The Impact of Equal Pay on Poverty and the Economy

Women make up almost half of the workforce, yet they continue to earn less than men on average in nearly every single occupation for which there is sufficient earnings data for both men and women to calculate an earnings ratio (Hegewisch and DuMonthier 2016a). In 2015, women working full-time, year-round earned just 80 cents for every dollar that men earned (Hegewisch and DuMonthier 2016b). The pace of progress toward pay equity has been slow, and if progress continues at the same pace, it will take until 2059 for women to finally reach pay equality. For women of color, equal pay is even further away. Hispanic women will have to wait until 2248 to reach pay equality with White men and Black women will have to wait until 2124 for equal pay (Institute for Women’s Policy Research 2016).

Despite being paid less, women’s earnings are increasingly important to the economic stability of families. In the United States, half of all households with children under 18 have a breadwinner mother, who is either a single mother who heads a household, regardless of earnings, or a married mother who provides at least 40 percent of the couple’s joint earnings (Anderson 2016). And many women without children, both single and married, work to support themselves and other family members. Thus, persistent earnings inequality for working women translates into lower pay, less family income, and more children and families in poverty.

This briefing paper summarizes analyses of the 2014-2016 Current Population Survey Annual Social and Economic supplement and uses statistical controls for labor supply, human capital, and labor market characteristics to estimate: 1) how much women’s earnings and family incomes would rise if working women were paid the same as comparable men (men who work the same number of hours, are the same age, have the same educational attainment and urban/rural status and live in the same region of the country); 2) how much women and their families lose because women earn less than similarly qualified men; 3) how many children would benefit from the increased earnings of their mothers; 4) how many children and families would be brought out of poverty if women received equal pay; and 5) how much the economy as a whole suffers from inequality in pay between women and men.

Findings from this analysis include:

• Nearly 60 percent of women would earn more if working women were paid the same as men of the same age with similar education and hours of work. Nearly two-thirds (65.9 percent) of working single mothers would receive a pay increase.
• Providing equal pay to women would have a dramatic impact on their families. The poverty rate for all working women would be cut in half, falling from 8.0 percent to 3.8 percent. The very high poverty rate for working single mothers would fall by nearly half, from 28.9 percent to 14.5 percent.
• For the 15.3 million single women—divorced, widowed, separated, and never married women living on their own—equal pay would mean a significant drop in poverty rates from 10.8 percent to 4.4 percent.
• Approximately 25.8 million children would benefit from the increased earnings of their mothers if they received equal pay.
• The number of children with working mothers living in poverty would be nearly cut in half, dropping from 5.6 million to 3.1 million.
• The United States economy would have produced additional income of $512.6 billion if women received equal pay; this represents 2.8 percent of 2016 gross domestic product (GDP).