Disney’s $43M gender pay settlement is a wake-up call — pay gaps can cost you big over time. Here's what you can do

As part of the settlement, Disney will hire a consulting industrial psychologist to train its employees on best practices and a labor economist to perform a pay equity analysis of all full-time, non-union employees in California below the level of vice president for three years. Any “statistically significant” pay gaps will have to be addressed.

The settlement still has to be approved by a state court.

This case has got national attention, but is also a reminder for professionals across industries to take a closer look at their own earnings. Identifying where you stand on the payroll and addressing any potential gaps could be key to building long-term financial security.

Long-term costs of pay gaps

Challenging your employer over unequal pay can be intimidating — especially if you’re standing up to one of the world’s largest entertainment companies like Rasmussen. Yet, addressing pay disparities is essential.

Under the Equal Pay Act of 1963, individuals of all sexes are entitled to equal forms of all compensation, including salary, overtime pay, bonuses, life insurance, vacation and holiday pay, reimbursement for travel expenses etc., if they perform equal jobs. However, in practice, this standard is often unmet.

In the U.S., the gender pay gap has closed only slightly over the past two decades. In 2022, women earned approximately 82 cents for every dollar earned by men — a marginal improvement from 2002, when the figure was 80 cents, according to the Pew Research Center. Research also shows that the gender pay gap is more significant for women of color.

Being paid a lower amount than male counterparts doesn’t just affect your paycheck but it can also have a lasting impact on your financial health. For example, if a woman earns $60,000 annually, a man in the same role – earning $1 for every 80 cents she makes – would receive $75,000. That would be a $15,000 difference each year.

When you consider how much money that is over many years and how that money could grow with compound interest once invested, the true impact of the pay gap becomes more clear. Investing $15,000 every year assuming 7% average annual returns would deliver over $200,000 in a decade.

This disparity can lead to lower retirement savings, reduced investment opportunities and a smaller financial cushion for future goals.

What you can do

“It’s really hard to know you’re experiencing [pay discrimination] because there is such a culture of secrecy around pay,” Emily Martin, the vice president for education and workplace justice at the National Women’s Law Center told The 19th. “Part of the answer to closing gender wage gaps and racial wage gaps … is greater pay transparency because sunlight is a disinfectant here.”