Racial discrimination: The wage gap is worse for many women of color than it is for white women. According to racial wage gap data from the U.S. Bureau of Labor Statistics, Black and Latinx women earn median weekly pay of $887 and $825 respectively, compared with median weekly earnings of $1,040 for white women and $1,254 for white men.
• Motherhood: Having a baby is expensive on its own, but it also has a significant impact on a woman’s earnings. Research from the U.S. Census Bureau indicates that between two years before a child’s birth and one year after, the gender pay gap within a couple doubles. The wage gap continues growing until the child is 10 years old, representing a massive loss of income over the mother’s career.
• Occupational segregation: While unequal compensation for equal work is a core issue, access to equal work is also a primary driver. The National Partnership for Women & Families found that women make up 63.6% of the workforce in the 20 lowest-paying jobs they studied, compared to only 30% of the workforce in the 20 highest-paying jobs.
• Unpaid family care: Women are more likely than men to take career breaks to care for aging or sick family members. Long breaks in employment may raise questions with prospective employers or cause women to lag behind industry trends and new skills, further depressing wages.

How Workplace Policies Impact Earning Disparities

While many federal and state laws prohibit discrimination in pay, certain workplace conditions persist, which keep the gender wage gap from shrinking. These are a few of the most common:

• Salary history on applications: Some states prohibit employers from asking prospective employees about their salary history, and research has found that the ban helped narrow the wage gap. However, many companies work around this by asking applicants for pay expectations, which can lead to a perpetuation of women being underpaid if they don’t feel comfortable asking for a higher salary.
• Pay transparency: The historical secrecy of salaries, and its taboo nature as a topic of discussion, has frequently left women in the dark about how large the gender wage gap was. The National Bureau of Economic Research found that pay transparency laws reduced the gap by 20–40%.
• Individual vs. group salary negotiations: Data also shows women fare better with collectively negotiated compensation. Women in unions earn an average of 89.6% of their male counterparts’ wages, compared to non-unionized women earning 82% of their male counterparts’ wages at the time of the study.

The gender wage gap doesn’t just lead to a smaller paycheck for women every two weeks—it has lifelong consequences. As female workers earn less during any given period, they amass less wealth than their male counterparts and have less financial stability.

Note

Note: Beyond the direct consequences of financial instability, these shortfalls often leave women feeling trapped in jobs where they’re underpaid. When faced with the choice between barely covering bills or not covering bills at all, it’s difficult to risk steady income.

How To Close the Gender Wage Gap

Reducing the gender wage gap is a complex problem. While there’s no single solution, there are some ways women can help themselves and each other reach wage parity with men.

Talk About How Much You Make

Talking about money has historically felt taboo, particularly among women. According to Investopedia and REAL SIMPLE’s 2024 Her Money Mindset survey, of the women who talk about money with their friends, only 15% will mention if they are asking for a raise or promotion, and only 24% discuss how much they make.

However, discussing raises and salaries is very beneficial for all parties involved in the conversation and is a powerful tool. By comparing notes, you can learn a lot: if you’re making less than market standards, how often and how much people are negotiating for in raises, what sort of salary and bonus structures are out there, and more.

The reality is, most women feel grateful for the topic to be broached and ultimately walk away with more information about the fairness of their wages, inspiring them to put more pressure on their company for better pay.

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31% of women who took the Her Money Mindset survey said they think it’s important for women to talk to their friends about money.

The hardest part may be breaking the ice, but there are helpful strategies for approaching the topic in a respectful and productive way.

For instance, you can bring up the conversation by casually incorporating a financial topic into a conversation to get a pulse for how your friends feel. It also can be helpful to set ground rules, such as agreeing to confidentiality and actively listening without interruption.

Negotiate Higher Compensation

The 2024 Her Money Mindset survey found 60% of women have never asked for a raise, and 69% have never requested a promotion. Women with higher household income levels were more likely to have asked for a raise or promotion.

Whether it’s a raise at your current job, or a significant bump from moving to a new company, negotiating a higher salary is one of the most important ways women can increase their earning power. 

“I don’t think people realize the impact the gender wealth gap can have on our lifetime earnings,” says Gloria Carcia Cisneros, a certified financial planner and wealth manager at Lourd Murray. “When you start with a lower base salary, it means that for all the subsequent pay increases, you are getting less than someone who is getting the same percentage increase, but has negotiated higher pay from the beginning.” 

She also notes that companies expect candidates to negotiate. “The earlier the better, make sure you start negotiating in your 20s and 30s to take advantage of the exponential growth.”  

Note

Investopedia and REAL SIMPLE’s survey found that 30% of women in the millennial generation and younger have a goal to get a raise and/or promotion in the next three years.

One negotiating tip from Michelle Kruger, certified financial planner and senior financial planner at Gratus Capital, is using benefits as a tool for negotiating salary.

“Bring cost differences like an increased health insurance premium or a lower 401(k) match to your potential new employer’s attention,” Kruger says. “Calculate the value of the lost benefits to you, and ask for a commensurate increase in the offer.”

Consider these key strategies when asking for a raise:

1. Prepare in advance: Collect data for comparable jobs at your company and industry. Plan out key points you want to make and be ready for pushback.
2. Be assertive: No one cares more about your welfare than you. Treat your boss with respect, but ensure that it’s mutual and advocate for yourself.
3. Practice: Ask a friend to roleplay your boss and rehearse your talking points. Make sure they throw you some curveball questions.
4. Negotiate: Bosses often have budget constraints that limit how flexible they can be. Push for your desired salary, but be ready to take concessions elsewhere, such as additional paid time off or other benefits.
5. Time your request: Set yourself up for success by asking for a raise when it’s likely you’ll get a positive reaction. If your company just went through a round of layoffs or the economy is trending down, you’ll face more resistance.

Enhance Your Skills and Education

If negotiating a raise isn’t going as well as you hoped, the next step is to bolster what you can do at work. The best way to do this is by enhancing your skills or seeking further education.

In many cases, learning new skills can help break down occupational segregation. For example, office managers and executive assistants are often women, many of whom have extensive business experience and a wide range of abilities. But they end up pigeonholed into administrative jobs, limiting their earning potential. By developing specialized skills such as accounting, human resources, or project management, they can advance their careers and shrink the wage gap.

Women have a range of options for building their skills and resumes:

• Professional certifications: Professional certifications offer a concrete way to increase earning potential by demonstrating specific skills and qualifications to prospective employers.
• Company-sponsored development: Many companies cover some or all of the costs for professional development courses. Everyone benefits, as employees learn more skills and employers gain access to those skills.
• Returning to school: Going back to college might seem daunting. But with the proliferation of online learning, ongoing education can fit any schedule. Finishing a degree or getting a new one can open up opportunities to earn more.

Build Wealth By Investing

Setting money aside for investments can be hard when you’re juggling multiple financial goals, or just trying to make ends meet. However, investing helps women close the wage gap in two ways:

1. Increased financial stability: As women amass more wealth, it allows them more freedom to make career choices. When not tied to a job just to keep bills paid, women can explore more lucrative opportunities and advance professionally.
2. Source of passive income: Many types of investments don’t just grow over time, they also generate income. Whether it’s dividends from stocks or rent from real estate, passive income supplements wages from employers and increases overall wealth.

If you’re just starting out, a high-yield savings account can be a good option. You’ll see compounding gains from interest as time goes on. The money is FDIC-insured, so there’s no risk of loss. And it’s easy to access if an emergency comes up and you need access to the funds.

As time goes on, you can diversify into other investments:

• Index funds spread your money across groups of different stocks, insulating you from the risk of one company hurting your portfolio.
• Individual stocks can perform well but require more research and active management.
• Bonds are a relatively stable investment, but have smaller payoffs and take time to mature.
• Crypto has the potential for large gains, but the lack of regulation introduces significant risk.
• Real estate often has a high cost of entry, but generates income over time.

Financial advisors generally recommend a diverse portfolio based on the investor’s age. Younger investors can afford more risk, like stocks and index funds, while older investors tend to move towards more stable choices, like bonds.

Support Women in Leadership Positions

As of 2024, women made up 46.9% of the American workforce. But they remain underrepresented in the upper echelons of business. Only 10.6% of CEOs and 30.4% of board members at Fortune 500 companies are female.

Breaking through the glass ceiling isn’t easy, but it has an immense payoff.

Elise Awwad, who currently serves as DeVry University’s president and CEO, started her career with the company as an admissions advisor. While working her way up in the company, Awwad says “I recognized the need to support other women in the workplace.” and “The male-dominated culture is still prevalent in many tech companies and can make women feel like they don’t belong.” 

In 2019, she established EDGE (Empowerment, Diversity, Growth, and Excellence), a network of leadership scholars and professionals who promote the enhanced career experience and advancement of women in leadership roles at DeVry, and in the broader community. She also spearheaded DeVry’s Women+Tech Scholars program, created to “empower women through mentorship, job search resources, credentialing, and scholarships, encouraging them to take the first step toward a tech-focused career.”

Debbie Sanders, COO of Visory Health, also notes the importance of advocacy and support for career advancement. “Look for a mentor, and look for positions and jobs where you feel supported and will be respected and compensated for the great ideas and hard work you put forth,” Sanders commented. “Getting places in your career usually means not only do you need to excel at what you do, but also have someone in an executive position there to support you as internal politics increase.” 

Important

In the long term, putting women in leadership positions will foster a culture of equality and—hopefully—reduce the gender wage gap. Better representation in C-suites and board rooms will lead to more balanced policies and help break down implicit cultural biases that persist within some companies.

Frequently Asked Questions (FAQs) 

What Country Has the Highest Gender Wage Gap?

Not every country has reliable wage data available. But according to the Organisation for Economic Cooperation and Development (OECD), Korea has the highest gender pay gap at 31.2% in 2022. The only other country above 25% is Israel, at 25.4%.

Which Countries Have the Lowest Gender Wage Gap?

Based on the same OECD data, Belgium’s gender wage gap of 1.2% is the smallest in the world. It’s joined by four other countries under 5%—Costa Rica (1.4%), Colombia (1.9%), Bulgaria (2.5%), and Norway (4.5%).

How Has the Gender Pay Gap Changed Over Time?

Women made significant gains in the later part of the 20th century. Pew Research found that between 1982 and 2002, women’s earnings relative to men’s rose from 65% to 80%. But in the following 20 years, the gap remained relatively stable, hovering between 80% and 85%. Researchers have not found evidence of any single factor causing the stagnation. Many of the topics this article has discussed contribute, including discrimination and occupational segregation.

Gender disparities can vary widely by industry and job type. At one end of the spectrum, there are a handful of jobs where women earn more on average. Tutors top this list, where women earn 35% more than men. Conversely, women lag far behind males in jobs like finance and manual trades. Financial services sales agents have the largest pay gap, where women earn 55.1% of what men do.

The Bottom Line

There’s no quick solution to closing the gender wage gap. And unfortunately, much of the struggle involves deeply rooted cultural biases. As individuals, every woman needs to advocate for herself by negotiating higher pay and building personal wealth through investing. Collectively, women can fight to empower their peers in leadership and lift each other up. Systemic change takes years. But through continued efforts for equality, we can build a workforce where our daughters and granddaughters receive equal pay with our sons and grandsons.

Read the original article on Investopedia.