Gender Pay Gap May Be Narrowing, But New Data Suggests a Plateau

As we were recently reminded on Equal Pay Day, the gender pay gap remains wide open. Currently, a woman is paid about 83 cents for every dollar a man is paid. A new study doesn’t dispute this abysmal fact, but it does shed light on a related note: Over the course of past decades, women have seen income growth, whereas men have experienced income stagnation.
Over the course of past decades, women have seen income growth, whereas men have experienced income stagnation.  Philip Toscano / PA Wire/PA Images

Penned by economists Fatih Guvenen of the University of Minnesota, Greg Kaplan of the University of Chicago, Jae Song of the Social Security Administration, and Justin Weidner of Princeton University, “Lifetime Incomes in the United States over Six Decades,” analyzed the income levels of men and women from 1957 to 2013. Among the major conclusions of the nearly 80-page report: Men who entered the workforce between 1967 and 1983 saw their median lifetime income decline by 10 to 19 percent; on the contrary, women saw a median lifetime increase of between 22 and 33 percent.

“That to me was surprising because over this time period there were big increases of total income, and the economy grew a lot,” said study co-author Greg Kaplan. “The picture among men was pretty bleak.”

Younger Workers Getting Less of the Pie

One of the reasons for men’s decline in lifetime income appears to be a shift in pay to older workers, with younger male workers capturing less of the economy, said Kaplan. Another reason, though more speculative, Kaplan notes, is that over the years we’ve seen a decrease in manufacturing jobs, which were predominantly held by men.

But the biggest factor appears to be that over the decades, men have been earning less and less in their younger working years.

“We can see where in the life cycle decline takes place — and found it takes place at young ages,” said Kaplan. “If you look at recent cohorts and compare 25 now to 25 in [the late sixties through the eighties], you can see a steady decline. Men were starting out at lower earnings and they’re not being made up for by higher earnings later on.”

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Disproportionate Incomes Keep Middle, Lower Classes Stuck

While the study found that women in the 1960s, ’70s, and ’80s generated more income growth (again, to be reconciled with the fact that they were still making less than men overall), it’s looking like women are also now in the same camp as men: stuck in an income stagnation.

“For the recent, younger cohorts of workers, we’re seeing stagnation of income for both men and women,” said Kaplan. “Data suggests that over the course of [either gender’s] lifetime now, income won’t be much higher than it was in previous generations, which is pretty bleak.”

Increasingly we’re seeing more money go to workers in the top percentiles, and less opportunity for growth among mid- and low-level workers.

Frida Polli, CEO and co-founder of Pymetrics calls it “the story of the middle and lower classes in America.”

“Wages just haven’t gone up for men and women in these fields that aren’t in the top percentiles,” said Polli. “What has happened over time is a concentration of wealth, and wealthy people getting into power and creating laws that redistribute the wealth back to them.”

The current administration stands only to make this situation worse, especially insofar as it undermines public education.

“The current administration doesn’t want to invest in public education, which is the best way to move people up the food chain,” Polli told NBC News. “The mechanisms by which people move from lower economic to a middle or upper class is eroding because politicians are not creating the funding these public goods need. I’m not a Doomsday sayer, but I think right now at this point in history, society is not inclusive for people who don’t come from a privileged background.”

Negotiating Is More Crucial for Women Than Ever Before

While both genders may be bearing the brunt of a disproportionate income distribution, the data is undoubtedly more worrisome for women than men. After all, they’re already making less than men. If their income growth is tapering off, how will they ever catch up to their male peers? We’ve heard it before, but we need to hear it again and again: Women have to be confident negotiators — and not just eventually, but right off the bat in their careers.

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“Every time you don’t negotiate your salary, you’re likely growing the pay gap even more between you and your male colleagues,” said Monster.com career expert Vicki Salemi. “Remember, the higher you start, the higher your salary will be with each incremental raise you get at that company, ultimately impacting your end goal. When a woman’s underpaid on her first job, then every year during salary review at that company, her increase will be based on that lower base compensation, therefore compounding the issue.”

Tamara Lashchyk, a Wall Street executive and business coach, says that even now, after 25 years in the financial industry, she sees women struggle with asking for more.

“I see women generally less comfortable with negotiating than men,” Lashchyk told NBC News. “They tend to negotiate as an extreme measure — when they have another offer or are ready to walk out; whereas for men it’s more a normal course of business, something they do on an annual basis.”

The Millennial Mindset

Lashchyk also detects less of a “killer instinct” among both millennial women and men, which could be fostering the income stagnation. They’re ambitious, but more interested in feeling meaningful in their work than merely making money.

“I find that even on Wall Street, millennials are not as driven by monetary compensation,” said Lashchyk. “They’re a more civic-minded generation who want meaning and purpose in jobs they choose, even if that means lower income. I also think that there’s been a cultural change: when [my generation] graduated college, we would never have considered moving home no matter how bad the case was — in fact we may not have even been allowed to. Now you see millennials moving home, and parents embracing that. So perhaps they also don’t need to be as hungry as we were because they know where their next meal is coming from.”

The Data May Be Depressing, But We Have Reason to Be Optimistic

Christy Hopkins, a human resources consultant and writer at FitSmallBusiness.com, perceives women making less than men, and also that men and women are starting out at lower salaries — especially as the talent pool widens and we see more and more people with college degrees entering the workforce. But she’s actually quite optimistic about the future of women.

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“Just look at the fact that this study exists and we’re having this dialogue,” said Hopkins. “When I graduated college in 2004, we weren’t having these conversations. That there is even this kind of data available on women is a huge step.”

And it’s more than just conversations and data, Hopkins observes: There are also those companies who want to be the ones to make a difference, and prove they don’t tolerate a gender pay gap.

“Startups and even the technology sector in general is a great example,” said Hopkins. “A female developer in Seattle or San Francisco knows that companies have quotas for women and that she can possibly make more than her male colleagues. People are generally more informed about their worth and what they might want, and I think women realize they’re a hot commodity for tech companies.”

While the study highlights the importance of starting out high (because that could set the bar for the income for the rest of your working life), Hopkins sees great opportunity for women who are rejoining the workforce after taking off for motherhood to reset their careers and get on a higher paying path.

“Organizations like the Mom Project — which are designed for moms returning back to work — are becoming more and more common. Plus, the concept of work/life balance is becoming work/life integration, which is a much stronger term. Companies realize that if they want talented workers, they need to accommodate moms.”

Polli of Pymetrics adds that some recent local legislative action — such as a new law prohibiting employers from asking about a job applicant’s salary history — is moving things in the right direction.

“Now, women who didn’t negotiate their first salary well don’t have to be stuck with it indefinitely,” Polli said.

Written by Nicole Spector, published by NBCNews.com.

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