One hundred years since the 19th Amendment‘s passage gave women the constitutional right to vote, inequality persists—particularly in the workforce, where women continue to be paid less than men.
Each year, Equal Pay Day marks the date on which women will have earned as much as their male counterparts did the previous year. In 2020, that date is March 31, meaning that women’s earnings from January 1, 2019, to March 31, 2020, match what men earned in 2019. It is only three days earlier than last year’s April 2 Equal Pay Day, underscoring the frustratingly slow movement toward equality.
Unpacking the Gender Pay Gap
Globally, women make only 77 cents for every dollar that men earn. In the US, the current rate of 82 cents per dollar is only slightly better, but the disparity is worse for American women of color. According to data from the Equal Pay Today campaign, Asian American and white women have the smallest pay gaps, at a respective 90 cents and 82 cents per dollar. They are followed by black women (62 cents) and Native American women (57 cents). At 54 cents to the dollar, Latinas fare the worst—their Equal Pay Day is not until November 2. Equal Pay Day for mothers across all demographics is on June 4.
A gap of 82 cents per dollar translates into $10,194 less per year in median earnings. These gaps have significant implications for the economic security of women and their families, which in turn impacts national poverty and unemployment rates. The Institute for Women’s Policy Research (IWPR) estimates that attaining equal pay would reduce poverty among working women by more than half and inject $513 billion into the American economy. However, the World Economic Forum’s 2020 Global Gender Gap Report found that global progress on the wage gap and women’s labor market participation has stalled. At the current pace, the IWPR projects that white women will not achieve pay parity until 2059. Black women will have to wait until 2130, and Latinas until 2224.
3 Steps toward Greater Equity
How can gender-lens investing accelerate progress? The World Economic Forum, IWPR, and other experts have coalesced around three priority steps that, if implemented, could help close the pay gaps and set an example for others to follow.
1. Prompt Meaningful Investigations
This means requiring portfolio companies to examine pay and promotion culture and practices at every level for every role. Simply looking at current salaries is not enough—pay decisions are often made based on longevity at the company, performance, and perceived experience. “Perceived” is the operative word here: even as new research finds that women are perceived as equally competent to or more competent than men, biases around leadership capacity and inherent skill sets continue to pervade the workplace.
In recent years, however, entrepreneurs have launched artificial intelligence tools for companies to track this type of unconscious bias by flagging discrepancies in pay or seniority among individuals with similar qualifications. Such bias-mitigating technology and similar products and services may draw the attention of gender-lens investors.
2. Invest in Improved Social Insurance Offerings
Because women are socialized to be caregivers and are physically responsible for childbirth, they often balance their careers with their health and family demands. Robust maternity and paternity leave packages, as well as flexible options for employees with caregiving responsibilities—telework, part-time options, or alternative partner tracks—do more than just attract and retain female employees. They also normalize the important role that men can and should play in parenting and caregiving.
3. Value and Invest in Women-Led Work
A major driver of the pay gap is that fields primarily employing women offer lower pay, on average, than those that primarily employ men. Unsurprisingly, the female-dominated fields are in caregiving roles like teaching, nursing, and elder care.
Gender-lens investing around this challenge includes efforts to bring more women into higher-paying, male-dominated science and technology fields and to increase investments in caregiving professions. The latter effort challenges the value that both society and the market have placed on caregiving, while the former must contend with the decades spent designing career paths around men.
By investing in a new conversation about what careers can look like and how we value work, gender-lens investors can make a difference on the pay gap in years to come.