A Look at the Gender Pay Gap in 2020
Which states offer the best pay for women?
In honor of Women’s History Month, we at Business.org thought we’d devote a little time to a subject that is near and dear to the interests of many women in business: the gender pay gap.
Though equal pay for equal work has been federally mandated since the passage of the Equal Pay Act of 1963, actual earnings for men versus women show that gender pay disparity is still an overwhelmingly common trend within the United States.
Because the gender pay gap has such serious consequences for women in business (especially female entrepreneurs), we did a little digging to find out which states offer the narrowest gender pay gaps in the country—and whether we’ve made any significant progress toward closing those gaps in the last decade.
So . . . how are we doing?
According to the most recent American Community Survey (ACS), nationwide median earnings for women over the age of 16 average out to about 80.1% of the median earnings for men in the same age group.1 In other words, women in the US workforce are making roughly $0.80 for every dollar earned by their male colleagues.
It’s not all doom and gloom, though. Compared to the 2010 ACS, the US has actually narrowed the pay gap by a whole 2.6 percentage points. In fact, most states in the country have shown improvement.
That being said, the US isn’t doing quite as well as many experts believe we should be. In 2016, the pay gap for women over the age of 25 actually widened by about 2.2 percentage points.1 While pay disparity has been improving since then, we still haven’t made up that ground, and some experts are doubtful it’s possible given the recent rollback of federal rules originally designed to further shrink the gender pay gap.
- California has the lowest pay gap in the country. Women in the Golden State make roughly $0.88 for every dollar earned by men. The state has also narrowed its pay gap by 4.6 percentage points since 2010.
- Women in Washington, DC, boast the highest median earnings. DC women earn a median of $70,911 per year. However, DC’s also seen some of the worst regression in pay disparity. In fact, with a -4.2 percentage point difference compared to 2010, our nation’s capital has backslid more than any other area in the country apart from South Dakota.
- Most of the top 10 states are located along the East Coast. New York, DC, Maryland, Vermont, Florida, and Delaware form the bulk of our top 10, along with outliers California, Nevada, Arkansas, and Oregon.
- Nearly every state has narrowed its gender pay gap since 2010. The only areas where pay disparity has gotten worse are South Dakota, DC, New Hampshire, Alabama, North Dakota, New Jersey, and Iowa.
- Arkansas is the most improved. The state has narrowed its pay gap by an incredible 10.5 percentage points—the biggest improvement in the nation. That being said, the state’s median earnings for women are still one of the lowest in the nation at just $36,042 per year.
- Women should avoid West Virginia and Louisiana. The Pelican State has the widest gender pay gap in the nation, with women making just $0.70 for every dollar made by men. West Virginia, meanwhile, offers the third-worst gender pay gap plus the lowest median earnings for women: $32,778 per year.
For our rankings, we used data from the 2018 American Community Survey (ACS)—the most recent year for which data is available.
We compared the median earnings of men and women across all 50 states plus the District of Columbia. This means we only looked at income derived primarily from job wages and salary.
Finally, to determine each state’s progress between 2010 and 2018, we evaluated the difference in percentage points between women’s earnings as a percentage of men’s earnings. Here’s where we landed:
|Rank||State||2018 women's earnings as a percentage of men's earnings (a.k.a. pay gap)||2010 to 2018 percentage points difference|
|3||District of Columbia||87.3%||-4.2|
Why is equal pay important for small-business owners?
While pay discrimination has negative consequences for every working woman, the consequences of the gender pay gap hit female entrepreneurs especially hard. Most female small-business owners don’t start their businesses until they’re 45 years old, meaning they’ve likely already received lower pay than their male counterparts for roughly two decades. That limits female entrepreneurs’ access to startup capital.
Less startup capital also affects female entrepreneurs’ ability to secure outside financing for their business. According to a report from the US Senate Committee on Small Business and Entrepreneurship, female business owners account for only 16% of conventional small-business loans—even though women own roughly 30% of all small companies.2 What’s more, the report found that women account for only 4.4% of the total dollar value of loans for all sources.
Translation: women often start with less money, so fewer women get approved for loans. And the women who do get approved get less funding—all because gender pay disparity is still an ongoing problem.
We also did a little research into how gender pay disparity changes with education level. The good news? Women with college degrees do experience less pay discrimination than women with no college eduction.
The bad news? Once women get a bachelor’s degree, the gender pay gap actually widens—and it gets worse with a professional degree.
In other words, women who haven’t completed high school make only 63.89% as much as men with the same education level. That pay disparity gets better with a high school diploma and peaks for women with an associate’s degree or some college—who make roughly 69.18% as much as men with the same education level.
But once women earn bachelor’s degrees, the pay gap widens to 68.45% compared to men with bachelor’s degrees. And women with professional degrees make only 67.6% as much as men with professional degrees; that’s still a narrower pay gap than women with only a high school diploma, but not by much.
Fortunately, that doesn’t mean higher education doesn’t pay off for women. Women with advanced degrees are able to secure pay increases that bring them a lot closer to the national median earnings benchmark. But even with a professional degree, the median earnings for women still fall short of the national median.
To sum that all up, education does help women earn more money. But even with an advanced degree, women still make less than the national median—and significantly less than men with comparable degrees.
Despite some setbacks along the way, the United States is inching closer to achieving pay equality for women—but we still have a long way to go.
Some areas, like California and Washington, DC, offer women higher-than-average salaries that are more on par with the salaries of men. However, some states (ahem, South Dakota, New Hampshire, Alabama, North Dakota, New Jersey, and Iowa) have actually regressed in the past decade, with higher gender pay disparity today than they had in 2010.
The gender pay gap is also worryingly wider for women with college degrees.
Clearly, there is work to be done. But if our research proves anything, it’s that we’re moving in the right direction.
Are you a female entrepreneur? You may be fighting a biased lending system, but that doesn’t mean financing is out of your reach. Check out the best small-business loans for women to get a leg up.
- American Community Survey, “Median Earnings in the Past 12 Months (in 2018 Inflation-Adjusted Dollars) of Workers by Sex and Women’s Earnings as a Percentage of Men’s Earnings by Selected Characteristics”
- U.S. Senate Committee on Small Business and Entrepreneurship, “21st Century Barriers to Women’s Entrepreneurship”