This article examines distinct dimensions of state government intervention in labor markets across states in the United States and investigates the effect of these interventions on gender inequality in earnings. Statistical models that take into account the contextual effects of family policies on gender inequality in earnings are constructed. Results from multilevel models show that progressive state institutional environments supportive of norms of equality help female employees catch-up with their male counterparts with regard to rewards, while states that function as welfare providers and employers exacerbate the gender gap in earnings.