Main Street Finance

Breaking Down Inequalities in Compensation Across the US

By Kat

Let’s start with the facts: salaries are implicitly tied to who we are. In an obvious sense, someone who performs at a higher level and produces better quality work should hypothetically be compensated more. But as we all know, it’s a lot more complicated than that.

Personal traits like your ability to negotiate and years of experience will inevitably largely impact the ultimate number on your paycheck. However, less explicitly related factors such as race and gender also play a role more so than we may hope.

To add to the complexity of the issue, a person’s physical geographic issue also correlates with their salary. Of course, you can expect to see a higher wage in a city or state with a higher cost of living. But on top of that, the inequalities previously mentioned such as the racial and gender pay gap are much more evident in some areas than others.

A recent study by the United Way of the National Capital Area analyzed the median income within demographics for each of the 50 states and major U.S. cities. While some variation in these types of gaps is to be expected, the degree of disparity within the disparities across states and cities is shocking.

Take for example the gender pay difference, i.e., the percentage more that men make compared to men when looking at the median income alone. Nationally, the average man makes approximately 25.4% more than the average woman. However, this ranges widely in cities like Fort Myers, Florida and Las Vegas, Nevada where the gap is 5.1% and 8.5% respectively to places like Baton Rouge, Louisiana and Detroit, Michigan, where the gap is as high as 48.5% and 35.5% respectively.

Similarly, when comparing median earnings for white people and BIPOC, the average pay disparity sits at around 26.9% in the U.S. The lowest this statistic gets is 4.3% in Phoenix, Arizona. The highest is a whopping 99.3% in Bridgeport, Connecticut.

Interestingly, there is inconsistency in the cities where the gender pay gap is lowest and highest and the cities where the racial pay gap is lowest and highest. It’s also interesting to point out the lack of a clear regional trend. While it seems that many of the most equitable cities are along the West coast, cities like Raleigh, North Carolina and Poughkeepsie, New York also make the list as most equitable.

It’s hard to determine a solution to this evident issue, though it’s clear that inequalities persist. It’s up to corporations and hiring managers to address these issues and reevaluate in order to create a fairer society.

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