November 15, 2019

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Gender Wage Gap 101

October 17, 2017

 

Is it 85 cents that women make compared to every dollar men make? Or is it 79 cents? Is that for full time work? What about education and hours worked?  

 

Understanding the gender wage gap can sometimes feel like you need an advanced degree in economics. Combine that complexity with the cultural taboo around talking about money and it’s easy for the gender wage gap issue to get sucked into a black hole of “I’ll think about it later.” 

 

I’ve made it easy for you using Canadian data from Stats Canada.  

 

$0.74

 

Canada has some detailed and recent statistics on the gender wage gap. When you compare the annual earnings of full-time workers in Canada, women on average earn only 74 cents for each dollar a man earns.  

 

But it’s also important to take hours worked into consideration. Women tend to work fewer hours than men - 5.6 fewer hours per week on average - and that can contribute to the gap. To account for this, Stats Canada also looks at the hourly wage. For each hour worked, a woman working full time makes 87 cents for each dollar a man working full time makes.  

 

$0.87

 

At this point, it’s worthwhile to think critically about why women are more likely work fewer hours. Most women I know aren’t kicking off an hour early each day to sip cocktails or go to the movies. Rather, women work fewer hours at their paid employment because they tend to work more hours at unpaid employment.  

 

According to Stats Canada from data in 2015, women spend on average 3.6 hours per day doing unpaid household work. Men do 2.4 hours of work on the same tasks - 50% less than women.  

 

For some, this arrangement works and in a two income household with joint budgeting, it doesn’t make much of a difference. But, for women who are widowed or who divorce, this income gap can cause serious hardship as they move into retirement age. And that’s simply the financial impact, the social and emotional impact of uneven distribution of housework is an entirely separate blog post.  

 

Where’s the rest?

 

Much of the remaining gap is explained by the types of occupations that women and men enter. Traditionally women-dominated sectors - education, health care, etc - tend to be lower paying than traditionally men-dominated sectors - engineering, construction, business.  

 

But, even in women-dominated sectors, men still tend to rise to higher positions with larger salaries. For example, in Ontario, women make up a majority of secondary school teachers but men surpass them in the number of principals. This is true despite the fact that more women than men possess the qualifications required to be a principal.  

 

The same phenomenon has been documented in health care. It’s often referred to as the glass pyramid - lots of women at lower levels and fewer women in each level as you rise.  

 

Some may suggest that women opt out of higher paying roles because they don’t want the responsibility; maybe they’d rather focus their energy at home. While this is certainly true for some women, it’s not a true choice for others. Consider a heterosexual couple with one kid. Mom works in a woman-dominated field and dad works in a man-dominated field. When a child gets sick, a family will often make the decision that it’s the lower-wage earner (Mom) who will take time off work.  

 

Or, consider that same family after they have a second child. Even with two incomes, the cost of daycare for 2 kids is a real hardship. They work hard to make the budget work, but eventually they decide that it makes the most financial sense for someone to stay home with the kids. It makes the most financial sense for mom to stay home, she makes less money and couldn’t support the family on her income alone. Maybe she loves being home but she also loved her job. It’s not a true choice to stay at home because the alternative was financial insecurity.  

 

$0.97 isn’t so bad

 

But, occupation choice doesn’t explain the gap entirely. According to Stats Canada even when you control for occupation choice, women would still only make 97 cents for every dollar a man would earn. 

 

97 cents per dollar doesn’t seem so bad, right!?! 

 

Let’s play it out over a whole career. 

 

 

In even the best case scenario where all things are equal, Joe is still walking away with a healthy down payment on a cottage while Susan needs to find a way to make her smaller retirement nest egg last the longer life she is expecting to live.  

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