Major Factors That Influence Pay Disparity in Retail

John Krautzel
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Pay disparity made headlines after the Great Recession ended when people protested against Wal-Mart's low wages and scheduling practices. The retail giant listened and raised the minimum wage of its employees. Despite the change, many experts believe the pay disparity in retail continues to keep the lowest-paid people in poverty.

Several factors influence the pay disparity among retail workers. Ethnicity and gender affect how much people earn in the retail sector. Poverty also keeps people from making more money at some of America's largest store chains. Unfortunately, there are no easy solutions to solve the pay disparity issue in retail wages.


Women make up more than half of the American workforce at large retailers. However, the wages they make and the hours they work differ from men. A study from Demos, published in June 2014, says the average woman working in retail earns $10.58 per hour. By comparison, men earn an average of $14.58 per hour. A single mother with two children making $10.58 every hour usually doesn't make enough money to stay above the federal poverty line.

Women also face erratic schedules and lack of benefits. Single mothers have to find day care for children, which costs money and reduces the amount of money for other necessities. Mothers also need to take off time when children get sick, which means time off of work with fewer hours of pay. Erratic schedules do not bode well, considering women need to work 103 more days per year to equal the pay men make in retail.

These factors combine to make it difficult for single mothers to go to college, earn degrees and get higher-paying jobs in general. One Demos study claims that if women earned an extra $1 per hour, retailers could increase sales by $4 to $28 each month per person. A 25 percent increase in pay leads to 2.6 percent higher sales. Therefore, reducing the disparity in wages helps retailers. Pay disparity in retail costs women $40.8 billion per year cumulatively, but this group of workers is not the only one that faces a large pay disparity in retail.


Another Demos study shows how blacks and Hispanics rate compared to whites in the retail industry. Full-time black and Hispanic sales clerks earn just 75 percent of whites in the same roles. This disparity costs these minorities $7,500 per person per year. Blacks and Hispanics are also more likely to work part time versus full time.

One reason for the pay disparity among ethnic groups includes on-call scheduling. Blacks and Hispanics are much more likely to have on-call schedules where managers call them and they come into work without a set schedule. Inconsistent schedules reduce the chances of attending classes, finding regular day care and working multiple jobs.

If these retail workers earned $15 per hour, the rate of poverty for retail workers in the United States would be cut in half. This reduces the strain on government benefits, food stamps, health care and housing programs that help people who live in poverty. Reducing pay disparity eases the burdens of everyone, not just those who do not make a lot of money. Unfortunately, pay disparity can perpetuate poverty among certain ethnic groups.

Vicious Cycle of Poverty

Pay disparity in retail creates a vicious cycle of poverty. About 7 percent of white and Asian retail workers are at or below the poverty line, but the rate increases to 13 percent for Hispanics and 17 percent for blacks. Therefore, low wages for retail workers affect blacks and Hispanics disproportionately compared to other demographics.

The reasons for poverty are numerous. People who work flexible, or on-call schedules, may not be able to show up to work at a moment's notice. Blacks and Hispanics who have to take public transportation to work may not get there in time to take advantage of more hours. The lack of transportation also keeps impoverished demographics from attending training opportunities that could increase pay.

Retailers across the country discriminate, either overtly or subconsciously, against blacks and Hispanics in hourly wages. In 2013, the median hourly wage for all retail sales positions was $14.53. Whites earned $15.53 per hour. However, blacks earned just $12.20 per hour and Hispanics earned $12.45 per hour. Lower wages, combined with poverty, keep certain demographics in a vicious cycle of poverty. This is because these workers need better pay to get out of poverty, but poverty keeps them from more hours and getting to work on time so they can make more money.

Promotions in retail also affect blacks and Hispanics disproportionately because of credit checks. Some employers run credit checks as part of a screening process for higher positions in retail. This creates a hiring bias against people of color. Blacks hold 12 percent of all retail sales positions but just 8 percent of first-line supervisor jobs.

Pay disparity in retail takes many forms. However, scheduling and part-time work cause wage disparity among women and ethnic minorities on the lower rungs of the career ladder. Once retailers realize that everyone benefits from equal pay and equal promotions, the wage disparity among American retail workers may improve so more people can make better lives for themselves.

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  • Nancy Anderson
    Nancy Anderson

    @Jane thanks for your comment. Personally I don't see retailers ever closing the wage disparity gap. It's been there for years and will probably continue to be there long after I am gone. Whether due to gender, ethnicity or any other reason, pay disparity will probably always be the norm - at least in our country. As for retailers stepping up to the plate - don't see it happening.

  • Jane H.
    Jane H.

    It amazes me that after all these years, we're still dealing with wage disparity issues in this country. I've read that Walmart actually considers potential government benefits as part of its rationale for keeping wages low. If they do it, then probably other big companies do it too. Given that the data suggests wage parity and higher wages overall are good for companies on many levels, what do you think it will take to get retailers to acknowledge these facts and finally close these gaps?

  • Shannon Philpott
    Shannon Philpott

    The article mentions single mothers factoring into disparity due to responsibilities of going it alone, but I think that we are also seeing a surge of single dads with these same responsibilities. However, the pay disparities still exist. I'm hopeful that as gender equality efforts are successful in other aspects of society, pay disparities will also follow suit.

  • Nancy Anderson
    Nancy Anderson

    @Andrew spoken like a true man! I totally disagree that men earn more because they work more overtime than women or because they work a harder job. Maybe the media has blown the pay disparity out of proportion but, speaking from a woman's point of view, it needs to be blown out even more. I guarantee that if you compared two employees - one male, one female but both doing the exact same job with the exact same hours - the male's pay is higher. Check it out in your own company and see if it's true. I think that the pay disparity is a hold-out from the good old boy's network where men went out to work all day and the women stayed at home tending to the house and the children.

  • Abbey Boyd
    Abbey Boyd

    I agree with William, that paying employees better means a boost to the economy and more money being spent with the retailer. I know many states and even cities are starting to increase their minimum wages, but I think companies have a responsibility to their employees and to the economy to take steps as well.

  • Andrew  S.
    Andrew S.

    I think the issue of gender pay disparity has been blown up of proportions by certain politicians and the media. There's no doubt that pay disparity exists, but the reasons for it are what's important. Men earn more because they may choose to work overtime or work at tougher jobs than women, for example. Probably only a small portion of pay disparity is due to actual discrimination by employers.

  • Nancy Anderson
    Nancy Anderson

    @William the laws are changing constantly. The minimum wage is slowly going up in most states. Sadly, retailers seem to pay pretty close to the bottom of the pay scale regardless of the fact that many of their younger employees will spend at least some of their pay on items from the store. So in the next few years we will see the min wage rise for most industries. Unfortunately, along with that raise in pay comes a higher cost of living and prices on everything are going up to cover the increase in wages.

  • William Browning
    William Browning

    How do you know when a company willingly engages in pay disparity? Are there any laws that can help fight this issue? Income disparity actually hurts retailers because employees often spend their paychecks at work thanks to employee discounts. It behooves retailers to pay workers more money because those employees spend that money at the retailer thanks to our consumer-based economy.

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