A sizeable gap exists between men and women’s salaries in the public sector. Based on the 2022 Current Population Survey, men’s average annual salary in state and local government was $68,845 compared with an average annual salary of $53,402 for women.

There’s also plenty of evidence that female employees are less secure about their financial future according to a new report from MissionSquare Research Institute. which delves into the reasons, the causes and perhaps most important, the actions that governments can take to improve the situation of female public sector employees.

Women’s Financial Challenges

The accumulated data illuminates the idea that women believe their economic future is far more fragile than do men. For example, a 2023 MissionSquare Research Institute report of public sector employees, 35 and under, found that 43% of men felt “very financially secure” compared with 23% of women.

Another separate Institute survey that same year noted the difference in debt levels between female and male public sector employees with more women reporting larger amounts of credit card debt, student loan debt and medical debt. In that survey, 39% of women responded that they had “a somewhat or difficult time paying monthly bills on time and in full”, compared with 31% of men. 

Student loan debt patterns more generally also show a difference between men and women, with a 2022 study of 2015-2016 bachelor’s degree recipients showing that women borrow more than men and take longer to repay.

Potential Causes

It’s not difficult to pinpoint reasons for the disparity in average public sector salaries. A look at the data from most cities, counties and states show that women tend to dominate in lower-paying fields and often those that afford less opportunity to earn additional dollars through overtime. As the report states, “males are overwhelmingly employed in select areas such as public safety, natural resources, public works and transportation, while women represent the majority of educators and social service workers.

Then, too, “women continue to bear a disproportionate share of family caregiving, which results in more women not working, working part-time or working fewer years in the same job.”

A statistic from the 2022 Current Population Survey notes that 19% of women in the public sector work parttime while this is true of 14.7% of men. Breaks in work history not only cut into savings but reduces potential defined benefit retirement payments that are still available in most. As the report says, “Not only do employees need to work a certain number of years to vest, but each additional year of service also increases the retirement benefit.”

For women in general, the report also flags more conservative investment habits with past research showing that women exhibit more “risk-adverse investing behavior”. It cites a 2022 study that found a third of female college graduates felt comfortable investing compared to just under two-thirds of men. 

What Can Governments Do? 

For a number of years, the Mission Square Research Institute has written about the importance of financial literacy programs for state and local government. An increasing number of states and localities have begun to offer these programs as a kind of fiscal counterweight to wellness initiatives. According to the report, “The issue is not just whether to have a program but how existing programs can be enhanced so they more effectively reach women and their family members who may also help manage household finances.”

Suggestions include programs geared to women (and men)  at a variety of different life stages – for example, when they’re younger and dealing with student loans or a little older and faced with the need to curtail work due to eldercare responsibilities. 

Among the other ideas are automatic savings and investment vehicles, and emergency savings options, which are not yet common, but could be particularly useful for low and medium-income workers. 

There are also potential government benefits and HR programs that could help. These include still rare childcare subsidies, which could prevent young mothers from leaving the workforce because of childcare expense; more widespread paid family leave, and student loan assistance, which is currently offered by 10% of state and local governments – far less than the 73% that are offering reimbursement for training or tuition.

“Government employers have opportunities to help their female employees increase their financial wellbeing,” the report counsels, noting that many of its suggestions also have the added benefit of improving “morale, retention and performance.”

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