Are young women really working for free till 2019?

Iona Bain

On Wednesday, I was chuffed to be invited onto The Figure Podcast. I always enjoy having a good natter about millennial money issues but it was particularly refreshing to record a podcast in the flesh (over a G and T, no less!) and I left the recording in total admiration of hosts Georgia and Charlotte, two erudite and go-getting 23 year olds who aren’t afraid to publicly debate some immense issues – including the gender pay gap and unequal pay for equal work.

The Figure’s chosen charity for November is The Fawcett Society. It commendably campaigned for the first female statue outside Parliament and resulted in their eponymous heroine, Millicent Fawcett, taking her rightful place this year alongside the likes of Nelson Mandela and Winston Churchill (uh oh, put the cat among the pigeons with that last name…)

One of The Fawcett Society’s most high-profile campaigns centres on Equal Pay Day, which falls on 10 November. According to the charity, this is the day when “women effectively stop earning relative to men” for the rest of the year.

So ladies, you are technically working for free until 2019 – or at least, that’s what the gender pay gap statistics used by the Fawcett Society would have us believe.

But there is far more to the story than stats. Firstly, the gender pay gap (GPG) and equal pay for equal work are two different beasts. Like most raw data, they don’t tell the whole story of women’s working and financial lives today.

I’m a huge supporter of the work being done by the Fawcett Society, and Equal Pay Day sparks a vitally important conversation.

But what do we really need to know? Here’s the explainer you need…

The Fawcett stats are based on the gender pay gap

This is a flat figure that is conjured up from assessing the MEAN wage for men and women across all types of jobs. So the gender pay gap within a business, as we understand it today, is actually calculated by totting up the pay of both genders within the company, from cleaners to the CEO, before spitting out an average salary for men and women.

Hmm, not sure I’d have this lamp at home…

That doesn’t mean we are ALL earning less than men for the same jobs

A good example of where the stats can be misleading are airlines. They have a whopping gender pay gap, but that’s because their jobs are particularly genderised – pilots earn more than air cabin crew, and more pilots happen to be men, while women tend to work as air cabin crew tend, to put it crudely. But that doesn’t necessarily mean a female pilot earns less than her male counterpart, and the same goes for stewards and stewardesses.

Some commentators dislike the use of gender pay gap stats to justify the claim that women are working for free for the rest of the year. CapX says the use of mean GPG stats “has the effect of giving more weight to the incomes of a relatively small number of high earners at the very top of companies. But it is unrepresentative of the rest of the workforce, where the the GPG has already narrowed significantly.”

Alternative data is available

The GPG in 2018 for those in full-time employment is 8.6 per cent, but this is based on the MEDIAN hourly wage. This has dropped from 9.1 per cent in 2017 and is now the smallest since records began. Some commentators would prefer these statistics to be used, but one persuasive counter-argument is that the mean gender gap gap illustrates a wider inequality in the modern workplace – the fact that men are more likely than women to occupy the highest earning positions. Stats from diversity and inclusion agency INvolve earlier this year showed there were more men called Dave than women running FTSE 100 companies.

Er, blokes called Dave….sorry Bey

Particular groups of women are definitely more susceptible 

The Office for National Statistics recently revealed that the gender pay gap for women aged 22-39 is negligible (some research suggests young women actually out-earn men in the early part of their careers). The gap really takes effect later in life, with all the research suggesting that the big sticking point is children. Women are more likely still to take time off work than men to look after families, therefore losing out in career (and salary) progression. Though the GPG has also narrowed “markedly” for those aged between 40 and 49. The gender pay gap for the self-employed is also highly pronounced, with the most recent official data available suggesting that self-employed men earned an average of £363 per week, while their female counterparts earned a third less at £243. However, again, the overall stats may belie differences within occupations. According to online services platform Bidvine, women are gaining more jobs and outearning their male rivals in areas like wedding photography and music tuition (though this is a very small, and arguably unrepresentative sample).

The gender pay gap is different from equal pay for equal work

It has been illegal for employees to be paid differently if they do the same work since 1970 under the Equal Pay Act. However, it has been argued that unequal pay has been allowed to spread in a culture where it is taboo to openly discuss wages, where male employees are more likely to press for wage increases and where employers rarely have to account for their wage decisions, either internally or externally. In Iceland, legislation has been introduced whereby companies with more than 25 employees are required to obtain government approval for their pay policies, which must demonstrate equality, or face fines.

Women have greater financial autonomy than ever before – but this brings its own problems

THAT COAT! THAT HAT! #stylegoals

Millennial women are, in many respects, far more financially free than their mothers were. It used to be very difficult (if not impossible) for women to completely earn, manage and spend their own money. It’s still in living memory that regulations prevented women taking out financial products like mortgages and credit cards without the co-operation of a male co-signer.

Women very clearly knew their place. Their roles in the workplace, the traditional domestic set-up and the consumer market were well-defined, if highly limited.

The flip-side of these restrictions is that financial (and indeed all) decisions were a lot simpler. There was a commonly-established path from parental to marital home, with the patriarchal structure behind you at all times, shielding you from the sharp edges of working life and the responsibility of major financial choices.

Financial independence is a relatively new concept for us. Young women feel anxious about their finances because it’s a cruel paradox of modern women’s rights and the unprecedented number of opportunities available to young women today.

Record numbers of young women live on their own, pay their own way and spend their own money…but it’s not all about the money

There are complex decisions to be made almost every day when you have ownership of your career and finances.

As our opportunities expand, so does our inner conflict. How can we earn the biggest salaries, do huge social good, love what we do, have a rich personal life, use our wealth to signify our value to the world (as is expected of us) while also saving enough for the future?

All are impossible to achieve at the same time. But young women struggle to know what to prioritise when they are bombarded with contradictory and psychologically manipulative messages through the media – all driven by an different commercial and political agendas.

Young women today are constantly having to suss out what is genuinely in their own financial interests and this is an endless, difficult and often exhausting mental process.

This may be why women report more financial anxiety than men, according to a 2017 study, and research says that anxiety and stress about money, particularly debt and the financial future, is endemic among millennial women in particular.

And it doesn’t help that we have higher standards than ever before…

Our ability to aim higher than ever before can also tip over into perfectionism and scrupulosity, which makes financial and career decisions even more difficult. As one article by an experienced therapist testifies, young women are particularly prone to perfectionism, which in the very worst cases can even lead to suicide.

…and greater potential pitfalls.

We also have a very complicated consumer landscape today. Debt is far easier to get into than to get out of. Some debt can be good or at least a means to an end – other debt can be ruinous. We have to save more than ever for the future but we have fewer and fewer incentives to do so, from low interest rates to pathetic employer contributions into our pensions. The responsibility is falling more and more onto individuals to make their money last but women (on average) have lower incomes, more career breaks and greater social pressures to spend money to help their children or please men.

The upshot? Research shows time and again that more women than men fail to save, take out vital insurance and invest, even though we often need these financial safeguards far more than our male counterparts.

But we can do something about it

Both individually and politically. Start discussing money with your friends, colleagues and boss today. Start enquiring about your pay, your benefits, your rights and options. Start following blogs like mine and female financial commentators who are pressing for change. I’m delighted to say that I’ve become an ambassador of the Insuring Women’s Futures campaign, which has already published research highlighting the financial traps facing women today. We’ll be campaigning for real change – so watch this space for more details.

What do you think? Leave a comment below or tweet me – @ionayoungmoney