Race, Gender Pay Gaps Significant for Millennials

New report shows a large gender pay gap, racial differences, student loan debt and uneasiness about retirement for millennials.

A study released this month by Wells Fargo (No. 12 on the 2016 DiversityInc Top 50 Companies for Diversity list) found a gender wage gap, “unmanageable” student loan debt and racial disparities when it comes to wealth and salaries for millennials.

The report, “Majority of Millennials Say They Won’t Ever Accumulate $1 Million,” reveals that 64 percent of working millennials ages 22-35 do not believe they will save $1 million for their retirement savings. And, just as in generations before, inequalities emerge when numbers are broken down by gender and race.

Millennial Women Earning Less Than Men

The median salary for millennial men is $39,100 — compared to $28,800 for millennial women and $33,800 for the general millennial population. Therefore, the study estimates that the wage gap is larger for millennial women than for the general population. According to Catalyst, in 2014 women earned an estimated 79 percent of men’s salaries annually.

Related Story: Massachusetts Take Historic Step Toward Equal Pay

As income inequality trickles down to yet another generation of working women, the side effects do as well, the study reveals:

Men Women
Report living paycheck to paycheck 43% 54%
Finances stretched “too thin” to save for retirement 50% 61%
Don’t believe they can accumulate $1 million in savings 56% 73%
Have already started saving for retirement 61% 56%
Average percent of income saved 7.3% 5.7%

The persistence of the wage gap makes it that much more important for women in particular to save for retirement, according to Joe Ready, director of Institutional Retirement and Trust for Wells Fargo.

“The wage gap between male and female millennials clearly exists, and it’s a real issue,” he said. “It’s important that young women focus on saving and investing now, as this strategy will help put them in good standing for their retirement years.”

Hispanics Earn Less, Support More People

The racial gap — illustrated in salaries of all generations — persists among millennials as well. Hispanic millennials reported an annual income of $31,100 — 92 percent of the general population.

Hispanic millennials reported less student loan debt than the general population. The median for Hispanics is $10,267, compared to $19,978 for everyone else.

However, Hispanics reported other financial obligations different from the general population of millennials — as well as increased optimism:

“Nearly a third (30%) of Hispanic millennials say they are currently providing financial support to two or more generations of their family, versus 14% of general-population millennials. Despite this difference, Hispanic millennials are more optimistic about surpassing the lifestyle of their parents, with 63 percent saying they will ‘do better than their parents,’ in comparison to 49 percent of general-population millennials.”

Related Story: Survey: Black, Latino Parents Believe College Vital for Success

In addition, the study found some differences between Hispanics saving for retirement versus focusing on daily finances:

Hispanic Millennials General Population Millennials
Have a monthly budget 66% 54%
Are saving for retirement 52% 59%
Consider saving for retirement a “high priority” 42% 35%

While more Hispanics consider it important to save for retirement, they are not saving at the same rate as millennials overall.

Related Story: Survey: Latinos in U.S. More Confident in Financial Future Than Most Americans

Further Findings

In addition to the gender and race breakdowns, the survey also found:

• 75 percent of millennials have “unmanageable” student loan debt

• 41 percent have not started saving for retirement; of this, 64 percent say they are not earning enough money to save

• The majority of millennials are hesitant to invest their money for fear of losing it in the stock market

• Nearly three-quarters of millennials do not believe social security will be available to them when they retire

• Only 44 percent of millennials say they are “fully employed in their preferred career”

• 63 percent of millennials value having a job they love over a high salary with benefits

• 40 percent would like to work for one employer over the course of their career

Is $1 Million Attainable for Women and Hispanics?

Despite the racial and gender gaps — and low level of confidence among millennials overall — Ready believes saving $1 million for retirement is an attainable goal. The key is to start saving early and to slowly increase the amount overtime.

“Millennials may not realize that if they start saving consistently by their mid-twenties — and stay invested for the duration of their working years — they will likely accumulate $1 million by the time they retire,” he said.

But this assumption may not apply to all millennials equally, based on the numbers. The study provides a mathematical breakdown for how millennials can earn $1 million over the course of their careers. However, the equation assumes they are starting with a $32,000 annual salary at age 25 — which is below the median salary reported for women and Hispanics. Further, the equation “assumes the earner receives a 2% salary increase annually” — which leaves women and Hispanics on an uneven playing field for the duration of their savings journey.

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6 comments


  • Wow, these salary numbers are shockingly low. Doesn’t seem like it’s hardly enough to support one person, let alone a family in most places in the US!

    • I did not move out of my mother’s house until I was 30 (I’ll be 32 in December). I’d earned a masters degree in 2009 and had to return home jobless. By the time I left my mother’s home I was finally jumping from a few hundred dollars under $35k to $50k. Most of my friends who live on their own only did so successfully with a roommate or a partner. There are very few of us who can maintain a household on our own. I am blessed to now say I can after living at home credentialed for over 5 years!

      It was a really hard time in my life. I struggled with feelings of inadequacy and failure. It is so very common though. I want to end this by saying I identify whole heartedly that I am happy with my profession and that is more important than the money. I work in the nonprofit sector.

  • Hispanics and women the only groups worth reporting on?

    Asians, folk from the Indian subcontinent, recent-immigrant African and Caribbean blacks?

    And “Nearly three-quarters of millennials do not believe social security will be available to them when they retire”?

    The non-believers are correct.

    • I concur.

      We have gone from six workers per retiree after WW2 to two workers per retiree by 2025.

      Social Security, Medicare and Medicaid as we know it are doomed. We can’t afford to be bigots anymore.

      Dramatic immigration reform is necessary, along with a strategic overhaul of public education for people already here. Law enforcement must be squared away and this asinine war on drugs must end.

      Glad you’re still kicking, haven’t heard from you in awhile.

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