Every September, the U.S. Census Bureau releases its update on income and poverty in the United States. I -- along with many other economists, policy wonks, data geeks, and others -- impatiently refresh the Census.gov website to learn whether there has been any improvement in men's and women's earnings, the wage gap, or the poverty rate. In recent years, the significance of each release has been characterized by its insignificance: since 2007, there has not been a statistically significant narrowing of the gender wage gap, and between 2013 and 2014, there was not a statistically significant difference in the poverty rate. Moreover, adjusted for inflation, the last ten years have seen virtually no increase in women's earnings, so women are now experiencing what men have experienced for more than three decades -- the failure of real wages to grow.
According to the new Census data, women now earn 79 cents for every dollar a man earns for full-time, year-round work; actually that's 78.6 cents compared with a new estimate for the prior year of 78.3 cents, a small gain indeed. The gap is even wider for most women of color, with Black women earning only 59.8 cents on the white man's dollar, and Hispanic women only 54.6 cents on the white man's dollar. By projecting the rate of progress from 1960 forward, the Institute for Women's Policy Research (IWPR) has found that women will not see equal pay until 2059, one year longer than IWPR's previous projection. As a clever segment on The Daily Show noted, wage equality for women will take longer to achieve than flying cars or 3D-printed human organs. For an economy that left the Great Recession behind six years ago, this stagnation is beyond frustrating.
Such a wide gap has compound effects over a woman's lifetime: the typical woman will lose $530,000 over the course of her lifetime due to the wage gap; a college educated woman will lose $800,000. For an individual woman, this is an incredible, undeserved reduction in her lifetime earnings, compromising her ability to save for assets like a house or retirement fund or simply to make ends meet.
For families, the gender wage gap can make the difference between living below or above the poverty line, having funds for recreation and vacations or having none, having access to high-quality child care, schools, and colleges, or only being able to afford poorer quality alternatives or no pre-kindergarten or post-secondary education at all.
For the economy overall, unequal pay is holding back economic growth. IWPR estimates that nearly 60 percent of women would gain pay if they were paid the same as men with similar qualifications and hours of work. Added across the U.S. economy, these gains amount to 2.9 percent of GDP, a growth rate equivalent to adding another state the size of Virginia. (This type of estimate assumes, of course, that, because of discrimination and other factors, women are currently paid below the level of their productivity; it also assumes no change in women's education or work hours, which would surely increase if women could expect to earn equal pay.) Each woman, including those who would gain nothing, would earn $6,251 more annually on average, reducing poverty by half for all families with a working woman as well as working women who live alone.
But ensuring that women receive equal pay is not as easy as just paying women more for their work (though that would be a good start!). Businesses and policymakers both have a role to play to achieve the benefits of equal pay well before 2059. You can read my recommendations for how private and public policies can narrow, and eventually eliminate, the gender wage gap over at Fortune. (Hint: we need to address wage inequality by bringing up the bottom of the pay scale, and we also need to close the gender care gap.) It's time we start taking achieving equal pay seriously.