DiversityJobs recently analyzed race, gender, and LGBTQ+ wage gaps. We now dive into ageism in the workplace along with age-related wage gaps and find that – compared with similarly-qualified men – women experience pay disparity that increases with age.
Retirement is tricky these days. You might be ready to retire at 65 and have the market crash in the middle of your plans to leave the workforce, throwing your future financial independence into question when it’s least convenient. Or you might successfully retire only to have to jump back into the workforce when you realize you won’t have the money to care for yourself as long as you imagined. Meanwhile, younger employees are using new tactics and phrases, and assume you’re on your way out the door.
Starting your career these days is tricky as well. Even with a college degree, your salary in your 20s might be lower than you imagined. Student loans and high cost of living might prevent you from taking certain positions or living in expensive areas of the country. You might find yourself stuck in an entry-level position because of endless decades-old bureaucratic machinery that doesn’t take into account what you do or your potential. You work at a breakneck pace only to find that higher-level positions never clear out, and promises of more money or a better title don’t materialize along with those extra responsibilities you agreed to take on. Meanwhile, you’re wondering what the high-salaried people in their 60s and 70s are really contributing to the company.
The aging workforce
The number of Americans aged 65 and older is projected to more than double to over 98 million by 2060. Globally, the number of people aged 60 and older will increase to 2 billion by 2050. With longer life expectancy – and thus people needing to stay in the workforce longer to make ends meet – we clearly need to find a way to treat older workers with fairness and dignity while still allowing room for younger generations to move through the ranks and be paid fairly.
It won’t be easy since age discrimination is rampant, especially in the U.S., despite it technically being illegal. But that’s because it’s hard to prove.
The U.S.’s 1967 Age Discrimination in Employment Act prohibits employment discrimination against people aged 40 years and older. Still, a 2018 AARP survey found that more than 90% of U.S. workers described age discrimination as “somewhat or very common.” For example, this law makes it illegal to ask someone’s age in a job interview. Yet, 44% of older job applicants said they had been illegally asked for age-related information by potential employers.
The Equal Employment Opportunities Commission has reported that age discrimination is the focus of over 20% of its discrimination cases each year.
We’ve even seen ageism written into social media algorithms for job-seekers. For example, Facebook has been accused of showing job ads to only younger workers.
Ageism in the workplace
Roughly 30% of people in all age groups told The Associated Press-NORC Center for Public Affairs Research that they saw no harm in letting people stay in the workforce longer, either for workers or for the U.S. economy in general. But 39% of workers aged 18-59 saw it as a bad thing for American workers (while only 19% of those over 50 did).
Simply put, being older does not mean employees contribute any less or deprive young workers of opportunities. Thinking otherwise assumes there are a fixed number of jobs in the economy, and there are not. Instead, jobs have increased along with the workforce.
From a macroeconomic viewpoint, older workers pose no threat to younger ones. But that hasn’t stopped people from holding on to this idea because they think simple arithmetic means that one worker leaving means one new position opening.
The age wage gap is far worse for women
The wage gap between older and younger workers depends largely on how one does the math.
On the one hand, age discrimination exists in many countries and traditionally disadvantages workers over the age of 50. It can lead to them being passed over for promotions or being excluded from continuing education activities, both of which can affect wages.
Data from the Bureau of Labor Statistics shows that American men don’t typically start to make less money until they’re over 65, whereas women’s median pay starts to decrease when they enter the 45-54 year age group. But even for college-educated men, the rate of pay growth slows down at age 49 (and age 40 for women).
However, in research funded by the Social Security Administration, economist Gary Burtless at the Brookings Institute saw a boost in the earnings of older workers compared with younger ones, thanks in part to an increasing Boomer generation with higher levels of education than those over 60 have had in the past. It’s also the case that highly educated people tend to stay in the workforce longer.
So while older workers face discrimination, they are still earning more – at least as long as they’re men.
Women suffer the most
Using individual-level data from the U.S. Census Bureau’s 2017 American Community Survey assembled by the Minnesota Population Center’s Integrated Public Use Microdata Series program, Business Insider did some math on the age pay gap among full-time workers in a 2019 article. They found that female workers had lower incomes than male workers at every age, but the gap was much higher for older women. In fact, they found the wage gap to be highest for women 57 and 58 years old – a whopping 25.8% – ironic, since this is when women would be company veterans and mentors to younger workers.
While some researchers have surmised that this gap is often tied to the types of jobs men and women hold, the AAUW’s data suggests that after age 35 median earnings for women are typically 74–82% of men’s across the board and that this holds true regardless of their education levels.
In her article on ageism and gender in Entrepreneur, writer and Chief Marketing Officer at Skillsoft Tara O’Sullivan asked what this meant for older female workers who face a sort of “double whammy” when it comes to thriving in the workplace. She pointed out that the National Bureau of Economic Research found that the resumes of older women get fewer callbacks compared to men of the same age as well as younger men or women. In industries from academia (which has its own issues because of the tenure system) to finance, old age is often perceived as a negative.
Add to this that when women are under 40, employers often assume that they will need to take time off to raise a family at some point. That can take them out of the running for certain upper-level positions. Then, when they’re older, it’s assumed that they took time off and therefore have less experience and are less qualified than men of the same age.
While some have suggested that one way to deal with this issue would be to encourage men to take family leave to eliminate any bias or other disadvantages about taking time off of work, research shows that countries with more liberal parental leave policies for women and men have more significant wage gaps for both groups. Because of this, the E.U. found that many fathers are unwilling to take advantage of the leave time. Moms will continue to bear the economic burden of having a family.
Older workers and the productivity myth
Even in jobs known to be labor-intensive, researchers have found that productivity does not decline with age, at least up to age 60. Not only that, but older workers can help train and ease the next generation into the workforce and serve as mentors as well as bosses to younger colleagues – but this is best done when both men and women can see older versions of themselves within a company.
Unfortunately, in many industries, it’s women who lack mentorship, and a company’s inability to provide it is a crucial reason they lose staff.
Maintaining the status quo of wage inequality and pushing women out of high-ranking positions negatively affects all women at a company. That’s not only wrong, it’s bad business.
Visit our workplace diversity hub for further reading relating to current challenges faced by women and people of color, wage gaps, successful inclusion strategies, diversity in corporate and government leadership, effective talent acquisition and diversity programs, and how artificial intelligence affects diversity outcomes.