150721 Gender pay gap
  • The gap is narrowing… What is the gender pay gap? The most commonly used measure is the percentage difference between the median gross hourly pay of men and women working fulltime, excluding overtime. The Office for National Statistics explains it all here. It currently stands at 9.4 per cent, which sounds pretty high – and it is, if you’re on the wrong side of that gap – but, according to the ONS, it’s actually the lowest figure on record. Back in 1997, it was 17.4 per cent.
  • …despite public sector job cuts. This milestone has been reached despite the loss of 415,000 public sector jobs over the past five years. You might expect this to widen the gender pay gap, as public sector jobs tend to be better paid and are disproportionately held by women. (Indeed, Northern Ireland has a negative gender pay gap – which is to say, women are higher earners – mostly because of its large public sector.) But it hasn’t. The forces closing the gap are outmuscling those trying to keep it open.
  • It’s actually worse for the well-paid. The 9.4 per cent figure is calculated using the average pay of the average man and women, but things look very different when we depart from that middleground. The graph at the top of this post shows the gap for nine different groups of earners, from the 10th percentile towards the bottom of the income scale to the 90th percentile towards the top. You’ll notice that the widest gap, of 18.3 per cent, is between the highest-earning men and women. That’s 12.3 percentage points greater than the gap between the lowest earners.
  • But why? There’s a complex latticework of explanations for the gender pay gap, but one strand always sticks out: kids. In their twenties, and to a lesser degree in their thirties, women may even earn more than most men. But that ends abruptly in their forties, when the gap expands to 13.6 per cent in the men’s favour. This is most likely caused by the onset of family. In any case, it suggests that women aren’t benefitting as much from the higher earnings that experience can bring.
  • Will a National Living Wage help? The reason I mention all this is the National Living Wage, which David Cameron is selling as a means of closing the gender pay gap still further. It’s true that the majority of those who will benefit are women in lower-paid jobs, but they’re not as far behind the men as their higher paid sisters. It could be that the Government’s less heralded policies, such as greater transparency from companies with more than 250 employees, will have more of an effect.