Gender Pay Gap: Earnings Peak At Different Ages For Women And Men

Understanding what drives the gap in wages

Since 2015, PayScale has studied the gender pay gap and has found persistent differences in men's and women's earnings. We have shown that there are various factors that contribute to the gender pay gap. For example, women of all races and ethnicities are less represented at higher levels of organizations than white men.
 

In the job search process, women - particularly women of color - benefit less frequently from employee referrals than white men. Since employee referrals can have a positive impact on pay and employee engagement, which in turn is a factor in performance, this also impacts pay for women of color. Lastly, we have found women of color are less likely than white men to get raises when they ask for them.

In this piece, we explore another aspect of the pay gap. Among workers with at least a bachelor’s degree, women’s earnings peak much sooner than men’s. Given that they also start their careers earning less and most of their wage growth is early on, this means women’s peak earnings are significantly lower than men’s. Women reach their peak career earnings – a median of $66,700 - at age 44 compared to men who reach their peak – a median $101,200 – at  age 55. This large difference in when wages max out is consistent with our previous research.

Looking at earnings profiles of different groups helps us understand why there are gaps in wages. The timing of when earnings peak, along with a significant body of literature, shows how decisions to have children differently impact the earnings of men and women. It also highlights the need to design benefits and policies that create opportunities, and not hindrances, for people with families.

In this study, we used a sample of more than 1.4 million workers who took PayScale's salary survey between April, 2016 and April, 2019. These respondents reported their gender in addition to information about their occupation, location and other factors that impact pay.

We restrict our data to those between the ages of 22 and 60 to avoid small sample sizes when we look at the data by occupations. Since our data tend to over represent white-collar workers, we restrict our analysis to those with at least a bachelor's degree.

When it comes to pay, women and men do not start their careers on even footing. The median income of women age 22 is $40,400 versus $52,500 for men. This $12,100 difference in wages starts to shrink as women's wages initially grow faster than those of men. However, the gap in earnings starts to grow again at age 29 as the growth rate of women's wages starts to slow down while men's wages continue to steadily increase.
 

 
For women aged 37-38, earnings growth flatlines, similar to what we have found in previous research. The median wage for 38-year-old women is $64,000, which is roughly equivalent to what 27-year old men earn. Meanwhile, the median wage for 38-year-old men is $86,500, $22,500 more than the median wage of women in the same age group.
The growth rate of median wages picks up somewhat after the age of 38 before starting to flatten out again. Women reach their peak wages at the age of 44. At this age, they earn $66,700. Men, on the other hand, reach their peak wages at the age of 55, and they earn $101,200. The difference in men and women's peak earnings $34,500.

The divergence we see in the growth rate of earnings happens between the ages of 29 and 38, when those with at least a bachelor's degree tend to start having children. This suggests that a key factor driving the divergence in earnings growth is the impact having children has on men and women's career decisions and the corresponding "motherhood penalty" and "fatherhood premium.” Specifically, after having children, women tend to reduce the number of hours they work outside the home, while men tend to either work the same number of hours or increase the hours they work^[i].

Family demands may be a key factor driving the divergence of earnings growth for men and women. This becomes clearer when we look at which occupations^[ii] have the largest gaps in wage growth. "Greedy" jobs, i.e. those that pay a premium for working long hours, have the largest divergence in the growth rate of wages for women and men. They are also some of the highest paying occupations. This point is painfully clear when we look at legal and management occupations.  


 
Legal occupations reward long hours and perpetual availability. A study by the American Bar Association showed that women lawyers, particularly women of color and mothers, face significant bias in the workplace. Legal occupations by far have the largest divergence of men and women’s wage growth. Fifty-six-year-old men in legal occupations make the most money. Their median earnings are $168,00, 359 percent higher than the median earnings for 22-year-old men in these occupations. Thirty-five-year-old women in legal occupations, on the other hand, earn more than women in any other age group. Their median income is $75,000, an increase of 114 percent over 22-year-old women. The difference in the peak income for men and women in legal occupations is $93,800, or $18,800 more than women make at the height of their careers.


 
Management is another job area that is considered "greedy" since it requires long hours and face-to-face time, even if it is via video-conferencing software. In management occupations, men at their peak earn $125,300, while women at their peak earn $84,100, a difference of $41,200. However, unlike other occupations this is not because men's wages peak much later than women's. Wages for men in management positions max out at age 55, while for women they do at 54. Most of the difference is due to large differences in wage growth starting at the age of 33.

The divergence of men and women's wages in management jobs is significant, not just because of the considerable difference in earnings, but because it also represents that women do not climb the corporate ladder at the same rate that men do. In our study of the gender pay gap, we found 11 percent of men 45 and older are directors and 8 percent are executives. For women, these numbers are 8 percent and 3 percent, respectively. No doubt, much of the divergence we see in the earnings of men and women in management occupations is due to women not making it to the highest levels within organizations.

The gap in wages between men and women is driven by many complex and related factors. By looking at wages for different age groups we can better assess the issues workers face. The fact that wages for women tend to slow down for those in their late 20s, suggests that starting a family is likely a key element of the gender pay gap. This is supported by our occupational data and other research that shows that women in “greedy” occupations take a large hit to their wages compared to their male peers, even those who also have children. Our data highlights the need for family-friendly policies such as paid family leave and flexible schedules if the pay gap is to be closed.

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