Contract Provision: Meaning, Considerations and FAQs

Women have not been paid equitably for their work, relative to men's pay, for over a century. Laws have been passed in the U.S. prohibiting this type of discrimination, which has led to progress in closing the gender wage gap between men and women. But the results haven’t been equally felt by all women.

A substantial race-based income inequality exists in the U.S. primarily as a result of the intersectionality between the gender wage gap and wage gaps by race. LGBTQ+ people also face pay gaps.

These issues have come to the fore in early 2025 because several of President Donald Trump's executive orders call for the dismantling of diversity, equity, and inclusion (DEI) programs in the public and private sectors.

The Gender Wage Gap: A Long History

The wage gap between men and women has a long history. Those who know about Rosie the Riveter are likely well aware that during World War II, American women entered the workforce en masse, often into traditionally male-dominated fields, as men left to fight overseas. But this wasn’t the first great American war for which women stepped up to attend to needs on the home front.

During World War I many women took over for the men who fought in the “Great War.” When these new workers realized they were going to be paid less than a man for the same labor, several strikes ensued. During WWII demands for wage equality returned in force, with trade unions and women’s organizations becoming more heavily involved.

It took some 20 years for these demands to bear fruit with actual laws. The first was the Equal Pay Act of 1963, which included the requirement that men and women receive the same pay for “substantially equal” work in the same workplace. A year later Title VII of the Civil Rights Act of 1964 expanded on this legislative groundwork by banning compensation discrimination due to “race, color, religion, sex, and national origin.”

However, it took 46 years—and a Supreme Court dissent by Supreme Court Justice Ruth Bader Ginsburg—before the passage of the Lilly Ledbetter Fair Pay Act in 2009, which provided that every discriminatory paycheck, not merely the employer’s initial pay decision, constituted a new discriminatory act for which the worker could file a claim and recover up to two prior years’ worth of back pay.

Understanding the Wage Gap

According to the "Cambridge Dictionary," a wage gap is “the difference between the average pay of two different groups of people.” The gender pay gap, as defined by the Organisation for Economic Co-operation and Development, is “the difference between median earnings of men and women relative to median earnings of men.”

According to the latest U.S. Census data, women on average earned less than 83 cents for every dollar earned on average by men in 2023. That’s a 17-cent difference with a notable impact. Working women collectively earned nearly $1.7 trillion less than men in 2023, according to the National Partnership for Women & Families, which analyzed Census Bureau data.

Gender wage gaps can be attributed to a multitude of often-overlapping elements. For instance, although differences in education or geographic location do contribute to wage inequality, gendered pay gaps still persist in their absence. Additionally, many of the potential contributing factors that might seem independent of a worker’s gender—such as differences in experience or hours worked—can be the results of societal gender bias.

Traditional gender role expectations establish housekeeping and parenting as the primary responsibilities of women, which can leave them with fewer hours available to work and less industry experience than men. Benefits such as paid family leave and affordable childcare encourage mothers to return to work. But as of 2023 only 27% of civilian workers had access to employer-sponsored paid family leave. Additionally, persistent income inequality based on factors other than gender can limit which groups of women are able to afford services such as childcare.

Intersection of Race and Gender

The 17-cent wage gap isn’t experienced equally by all women; some women make even less as a result of additional discrimination against other demographic characteristics. In the fourth quarter of 2024, for example, Black and Latino/Latina women both had lower weekly median incomes than White women, with Latino/Latina women earning the least of any group. But Asian women had a higher weekly median income than White, Black, and Latino/Latina women for this period. They also earned more than White men, though women across all four of these racial groups earned less than men of their same race.

This wasn’t always the case. Between 2000 and mid-2019, although Asian women earned more than all other women, they had a lower weekly median income than White men. Asian men were the only demographic to earn more than White men in both the fourth quarter of 2024 and from 2000 to 2021.

These statistics, however, rely on average values and don’t paint an exact picture. For example, not all Asian American women earn more than White men: In 2022, for every dollar earned by White men, Filipino American women earned 79 cents, Native Hawaiian women earned 61 cents, Tongan American women earned 52 cents, and Nepali American women earned 48 cents.

Gendered Opportunity Gaps

Education reformers refer to an opportunity gap as “the ways in which race, ethnicity, socioeconomic status, English proficiency, community wealth, familial situations, or other factors contribute to or perpetuate lower educational aspirations, achievement, and attainment for certain groups of students.” Outside of the education field, the same basic concept also applies to the obstacles workers face as a result of their demographic characteristics.

Teachers and other kinds of mentors often point to the importance of networking, which provides participants with a kind of social capital (i.e, a positive product of human interaction for a person’s career). Having friends, family members, or other social connections in high places typically makes securing job opportunities much easier. Because this social capital isn’t evenly distributed, it creates an opportunity gap.

Myriad other factors contribute to the overall opportunity gap. One of the more prominent is what’s known as “occupational segregation,” which is “a group’s overrepresentation or underrepresentation in certain jobs or fields of work,” as the Washington Center for Equitable Growth puts it. In 2020 the Center found that fields dominated by men tend to be higher-paying ones, regardless of skill or education level, a finding that was echoed in a 2024 study by the Federal Reserve Bank of Philadelphia.

Meanwhile, societal pressure and structural sexism may influence the career paths that some women take. In particular, Black and Latino/Latina women, regardless of education, are often concentrated in lower-paying jobs compared with White women operating at a similar skill level. For instance, a 2021 study by the Pew Research Center indicates that most women of color continue to have much lower representation in lucrative STEM careers.

In addition, sexism and misogyny still exist in the job market. Even though the Equal Pay Act made gender-based discrimination illegal, it can still be commonplace. Employers may continue to discriminate by relying on a person’s salary history during hiring, which perpetuates pay disparities. To thwart discrimination, 21 states in recent years have banned the practice of employers asking job candidates about their salary history.

Transgender and Nonbinary Wage Gap

In addition to facing discrimination for their gender identity and/or sexual orientation, LGBTQ+ individuals may also contend with wage gaps for their identities. The intersection of these two socioeconomic divides can result in unique circumstances for workers outside the gender binary. For instance, the Human Rights Campaign reports that transgender men and women made 70 cents and 60 cents, respectively, for every dollar the “typical worker” (e.g., the median wage for all workers in the United States) earns. Additionally, a 2008 study found that the average earnings for transgender women fell by approximately 32% after transitioning. Conversely, the average earnings for transgender men actually increased post-transition, albeit only by 1.5%.

Several transgender men in the same 2008 study reported gaining additional authority and respect at work following their transition. Other researchers found that transgender women had trouble maintaining employment, with more recent data indicating that many leave high-paying jobs for lower-paying ones due to workplace discrimination. Some transgender men, however, have reported having trouble being accepted at work, particularly if they lacked an “undisputed masculine appearance.”

The 2022 U.S. Transgender Survey found that more than one third (34%) of transgender individuals were experiencing poverty. It also found that 11% of respondents who had a job in the previous year were fired or forced to resign, lost the job, or were laid off due to their gender identity or expression. And the unemployment rate among the survey respondents was 18%.

The Human Rights Campaign also found that nonbinary, genderqueer, genderfluid, and two-spirit workers made 70 cents for every dollar the typical worker earns. In terms of the opportunity gap, a 2016 study found that nonbinary individuals assigned male at birth typically faced hiring discrimination, while those assigned female at birth more often experienced discriminatory treatment within their workplaces. Additionally, nonbinary people as a whole were more likely to have been denied a promotion, though they generally have fared better than transgender women.

The Effect of Sexual Harassment

Although inappropriate sexual remarks and physical advances in the workplace are prohibited by Title VII of the Civil Rights Act, much like the wage gap itself, sexual harassment is still commonplace. Though experiencing it isn’t exclusive to women, it disproportionally affects them. The U.S. Equal Employment Opportunity Commission found that approximately 83.7% of the 6,201 sexual harassment charges filed in 2022 were filed by women, compared with 16.3% filed by men.

Sexual harassment can not only emotionally harm a woman, it may also negatively impact her earnings. For instance, a fact sheet published in 2023 by the National Partnership for Women & Families found that women in workplaces where sexual harassment isn’t reported may be less comfortable negotiating salaries and raises. Incidents of sexual harassment in the workplace often go unreported due to fears of retaliation, termination, or inaction. In a 2018 Morning Consult survey, 46% of women who reported sexual harassment to their bosses or human resources departments were dissatisfied with the results.

Sexual harassment can affect job performance, workplace advancement, and career choices. Women who experience it in the workplace often report heightened anxiety and depression, which can affect productivity and overall performance. According to a 2019 report from the American Association of University Women, 38% of surveyed women experiencing workplace sexual harassment reported that it contributed to their decision to leave a job early, while a 2018 New America study found that it could push women out of entire industries, amplifying occupational segregation.

Additionally, women of color, LGBTQ+ women, and women with disabilities may face both greater financial consequences and an increased risk of retaliation, doubt, victim-blaming, and other prejudiced responses for reporting sexual harassment.

Gender Gaps on a Global Scale

Each year the World Economic Forum studies and indexes worldwide gender-based disparities as part of its annual Global Gender Gap Report. In addition to its overall assessment of wage and opportunity gaps, the 2024 Global Gender Gap Index comprises four comprehensive subindexes, each measuring a different type of gender disparity across 146 countries. These include:

• Economic participation and opportunity: This index measures wage equality between women and men for similar work, plus the difference in estimated earned income, labor force participation, and the number of professional and technical workers as well as legislators, senior officials, and managers between men and women. The economic participation and opportunity gap is the second largest, at 39.5%.
• Educational attainment: This index measures the difference in net primary, secondary, and tertiary enrollment rates as well as literacy rates between women and men. The educational attainment gap is the second smallest, at 5.1%.
• Health and survival: This index measures the difference in healthy life expectancy between women and men as well as the sex ratio at birth. The health and survival gap is the closest to closing, with only 4.0% remaining.
• Political empowerment: This index measures the difference between the number of women and men in parliament seats and at the ministerial level, as well as the number of years women have served as heads of state over the past five decades. The political empowerment gap is the farthest from closing, with 77.5% still remaining.

Outside of topics that have already been covered in this article, these subindexes measure several additional gender discrepancies that aren’t always considered when discussing the wage gap, despite the socioeconomic impact they can have on the personal level and conditions that enable discriminatory income differences. For example, if women are denied a higher quality of healthcare, it may impact their ability to work should they become sick or injured. Additionally, it could prove difficult to enact effective legislative changes to reduce an income gap if those with political power benefit from the current status quo.

Although each country is given its own score, the global average values make it easier to quantify how the more abstract opportunity gaps have changed over time. Since 2006, the shift in political empowerment has jumped 8.3%. The only index that has declined in the same period is the health and survival index (-0.2 points).

The Bottom Line

Although the gender wage gap has narrowed over the years, it will never completely close without coordinated efforts that address the many factors and biases that continue to enable its existence. Companies have to get involved in this by ensuring that all employees are being paid a fair wage for their labor and the workplace itself is a safe environment for all women.