Gender pay gap progress stalls for older women

The gender pay gap for millennials in their 20s has halved in a generation to just 5%, but women still face a potential lifetime earnings penalty which means pay differences continue to escalate as they enter middle age, according to research by the Resolution Foundation

The think-tank, which focuses on living standards, analysed the typical hourly pay of different generations of women – from as far back as the greatest generation (born between 1911 and 1925) – over the course of their careers, compared to that of their male counterparts.

The research shows that the gender pay gap has closed for every subsequent generation of women. Baby boomers (those born between 1946 and 1965) experienced a pay gap of 16% during their 20s. That gap fell to 9% for women in generation X (born between 1966 and 1980) and then to 5% for millennials (born between 1981 and 2000).

However, despite this progress in the early career phase, the gender pay gap continues to rise rapidly for women in their 30s and 40s. Among baby boomers the gender pay gap rose from 21% at the age of 30 to 34% by the age of 40, after which it started to fall. For generation X the pay gap increased from 10% at age 30 to 25% by the age of 40.

The gender pay gap for millennials rises steeply to 9% when they hit 30, only very marginally lower than the gap for generation X-ers at the same age. This suggests that the old challenges associated with having children endure for young women today, says the Foundation.

The think-tank argues the key factor here is that women start having children. The pay gap widens partly because mothers take time out altogether and so lose out on labour market experience. But it is also connected to the fact that training, progression and promotion are much harder to come by when working part time, which many women with children either choose to do or feel they have to because of high childcare costs.

The Foundation says that as men and women work for longer, tackling the gender pay gap at all stages of women’s careers will hold the key to reducing the lifetime earnings penalty they continue to face.

Laura Gardiner, senior policy analyst at the Resolution Foundation, said: ‘Young women today face relatively little disadvantage in terms of their pay packets compared to what their parents’ and grandparents’ generation faced.

‘But while many millennial women haven’t experienced much of a pay gap yet, most probably will once they reach their 30s, when they start having children. What’s more this pay penalty is big and long-lasting, and remains for younger generations despite the progress in early careers.

‘As people continue to live and work for longer, it’s important that businesses, policy makers and civic society continue to focus on closing the gender pay gap at all ages, and for every generation.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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