Last week, we released the latest State of Working America Wages Report, which highlighted historically fast real wage growth for low-wage workers between 2019 and 2022. Even after taking into account higher inflation, the 10th percentile hourly wage grew 9.0% over that three-year period, significantly faster than at an equivalent point from any other business cycle peak in recent history.

This tremendous wage growth occurred because policymakers took a different path in the pandemic recession and passed vital relief and recovery measures at the scale of the problem, which created a strong labor market. Unfortunately, despite this recent period of growth, wage levels for U.S. workers at the bottom of the earnings distribution remain low, making it difficult to make ends meet in any county or metro area.

While low-wage workers experienced welcome gains, we were surprised to find that the gender pay gap widened, even though women are disproportionately more likely to be lower-wage workers. We found that the gender wage gap grew across three measures: the median, the average, and a regression-adjusted average (i.e., controlling for age, race/ethnicity, education, and geographic division). Here, we delve deeper into the question of what happened to women’s wages vis-a-vis men’s over the last three years as well as the large wage gaps that remain across educational attainment and are worse for Black and Hispanic women.

The gender wage gap

Between 2019 and 2022, the gender wage gap remained stubbornly large even as lower-wage workers experienced gains. Women, on average, were paid 20.3% less than men in 2019. By 2022, that gap widened to 22.2%. Similarly, the regression-adjusted wage gap, which has been stagnant for most of the last 20+ years, widened slightly from 22.6% to 22.9%. Much of the growing wage gap at the average (unconditional and regression-adjusted) is driven by men’s higher wages and faster wage growth at the top of the wage distribution. When we look instead at wage growth at the middle of the wage distribution—the 40th to 60th percentiles—a different story emerges. In 2019, these middle-wage women were paid on average 16.2% less than middle-wage men. In 2022, that wage gap narrowed to 15.4%, a small but promising move in the right direction.

The experience of men and women across the wage distribution differs considerably depending on how it’s measured, but the gender wage gap persists no matter how it’s measured. Women are paid less than men as a result of occupational segregation, devaluation of women’s work, societal norms, and discrimination, all of which took root well before women entered the labor market. Figure A shows the wage gap at the 10th and 90th percentiles, the average of the 40th–60th percentiles, and the overall average.1 At all parts of the wage distribution, women are paid less than men.

The wage gap is smallest among lower-wage workers, in part due to the minimum wage creating a wage floor. The wage gap grows with wage level.2 At the 10th percentile, women are paid $1.55 less an hour, or 11.4% less than men, while at the middle the wage gap is $3.81 an hour, or 15.4%. These low- and middle-wage gaps translate into annual earnings wage gaps of over $3,000 and $7,900, respectively, for a full-time worker. The 90th percentile is the highest wage category we can compare due to issues with topcoding in the data, which make it difficult to measure wages at the top of the distribution, particularly for men. Women are paid $15.05 less an hour, or 23.1% less, than men at the 90th percentile. That would translate into an annual earnings wage gap of over $31,000 for a full-time worker. On average, the gender wage gap is nearly $8 an hour, or 22.2%.

Women are paid less than men at every education level

Despite gains in educational attainment, women still face a significant wage gap. Among workers, women are more likely to graduate from college than men, and are more likely to receive a graduate degree than men. Even so, at every education level, women are paid less than men, as shown in Figure B.

The wage gap widens with higher levels of educational attainment. Among workers who have only a high school diploma, women are paid 78.6% of what men are paid. Among workers who have a college degree, the share is 70.2%, and among workers who have an advanced degree, it is 69.8%. Furthermore, women with advanced degrees are paid less per hour, on average, than men with college degrees. Even straight out of college, women with a college degree are paid $4.50 less per hour than their male peers.

Black and Hispanic women experience the largest wage gaps

If the overall gender pay gap isn’t enough cause for alarm, the wage gaps for Black and Hispanic women relative to white men are even larger due to compounded discrimination and occupational segregation based on both gender and race/ethnicity. In Figure C, we compare middle wages—or the average hourly wage between the 40th and 60th percentile of each group’s wage distribution—for white, Black, Hispanic, and Asian American/Pacific Islander (AAPI) women with that of white men.3

White women and AAPI women are paid 82.5% and 93.4%, respectively, of what non-Hispanic white men are paid. Black women are paid only 69.5% of white men’s wages at the middle, a gap of $8.35 on an hourly basis which translates to roughly $17,000 less annual earnings for a full-time worker. For Hispanic women, the gap is even larger: Hispanic women are paid only 64.1% of white men’s wages, an hourly wage gap of $9.84. For a full-time worker, that gap is over $20,000 a year.

These pay gaps are even larger when examining average hourly wages for all workers instead of just the average for middle-wage workers because of the disproportionate share of highly paid workers who are white men, which pulls up their average. Using the average measure, Black and Hispanic women are paid 61.4% and 57.8%, respectively, of white men’s wages, an hourly wage gap of $15.11 for Black women and $16.40 for Hispanic women. Even in a regression framework—controlling for age, education, and geographic division—Black and Hispanic women are both paid about 67% of white men’s wages.

Conclusion

There is no silver bullet to solving pay equity, but a wide array of policy options can close not only the gender pay gap but also gaps by race and ethnicity. These include requiring federal reporting of pay by gender, race, and ethnicity; prohibiting employers from asking about pay history; requiring employers to post pay bands when hiring; and adequately staffing and funding the Equal Employment and Opportunity Commission and other agencies charged with enforcement of nondiscrimination laws.

We also need policies that lift wages for most workers while also reducing gender and racial/ethnic pay gaps, such as running the economy at full employment, raising the federal minimum wage, and protecting and strengthening workers’ rights to bargain collectively for higher wages and benefits.

Notes

1. See Gould and DeCourcy (2023) for the reasoning behind these metric choices.

2. This is also true for the intervening parts of the wage distribution not shown in the figure.

3. Race/ethnicity categories are mutually exclusive in this analysis. Here we denote white to mean white non-Hispanic, Black is Black non-Hispanic, Asian American/Pacific Islander (AAPI) are AAPI non-Hispanic, and Hispanic refers to Hispanic of any race.