WNBA Pay Disparity Puts Spotlight on Retirement Gender Savings Gap

With the WNBA draft garnering nearly 2.5 million viewers on Monday—its highest viewership to date—a decades-long gender pay gap in professional basketball is being put under a microscope. 

Caitlin Clark, who became the leading scorer in NCAA basketball history and was taken as first pick in the WNBA draft this week, will make a $76,535 salary this year. In comparison, the top NBA pick will make $10.5 million—137 times more than Clark. 

However, this gender pay disparity extends well beyond the basketball court, as women in the U.S. working full-time earn 84 cents for every dollar men make, according to the latest numbers from the Census Bureau. The pay gap not only sets women behind in their day-to-day finances, but it also perpetuates the gender gap to retirement savings. 

The Snowball Effect of Low Pay 

When women are earning less in salary, it snowballs into retirement, as most people save a percentage of their income each paycheck for retirement, according to Fidelity Investments. Ultimately, if someone is earning less, they will contribute less to their retirement account. And not only is the contribution amount potentially lower, but over time, this will likely impact the potential for compounding growth. 

According to research from the Government Accountability Office in 2020, women reported annual contributions to retirement accounts that were around 30% lower than men’s contributions. 

Because most women have less income to maintain their standards of living in retirement than they did when they were working, the GAO also found that, on average, women are increasingly relying on Social Security in retirement as their main source of income.  

Bridget Bearden, research and development strategist at the Employee Benefit Research Institute, says EBRI has found that there is a gap in both account balance and contribution rates between men and women.  

”When you compound an initial starting [salary], that’s lower pay [and] that’s a lower contribution rate, all of those [factors cause] women [to] have less of an accumulated balance going into retirement,” Bearden says. “And then once they’re in retirement, they’re more likely to be experiencing a myriad of financial stresses. It starts as soon as [women] graduate college, and then it just persists throughout their lifespan.” 

Cindy Hounsell, president of the Women’s Institute for a Secure Retirement, also notes that 69% of people in the low-paid workforce are women.  

“All of these jobs that we [rely on] desperately like home health aides and caretakers… these are women’s jobs where they get paid less,” Hounsell says. 

Lower-paid workers are also more likely to not have access to a workplace retirement plan, which once again, can exacerbate the gender retirement savings gap if these lower-paid jobs are primarily made up of women. 

Investing, Longevity Issues 

Hounsell’s research also found that, on average, women who start saving at age 20 have to work until age 68 to make what men would earn by age 60. The disparity is worse for Black, Hispanic and Native American women who would have to work until age 80, or even up to 90, to earn what men would make at age 60.  

If the pay gap continues to persist, many women may be forced to delay their retirement, especially because women also tend to live longer. According to Fidelity, on average, women live five years longer than men, and 81% of people 85 and over are women.  

This means that many women will likely be alone in retirement and will need to care for themselves financially. Longevity can also impact other aspects of retirement including higher health care costs, the need for a higher Social Security benefit and how long savings will need to stretch to cover living expenses.  

Not only is there a significant pay gap, but there is also an investing gap between men and women. Fidelity found that women are more likely to keep extra money—meaning anything outside of retirement or an emergency fund—in cash instead of investing it.  

“Not only is cash missing out on potential growth, but it isn’t even keeping up with inflation,” the Fidelity research stated. 

The Public Retirement Research Lab further found in its study, “A Gender Lens on Public-Sector DC Savings Behaviors,” that men took on greater equity risk in their portfolios, having a greater allocation to equity funds relative to women across all age groups. This may mean that women are missing out on potential growth opportunities by investing more conservatively in their retirement portfolios.  

The Motherhood Penalty 

Another factor that plays into the widening retirement gender gap is motherhood. More than 75% of caregivers are women, first for children, then later for ailing parents or a partner, according to Fidelity. When someone needs to leave the workforce to take care of a child or loved one, it can lead to lost salary and wages, as well as reduced retirement savings, as many will forgo contributions to their workplace plans and will not receive employer matches. 

Laura Quinby, a labor economist at the Center for Retirement Research at Boston College, refers to this phenomenon as the “motherhood penalty.” With the cost of childcare consistently on the rise, for many women, putting aside money for the future becomes less of a priority than budgeting for their families’ everyday needs.  

Bearden emphasizes the importance of employers offering paid family leave benefits, which she says more and more companies are starting to include in their benefits packages. 

“The more that employers are offering paid leave benefits, the better off women will be overall,” Bearden says. “It’s going to take many years to close these gaps… It’s not just the achieving pay equity, it’s also achieving universal coverage in terms of paid leave or some sort of federal paid leave program.” 

Whether its women in professional sports or women working as home health aides, the issue of the gender pay gap is universal and something that employers should be attuned to, as the research clearly shows compensation is inextricably linked with retirement savings.