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Ask the Experts: The Pay Gap Explained

President Obama recently noted that women make only 77 cents for every dollar that men earn — a statistic that has been endlessly debated. Here’s why we’re having the wrong discussion about the problem.

You’ve probably heard (or read) the most commonly cited stat about the wage gap: On average, women make 77 cents for every dollar a man earns — a ratio that hasn’t shifted since 2002. President Barack Obama wasn’t shy about using this figure (again) in a speech on April 8, otherwise known as National Equal Pay Day (the date marks how far into the following year women must work to earn what men earned in the previous year), when he issued two measures aimed at narrowing the gap among workers contracted by the federal government, noting that “it’s an embarrassment” that women with the same education in the same field earn less than men.

But the 77-cent figure doesn’t paint a complete picture of the wage gap, a fact that has been hashed out countless times in political speeches and the media. It derives from a simple calculation of U.S. Census Bureau data — the difference between women’s median salaries and those of men. It doesn’t take into account other variables that affect wages, like level of education, amount of work experience, or the fact that women are more likely than men to take jobs with lower salaries but more flex time — to better  accommodate child-rearing. Depending on how you add it up, the pay gap shrinks (or sometimes grows).

Nevertheless, it doesn’t disappear. Though its actual size may be tricky to pin down, the wage gap is real and signifies a problem that’s much bigger than a single statistic. So, NationSwell convened a panel of experts and asked them to explain the pay gap phenomenon, why it exists and what we can do to fix it. Read on for their thoughts, and then join the conversation by leaving your own ideas in the comments box below.

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1 What is the pay gap, and how bad is it, really?

The gender pay gap is the difference in earnings between men and women workers, expressed by a percentage of male earnings. More than 50 years after President John F. Kennedy signed the Equal Pay Act, which prohibited arbitrary wage discrimination against women, Americans are still struggling to even the playing field. At this point, we can’t even agree on how big the wage gap actually is.

 According to Jeffrey Hayes, study director at the Institute for Women’s Policy Research, a think tank in Washington, D.C., the 77-cent statistic that was recently cited by the president and has been constantly debated is our best estimate at summing up the wage gap, simply because it includes most earnings and most workers. This figure is based on national data collected annually by the government on full-time, year-round workers. It is the data set with the longest history, which makes it useful for tracking change over time and, unlike other measurements, includes self-employment, commissions and bonuses.

But just because Hayes believes the 77-cent statistic is the best overall representation of the issue doesn’t mean that it’s definitive. “We think that a number like this should actually be a starting point,” Hayes says. “We applaud people who go further and drill down into data, because it is complex.”

For example, if you compare weekly wages instead of annual pay, the gap between men and women shrinks to 19 cents. If you allow for total hours worked, since women often take more time off throughout their careers to care for children, or the fact that women historically occupy lower-paying fields, the pay gap shrinks to as low as 9 percent.

It’s not easy to do an apples-to-apples comparison of the wage gap, but a 2012 study by the American Association of University Women (AAUW), a nonprofit group in Washington, comes close. The study, Graduating to a Pay Gap, compared the earnings of male and female college graduates working full time one year after graduation. In their report, the authors found that a gap of 7 percent remained, even after accounting for factors known to affect earnings, such as occupation, college major and hours worked.

Though 7 percent may not seem like a lot to some people, Lisa Maatz, vice president of government relations at the AAUW, says it’s relative to a person’s privilege. “Would you like to give up 7 percent of your pay this year?” she asks. “For an upper-middle-class white couple, 7 percent may not seem like a lot. But for a single mom who is trying to make ends meet or get off welfare, it can make a big difference.”

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2 Why does the wage gap exist?

Claudia Goldin, Henry Lee professor of economics at Harvard University and director of the National Bureau of Economic Research’s Development of the American Economy program, offers two reasons that the pay gap exists. The first one is the persistent and biased belief that women and men have inherently different skill sets, and therefore are better suited for different jobs. It was an idea that came about during a time when society didn’t value women’s education as much as men’s — but that’s obviously not the case anymore. “On average, women today have higher college graduation rates, they attend college more than men, and they go to professional schools in equal degrees as men,” Goldin says. Still, some of those old prejudices — that men are better at math or women are more suited for humanities, for instance — linger.

The second (unsurprising) reason that some women make less today and will continue to make less in the future is because of family responsibilities, says Goldin. “I hate to say it, but in many cases biology is destiny,” she says. When a couple has a baby, it’s the mother not the father who has to stay home to recover — and breast-feed. Women naturally take on the larger caregiver role, which is why they tend to seek more flexible jobs even if they pay less. “Women may choose work environments in which they have more temporal flexibility,” Goldin says. “It may be that they work the same number of hours [as men], but they can slip away during the week for their son’s dentist appointment.”

3 Why does the pay gap matter?

The pay gap isn’t just a women’s issue — it’s a family issue. “For every woman who isn’t bringing home a fair paycheck, there’s a partner at home wondering why they’re having a hard time making ends meet,” Maatz says. After the recent recession, which resulted in a lot of men losing their jobs, it became evident that women’s wages were not only helping to keep families above water, but were also a main driver of economic recovery. In general, a smaller pay gap is good for business and the economy. “Women make 85 percent of all consumer decisions,” Maatz says. “Their ability to spend money where they think it’s helpful for their families obviously is going to be enhanced if they’re more financially stable.”

For Goldin, the question of why it matters goes even deeper. “In general, it matters because of fairness,” she says. “Women tend to have lower incomes and disproportionately support children, so it also matters for the well-being of the next generation. At the higher end, it matters for allocating our labor force and the skills of our economy to the right places,” meaning that a highly skilled woman may often be relegated to lower positions in the workforce simply because she needs to work fewer hours or cannot be on call 24 hours a day.

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4 Who is most affected by it?

Here’s something to think about: The 77-cent statistic is just an average for all women. The story changes completely when you take into consideration race and family dynamics. “When you start breaking it down, women of color and mothers end up much farther behind [the 77 percent statistic],” Maatz says. “White women, on the other hand, end up farther ahead.” Studies have shown that when a man becomes a father, his wages increase. But when a woman becomes a mother, her wages don’t, Maatz says.

As for race, compared with white men who work full time year-round, Asian women make 87 percent of male earnings; white women make 78 percent; black women make 64 percent; and Latinas suffer the largest gap at 53 percent. Why the difference? Well, black and Latino women tend to have lower education levels than other groups, which puts them at a disadvantage when they enter the workforce. But even though women of all races who have finished high school or college are likely to earn more, education alone doesn’t eradicate the pay gap. “It’s important to remember that even the tried and true solutions that our moms told us about — getting an education and working hard — aren’t going to solve the problem,” Maatz says.

5 So what will close the pay gap?

Just as the issue can’t be boiled down to one clean statistic, it can’t be resolved by a single initiative. Our experts agree that closing the pay gap will take a multipronged effort. “When we’re talking about pay equity, we’re talking about equal pay for equal work,” says Maatz. “We’re also talking about the fact that women tend to have jobs that pay less than men. And that’s not necessarily relative to their importance, it’s pretty much just because they’re done by women instead of men.”

 Our experts laid out various ideas on how to narrow the pay gap. First, the AAUW and Institute for Women’s Policy Research, among many other organizations, would like to see the Paycheck Fairness Act, which was blocked by Senate Republicans for a third time on April 9, pass through Congress. “[This bill] would close massive loopholes that have developed in the Equal Pay Act over the past 50 years,” Maatz says. It also allows for transparency about what people are making — or at least forbids penalties for discussing wages with colleagues — giving women and men a few more tools to use to their advantage when negotiating pay.

Second, more women need to seek out nontraditional, higher-paying jobs. In STEM fields, for example, Maatz says that while women still make less than men, they’re at least making more than they would in more traditional pink-collar jobs, such as nursing, teaching or secretarial roles. In addition, she says we should value these pink-collar jobs more — for both women and men. “Men in women-dominated jobs still make more than women in those fields,” Maatz says, “although they also make less than men in male-dominated jobs.”

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Raising the minimum wage is another way to help close the gap, as women make up the bulk of minimum-wage workers.

Furthermore, the experts say that we need to address the specific needs of the 21st-century workforce. “One of the reasons often cited why women get paid less or somehow choose jobs that pay less is that they want flexibility,” Maatz says. “But they don’t want less pay. They just want to be able to take care of their families.” Improving the country’s work-family policies to include benefits like paid sick days and paid leave can go a long way toward retaining women in the workforce. “These policies have been shown to tie women to the labor market more strongly, so they’re more likely to return to work faster and go back to the same employer [after having a baby], which also helps employers reduce turnovers,” says Jeffrey Hayes of the Institute for Women’s Policy Research.

Lastly, we need to let go of the assumption that women want to be primarily responsible for taking care of children. “Trust me, there are men who want to spend more time with their families, but it’s not supported at work,” Maatz says. This is a change that can’t be mandated. It has to happen organically. “I believe that in addition to having women lean in, we have to have men lean out,” says Claudia Goldin, the Harvard researcher. “If every man would say, ‘I don’t want to work 62 hours a week; all of us are going to work fewer hours — all of us,’ everything would change.”

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Erin Skarda is a freelance journalist and editor based in Denver, Colo. She is a former editor and writer for TIME.com.

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