The Pink Tax: Hidden Costs Women Pay

Shari Rash
December 27, 2020
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The pink tax: hidden costs women pay. 

The Pink Tax is not as cute as it sounds. It doesn’t even have to be on pink items.

Have you noticed products marketed to women are a little more expensive than products for men?

Do you and your husband use similar products but you end up paying more?

If so, you aren’t going crazy. Women across the globe may pay more for common goods versus men, this phenomenon is called the Pink Tax. 

The pink tax: hidden costs women pay – running errands is more expensive for women than men

Because I am a Financial Advisor dedicated to empowering Women when it comes to their finances, I recently had a male friend question me about how finances differ between men and women.

What’s the big deal? he asked.

I wondered where to even begin explaining the financial challenges women face when it comes to day to day life.

I decided to go with a simple approach to explain some of the financial challenges women face.

I asked him to tag along on a figurative errand run with me with stops at the drugstore to buy some razors and a swing by the dry cleaners to grab the laundry. 

At the drugstore, I find the razor aisle and easily walk right to the women’s section by following the pink hue. The razors allocated to women have cute pink wrapping and nice pink handles. Right next to the pink is a darker blackish, green hue, where the men’s razors are housed with their green and black packaging. 

I grab my pink package of razors. On my way out, a black and teal package caught my eye. My husband uses these razors so I grab him a pack. As I look at the price, I’m left to wonder why they are $18.99 for 5, but my razors are $16.38 for 2? 

Ok, now let’s go to the dry cleaners, I have to pick up work shirts for both myself and my husband. Oddly enough, we wear the same button down, collared shirts from the same store. Our shirts are the exact same with the exception mine are a smaller, female version of his. I get our laundry, pay the bill and look at the itemized receipt. Laundering his shirt costs $1.99 each, my shirts cost $4.99 each. I bring this up to the woman that handed me back my credit card. Her explanation: Your shirts are smaller, so they have a different price. Um, What?! How does that make sense? 

My friend was left scratching his head and now had a better understanding of one of the hidden financial challenges women face. 

That, ladies, is called the Pink Tax.

The pink tax refers to the extra amount women are charged for certain products or services.

The pink tax is charged on items such as personal care items, dry cleaning and auto maintenance. Research on the pink tax found that overall, women were paying more than men 42% of the time for comparable goods and services. 

What is the Pink Tax? – Paying more for a similar product

The Pink Tax is a term used to describe the increased cost of goods and services that women pay compared to men who pay a lower price for similar products. Researchers have been studying the Pink Tax for decades, with growing prevalence as the world continues to evolve and focus on equality for all genders. Although the Pink Tax is not actually a tax, it is a term used to describe the markup on basic necessities that women face. 

A recent study conducted by the US Government found that personal care products, such as deodorant, soaps, and lotions, for women are 13% more expensive compared to similar products for men. Additionally, accessories were 7% more expensive and clothing had an 8% markup. These markups can add up to thousands of dollars over the course of a few decades.

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About six years ago, the issue got a lot of attention when New York City’s Department of Consumer Affairs found many instances of gendered pricing when it examined 794 products sold in the city for consumers of all ages.

New York City Department of Consumer Affairs. “From Cradle to Cane: The Cost of Being a Female Consumer,” Page 5.

However, researchers have been noticing and analyzing this phenomenon since at least the 1990s. 

Senate Rules Committee. “Bill Analysis, California Assembly Bill 1100, Amended 8/31/95,” Page 2, Investopedia

Outside factors may influence the price of the goods we buy.

Despite efforts by the Government to limit the Pink Tax, there are outside factors that influence price.

First, many women’s items have higher import tariffs assessed. Items, such as silk shirts, blazers, and leather shoes create higher tariffs.

Although studies show that some goods have no gender differences in the tariffs assessed, many goods do have stark differences. 

Clothing companies often pass the higher price on women’s goods down to the consumer, creating a difference based on actual cost and not gender.

Another factor that can cause the Pink Tax is product differentiation. Women can have higher standards than men when it comes to personal care and clothing, giving retailers a justification to implement product discrimination based on gender. 

Are women OK with paying the higher price?

Moreover, many businesses engaging in the Pink Tax justify their pricing based on the notion that women are better prepared than men to pay the higher price.

However, studies also show that women experience a pay gap based on their gender, further lowering their disposable income. 

How are women affected by the Pink Tax?

The most noticeable effect of the Pink Tax on women is paying more out-of-pocket for basic necessities. Paying more money upfront for the same goods as men not only impacts your current financial situation, but also your future earnings. 

A recent 2020 study that analyzed tariffs over the past 20 years found that imports of women’s goods are taxed at an average rate of 0.7% more compared to the import of men’s goods. To put this in perspective, let’s say that you purchase $15,000 a year of women’s goods. At a rate of 0.7% and a 30-year time frame, you are paying $31,500 more for the same goods as men. 

That comes out to around $1,050 a year or $87.50 a month, which doesn’t seem like a big deal, right? Well, if you were to invest that additional $87.50 in the stock market and use the historical return rate of 10%, that $31,500 ends up costing you $171,732 in future earnings. This makes it no surprise that only 33% of the US’s millionaires are women and only 12.9% of billionaires are female. 

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How can the Pink Tax be stopped?

In recent years, the pink tax has been brought to the public’s attention, forcing companies to make changes to the way they handle pricing for gender specific comparable goods. But that doesn’t undo the years of our overpaying. 

State Governments have tried to regulate the Pink Tax by passing legislation prohibiting pricing differences based on gender; however, many companies have found loopholes to justify the higher prices. Moreover, there is a lack of legislation passed by the Federal Government to combat this growing issue. 

For example, California passed the Gender Tax Repeal Act of 1995, requiring businesses to charge men and women the same price for services, not products. New York City has similar regulations in place. The California Act has been proposed at the Federal level multiple times, but has yet to pass. There has even been talk in the United Nations about regulating gender goods and services discrimination, but nothing has been signed into law. 

What are the ways to avoid the Pink Tax: Hidden costs women pay?

There are ways you can minimize the impact of the Pink Tax on your spending and future financial goals. First, shop around before you purchase a product. By evaluating the different products and services available, you may find certain retailers or businesses that have lower prices for the same services, such as dry cleaning, feminine products, and haircuts. 

Another option is to purchase men’s products. The only real difference between men’s and women’s products is usually the color. Women can easily use men’s razors, shaving cream, deodorant, and other goods. There may be areas that you can’t avoid paying the higher price, such as feminine products. Your preferences will also impact the Pink Tax you are exposed to. For example, if you like luxury goods, such as silk coats and leather boots, you might not be able to avoid the higher price depending on the sellers. 

Buying online is also an option. When you buy online, you have more options to choose from, including bulk discounts. For example, the razor service Billie, provides a monthly subscription that offers gender-neutral pricing. Although finding the right companies to purchase from can be time intensive upfront, it can save you thousands of dollars in the long run. 

Think about what you could do with all the money you have paid towards the pink tax over your lifetime. Wouldn’t it have been of better use to go toward paying off your debt, save for retirement or even go on vacation? If you’re worried about the impact of the Pink Tax on your long-term financial goals, it’s best to contact a financial advisor or money coach at Greenway Wealth Advisory. We can advise you on strategies to grow your wealth, but can also provide solutions to minimize the long-term impact of higher prices on your financial position. 

Financial Essentials for Young Families

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