Why Increasing the Minimum Wage Could Help Close the Gender Wage Gap

Economists predict COVID will widen the gender wage gap by five percentage points—so that the average female worker will earn 76 cents for every dollar the average male worker makes.

Why Increasing the Minimum Wage Could Help Close the Gender Wage Gap
Nearly two-thirds of the employees making minimum wage are female. (SEIU Local 99 / Creative Commons)

Increasing the minimum wage from $7.25 an hour to $15 wouldn’t just lift a family of four out of poverty, it would also narrow the gender wage gap: Nearly two-thirds of the employees making minimum wage are female.

“If the minimum wage was raised to $15 an hour, 32 million workers would get a raise and, of those, 59 percent are women,” says Ariane Hegewisch, program director employment and earnings for the Institute for Women’s Policy Research.

Women earn 82 cents for every dollar earned by a man. To raise awareness about this pay disparity, the National Committee on Pay Equity established Equal Pay Day in 1996 to symbolize how far into the year the average women must work to earn the same as the average man. This year Equal Pay Day is March 24.

That wage gap grows even wider for women of color and Latinas with Black women earning 63 cents and Latinas earning just 55 cents for every dollar earned by a white man, according to the Institute for Women’s Policy Research. Equal Pay Day is Aug. 3 for Black women and Oct. 21 for Latinas.

However, the effect of the COVID-19 pandemic on women’s wages remains unknown for now because Equal Pay Day calculations are based on 2019 data, says Kate Nielson, senior director of public policy, legal advocacy and research at American Association of University Women. The Census Bureau won’t release data from 2020 until later this year, but economists predict that COVID will widen the gender wage gap by five percentage points, so that the average female worker will earn about 76 cents for every dollar the average male worker makes, according to this August 2020 report by the National Bureau of Economic Research.

Rachel Thomas, co-founder and CEO of LeanIn.Org isn’t surprised that COVID could set women’s wages back 10 years. “There is no way we went through 2020, where we saw disproportionate job losses for women, particular Black and Latina women, without the wage gap getting larger,” she says.


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New research by LeanIn.Org and SurveyMonkey finds that half of Latinas and Black women have struggled to pay for basic necessities like rent and child care in the past year, and half of Latinas and Black women have less than $300 in savings, compared with one-third before the pandemic.

The gender wage gap is caused by two factors—working in low paying occupations and being paid less than a man for the same work, says Julie Vogtman, director of job quality and senior counsel for the National Women’s Law Center. “The gender and racial wage gaps aren’t just the product of direct pay discrimination on the job,” she says. “Our society has devalued the work that women do, especially the work that Black and Latina women do.”

In addition, women earn less in almost all occupations, whether they work in predominantly male, predominantly female, or more integrated occupations, Hegewisch says. For instance, in the lowest paid of the largest 20 occupations for women—maids and housekeepers, earning an average of $503 per week—women are nine-in-ten workers (and face a wage gap of 10.6 percent); in the highest paid of the largest 20 occupations for men—chief executives, earning an average of $2,402 per week—women are fewer than one-in-three workers (and face a wage gap of 24.4 percent), according to new data from the Institute for Women’s Policy Research.

Why Increasing the Minimum Wage Could Help Close the Gender Wage Gap
An Equal Pay Day Rally and press conference in Chicago on April 10, 2018. (Charles Edward Miller / Flickr)

Women make up two-thirds of the nearly 20 million workers in the low-wage jobs such as child care, home care and grocery store cashier, Vogtman says. “While they’re recognized as essential workers, they still earn minimum wage and that plays into the wage gap because it’s depressing the earnings for a huge share of women workers,” she says.

Congress has increased the minimum wage only three times in the last 40 years, and the last pay hike from $6.55 to $7.25—an increase of less than $1—occurred more than a decade ago. Meanwhile, the federal minimum cash wage for tipped workers (for instance, bartenders and restaurant servers) has remained at $2.13 per hour since 1991.

However, in states that have increased the minimum wage, the gender pay gap has begun to close. For instance, in California where the minimum wage is $14 an hour, women now earn 88 cents for every dollar a man earns. In New York, where the minimum wage is $12.50, women earn 88 cents for every dollar. In Arizona, where the minimum wage is $12.15, women earn 84 cents for every dollar. States that pay at least $10 per hours, have a gender wage gap that is 17 percent smaller than states that pay the federal minimum wage of $7.25 hour, Vogtman says.

Economists agree that raising the minimum wage will have an impact on closing the pay gap. One in four working women—including 34 percent of Black working women and 31 percent of Latina workers—will get a raise if the minimum wage rises to $15 per hour by 2025, according to an Economic Policy Institute analysis. A Congressional Budget Office estimate finds that that gradually raising the minimum wage to $15 would lift 1.3 million Americans out of poverty, including 600,000 children. The Raise the Wage Act of 2021 (H.R. 603) recognizes that employers will need to time to adjust so it proposes raising the minimum wage gradually to $15 by 2025.

“The economy can’t recover as long as millions of people who have been hardest hit [by COVID] are still being paid poverty level wages,” Vogtman says.

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About

Lisa Rabasca Roepe is a Washington, D.C.-based freelance journalist who writes about women in the workplace and issues related to gender and diversity. Her work has appeared in Fast Company, Business Insider, the Boston Globe, the Christian Science Monitor, Marketplace, Quartz, CQ Researcher and The Week. Follow her on Twitter: @lisarab.