• Investing & Markets

Down with the Wage Gap: The Rise of Breadwinning Women

June 16, 2015 | Holly Johnson

It’s hard to deny the fact that the gap between men and women’s wages, known as the “gender wage gap”, is real. Study after study verifies its existence, and even worse, the reality that the disparity has barely budged over the last decade.

While the severity of the wage gap may ebb and flow based on various, unique factors, it still lurks around every workplace corner. One recent study from the American Association of University Women (AAUW) showed that the wage differs regionally (women earned 91% of what men earned in Washington D.C. in 2013, but only 66% in Louisiana). Further, minority women in all occupations experienced a more severe gap – Hispanic women earned only 54% of what Caucasian men earned in 2013).

To make matters worse, the wage gap grows with age. Women earn around 90% of men’s earnings until age 35, but it drops off from there.

A study from the Pew Research Center backs up the ideas proved by AAUW, adding that they believe the pay gap has shrunk to a disparity of $0.16, unlike earlier years. In other words, Pew estimates that women of all ages and ethnicities are earning an average of $0.84 for each dollar a man earns.

Year after year, dollar after dollar, even small sums – like a disparity of $0.16 – add up in a huge way. And those missing dollars can lead to bleak consequences not just for women, but also for their families.

The Rise of the Female Breadwinner – Is It All Good News?

Still, many of the statistics around the gender wage gap contradict. At a time when female employees are fighting for equal paychecks, you might think that the number of households with a female breadwinner is decreasing. However, Pew Research Center data actually shows that the number of female breadwinners is on the rise. While a female breadwinner led 11% of households with children under age 18 in 1960, over 40% of households have a female breadwinner today.

But don’t let the numbers fool you. Pew points out, these “breadwinning moms” are made up of two distinct groups. While 37% are married moms who earn more than their husbands, the other 63% are single mom breadwinners because they have no choice. That’s hardly something to celebrate.

Further, the term “breadwinner” is a deceiving one, implying a high income. According to Laura Vanderkam, author of I Know How She Does It, households with a female breadwinner aren’t spared from the effects of the gender wage gap more than anyone else. Why? Because female breadwinning isn’t always intentional.

“Dad loses his job, and Mom is suddenly the breadwinner, but because she didn’t plan on that, she hasn’t built up her career with the goal of earning the money necessary to support her family well on her own,” explains Vanderkam. “Just because a woman is a breadwinner doesn’t mean she’s earning a lot. These are two separate issues.”

Down with the Wage Gap: The Rise of the High-Earning Woman

Dark and dreary statistics aside, a certain percentage of women are earning higher incomes than ever before – and that fact should be celebrated. As Pew notes, the median total family income of married female breadwinners was nearly $80,000 in 2011, well above the median household income of around $57,000.

Many experts attribute the rise in female earnings and female breadwinners not just to societal factors, but also to female educational attainment. And when you look at the numbers, it’s easy to see why. As the Center for American Progress notes, women make up just 50.8% of the population, yet they earn:

• 60 percent of all Bachelor’s degrees
• 60 percent of all Master’s degrees
• 47 percent of Law degrees
• 44 percent of Master’s degrees in Business and Management

Meanwhile, women are 47%of the workforce, yet make up 59% of the college-educated, entry-level workers.

With numbers like that on the table, it’s no wonder that the wage gap is closing at a faster rate for younger women. These high-earning women in question are raising the bar and blazing trails. Hopefully, women after them will keep pushing forward until equal pay is an issue of the past.

Why Are Some Women Earning More?

Still, in a nation where women’s wages are being suppressed, it’s interesting to see what steps some take to earn more than the national average. Higher education plays a role, but is there something else?

Vanderkam interviewed high-earning women in her new book to learn what really set them apart. For her study, she focused on women earning over $100,000, with at least one child at home. Here’s what she found:

“The women in my study, who all earned >$100,000, worked slightly longer hours than average. They put in (on average) 44 hours a week,” notes Vanderkam.

Compare that to the average mom working a full-time job, and you’ll see the difference. Bureau of Labor Statistics figures say the average working mother puts in 35-37 hours per week and makes less than $40,000 annually.

But hours worked isn’t the only significant factor Vanderkam found. Close to half of interviewees worked “split shifts” in order to spend more time with their families. They’d leave work at a reasonable time, then do more work after putting the kids to bed.

“They traded off work time for what could be TV time, rather than work time for kid time,” explains Vanderkam.

According to Vanderkam, high-earning women who manage to “have it all” are ones who find innovative ways to put in more hours without compromising family time.

“Women massively limit their earning power by not considering jobs that would require those few extra hours,” she said. And in a today’s competitive labor those extra hours could mean the difference between getting ahead – or not.

The Fight for Equal Pay Must Continue

That’s all good advice indeed, but more needs to be done to ensure fair pay in the richest country in the world. Women cannot change enough to solve the gender wage gap, nor should they. Instead, systemic changes need to be made to fix pay inequality on a national level.

It’s high time that solutions are brought forward and implemented. Equal pay isn’t just a women’s issue; it’s a family issue. When women aren’t paid what they’re worth, everyone hurts.

That’s part of the reason President Barack Obama signed two executive orders on Equal Pay Day 2014. The first prohibits retaliation against contractor employees who discuss salary with their co-workers, and the second calls on the U.S. Department of Labor to start collecting wage data, including the race and sex of employees, from federal contractors.

To bring the wage gap to a close for good, the AAUW aims to secure congressional action on the following pieces of legislation too:

• Paycheck Fairness Act: Building on the Equal Pay Act, which hasn’t been updated since 1963, the PFA would “enact stronger incentives for employers to follow the law, enhance federal enforcement efforts, and prohibit retaliation against workers asking about wage practices.”
• Fair Pay Act: According to the AAUW, the Fair Pay Act would “require employers to provide equal pay for work of equal value, whether or not the jobs are the same.” Other goals of this legislation include “banning retaliation, requiring employers to file wage information with the Equal Employment Opportunity Commission, eliminating the gag rule on wage disclosure, and prohibiting employers from reducing wages to comply with pay equity requirements.”

Fighting for legislation that will help close the gender wage gap isn’t the only way women can work towards financial equality. By learning more about creating additional capital through investing tools like Personal Capital’s, women are another step closer to a more fair financial life.

We can’t solve the wage gap on our own; we need everyone, men included, to get on board with us.

Learn more about Pew Research Center’s study here, and visit Personal Capital today to check out helpful investing tools.

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