A little more than a month ago the U.S. marked Equal Pay Day to commemorate the fact that it takes a woman until April of the following year to earn what a man does in twelve months. Because of events like this, most of us are aware that on average women get paid 18 cents less an hour compared to men working the same job. But what does that difference add up to over a lifetime?

That's what a new analysis conducted by consultancy Age Wave and Merrill Lynch aimed to find out. The results aren't pretty.

The extremely high costs of working while female.

The premise of the analysis was simple: imagine a set of twins with the same drive, intelligence, and eventual job. One is a woman and one is a man. How will their financial fortunes differ? A bit of arithmetic is all it takes to figure out that an 18-cent pay gap over a full-time career adds up to a $411,000 deficit for the female twin.

A figure in the mid-six figures is pretty scary to think about -- it could buy you a nice house in a lot of markets, put a kid through a top tier college, or ensure a far comfier retirement, after all -- but that's actually not the scariest conclusion of the analysis.

"Women's life journeys are different than men's," explains Age Wave co-founder Maddy Dychtwald in her writeup of the findings in the WSJ. "Those differences can result in serious financial consequences, especially around caregiving."

Because women are still far more likely to take on the responsibilities of caring for both young children and ailing family members, the average woman spends 44 percent of her adult life out of the workforce, compared to 28 percent for the average man. So in the case of our hypothetical twins, the female sibling is far more likely to miss significant chunks of her prime earning years.

When that fact is taken into account, "by the time this woman reaches retirement age, that 18-cent differential becomes $1,055,000 less than her brother who has stayed continuously in the workforce," Dychtwald concludes. Add the loss of compound interest from earnings not invested, which is far harder to estimate but certainly exists, and the wealth gap between the sexes is larger still.

Is it any better in entrepreneurship?

If you're a woman, that probably annoys you to no end, but if you have your own business, or are pondering making the jump into self-employment, it also probably makes you wonder: are things as bad in the world of entrepreneurship?

I'd love to tell you they aren't, but plenty of evidence suggests even women who work for themselves end up making significantly less. A recent study from client management platform Honeybook of independent workers in creative industries found that female freelancers make 32 percent less than male ones for the same type of work. World Economic Forum data shows women entrepreneurs tend to start up in less lucrative sectors such as social work or beauty. They also tend to start smaller businesses.

British professor of entrepreneurship Ute Stephan explained the overall tendency for female entrepreneurs to earn less to Sage, saying: "The reasons for the overall pay differential are various, like women cluster in low-paid sectors; they make family a priority; they lack confidence; they fail to ask for more money or they are discriminated against."

Figuring out what to do about the problem, unfortunately, remains a lot trickier than identifying it. Dychtwald has suggestions for how to take account of the gap in your financial planning in her article, but if you're looking to confront the underlying biases that fuel discrimination and unfair compensation practices, you'll need to stray from the world of business into the world of activism.

While we all wait for political change, however, high-profile women like Sheryl Sandberg have offered tips on how to negotiate and get ahead in entrepreneurship more effectively as a woman.

Published on: May 22, 2018