There’s A Pink Tax On Women

OK, it’s not a tax, per se. But markups are everywhere on stuff catering to women consumers. We asked Diane Bourdo, president of The Humphreys Group in San Francisco, to explain the implications of higher costs for females in our society.  

Larry Light: For anyone not familiar with the term, “pink tax” refers to the premium that women are expected to spend for specific services or products marketed toward them, from haircuts to deodorant, and everything in between. Where does this originate?

Diane Bourdo: The pink tax officially dates back to 1994, when a report from California’s Assembly Office of Research found that 64% of stores in five major cities charged more to wash and dry clean a woman’s blouse than they did a man’s button-up shirt. Following the study, California passed the state-wide Gender Tax Repeal Act of 1995, making it illegal for a business to discriminate with respect to the price charged for similar services due to a person’s gender. However, without a doubt the pink tax still affects women today.

Light: So, for instance, we should think about the last time we scheduled a haircut and check to see whether the salon had separate price lists for men and women. What about car insurance policies and can you give some other examples?

Bourdo: Yes, as financial journalist Beth Kobliner points out women, especially those 40 and older, often pay more for car insurance than their male counterparts, even with identical driving records. According to a Consumer Reports study, women’s products cost 7% more on average and up to 50% more overall than similar products marketed toward men.

This price gap is especially pervasive among personal care products like razors—$10.99 for a women’s pack, $10.49 for a men’s pack—and shaving cream, which is $2.49 for women, $1.69 for men. It is also prevalent among children’s toys and accessories, children’s clothing, adult clothing, home health care products for seniors and more, according to the New York City Department of Consumer Affairs.

Furthermore, did you know that 27 out of 50 states still have a tax on tampons and other feminine hygiene products? Deeming tampons and sanitary napkins “unessential,” these states profit an estimated $120 million annually off of women. It’s worth noting that the tampon tax is a real tax, whereas the pink tax is actually a markup on goods, but it’s another example of the financial discrimination faced by women.

Light: While the pink tax is certainly an unfair financial burden on women, is it unfortunately just a small slice of a much larger and more problematic pie?

Bourdo: Absolutely. According to the American Association of University Women (AAUW), women working full time in the U.S. are still paid just 83 cents for every dollar a man makes. It’s a pay gap that researchers say likely won’t close for another 37 years. This disparity has consequences that affect women throughout the entirety of their lives, from the opportunities they have when they’re just getting started on their career paths all the way to retirement.

In fact, in terms of overall retirement income, it’s estimated that women have only 70% of the wealth men do. What’s more, underneath the wage gap is an even more daunting reality: the wealth gap. Data from the Federal Reserve revealed that women own only 32 cents for every one dollar owned by men.  

Light: What can women do to avoid the pink tax?

Bourdo: If you’re angry just hearing this, you’re not alone. So, what can you do to fight against it? Yes, you can buy gender-neutral products or products marketed toward men. Is it fair? No. Is it economical? Yes. You can also support change in legislation and use your voice to speak out against the injustice of the pink tax.

 One other thing you can do: take control of your financial picture. I have long championed women as they’ve scaled the learning curve of personal finance and investing, and I consistently strive to debunk the stereotypical myths that still permeate discussions about women and money.