The Wage Gap Persists—But Recent Reforms Are Making a Difference

A mother and son in Washington, D.C. For working women, wage gaps by gender and race exist because of outright pay discrimination, women’s disproportionate caregiving responsibilities and occupational segregation. (Allenran Photography / Flickr)

The U.S. Census Bureau’s new income data shows the gender wage gap has narrowed by one penny for full-time, year-round working women, and four cents for all working women. This aligns with the robust economic recovery the United States is experiencing, where jobs are plentiful, women’s wage growth is outpacing men’s this year, and the economy is strong by many measures.

But many women are still struggling to make ends meet. High prices on necessities like gas and food have hit women particularly hard, partly because of the gender wage gap.

Additional reforms are necessary to finally close the pay gap, but recent Biden administration and congressional policy reforms, including the Inflation Reduction Act and the student loan relief plan, will no doubt alleviate some of the financial pressures women are facing and bolster their economic security in the long run.

Last year, women working full-time, year-round earned just 84 cents for every dollar their male counterparts made, and all women working earned just 77 cents for every dollar men made. The disparities were even greater for women of color when compared with white, non-Hispanic men, contributing to the already stubborn racial wealth gap:

  • Latina women working full-time, year-round earned just 57 cents and all Latina women working earned just 54 cents for each dollar.
  • Black women working full-time, year-round earned just 67 cents and all Black women working earned just 64 cents for each dollar.

The gender wage gap exists in nearly all jobs and at all education levels. Women, particularly women of color, are overrepresented in low-paid work but underrepresented in high-paid work—a feature of the labor market known as occupational segregation. And, even when accounting for these factors, there are still wage gaps by gender and race because of outright pay discrimination and women’s disproportionate caregiving responsibilities. The wage gap also compounds over a woman’s career, so she loses income she could have used to buy a home, pay her student loans or save for retirement.

Many women report having difficulty covering necessary expenses. In early August 2022, nearly half of all women said they had difficulty paying regular household expenses such as medical costs, food and rent, according to the Census Bureau’s Household Pulse Survey. Black and Latina women, who are disproportionately more likely to be primary breadwinners than other groups of women, experience these challenges acutely.

President Biden signed the Inflation Reduction Act (IRA) into law in August, which will help fight inflation and lower costs. The IRA will help women with some of their biggest non-negotiable costs such as prescription drugs, healthcare and energy expenses. Long before current inflationary pressures, women spent more on healthcare than men, and women, particularly women of color, were more likely to struggle to buy prescription drugs. The IRA’s prescription drug reform, which caps out-of-pocket costs for prescription drugs at $2,000 annually for Medicare beneficiaries, will help women—who outnumber men on Medicare—afford life-saving drugs and will help make their paychecks go further toward other needs.

That same month, Biden also announced a historic student loan relief plan, which is estimated to help up to 43 million Americans better manage their budgets and build wealth. As women hold roughly two-thirds of all student debt in the United States, and Black women take on more debt on average than any other gender and racial group, this relief will significantly help improve their immediate and future economic security, along with narrowing the racial wealth gap.

Beyond the IRA and student loan relief, the recently passed CHIPS and Science Act will build upon the success of the Bipartisan Infrastructure Law, creating more quality clean energy and construction jobs—sectors that are historically male-dominated. Ensuring women have greater access to these good jobs can go a long way in addressing the wage gap. Progressive state and local implementation of these laws and strict enforcement of federal laws, including anti-discrimination and anti-harassment statutes, are all critical tools to do so.

Additional reforms are necessary to finally close the gender wage gap, including passing the long-overdue Paycheck Fairness Act, guaranteeing universal paid leave, providing workers with a livable wage, and making childcare affordable and accessible for all. But recent policy wins will alleviate some of the real-world consequences of the gender wage gap causing women (most acutely, women of color) to be financially insecure for their entire lifetime—all the while, living in the richest country in the world.

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About and

Rose Khattar is the associate director of economic analysis on the Poverty to Prosperity team at American Progress.
Lauren Hoffman is the associate director for women's economic security with the Women's Initiative at American Progress.