Love vs Money: Women earn 15% less than men throughout their careers

The workplace wasn’t created equally for everyone – yes, yes, we all know this. Gender inequality isn’t new news.

But what might be news to you, is just how much this inequality impacts women financially throughout their lives. So much so, that women who work the same number of years as men – in the same position – end up earning approximately $295,000 less in their lifetime.

This is according to the US Department of Labor, which also highlights that women who partake in caregiving roles earn 15% less over the course of their lifetimes, which, as you can imagine, significantly impacts every part of their finances – including their retirement fund. 

Furthermore, new research from the National Women’s Law Center suggests that the average 20-year-old woman in America starting full-time employment will earn $407,000 less throughout a 40-year career.

Sadly, this isn’t just in the US.

Globally, women are receiving pensions that are 25% to 30% less than men.

UK-based finance platform, PensionBee also found that taking time out of work to perform unpaid caring roles has a knock on effect on retirement savings.

In fact, in a recent report, the organization found that for every year spent out of work to perform unpaid care, pension pots suffer by roughly £5,000 compared to someone who has not performed these duties. What’s more, for every year spent working part-time, their pension lowers by roughly £2,000. 

Women are more likely to take time out of work to look after their children, which is a leading cause of the gender pension gap, currently standing at 35% on average in the UK,” says PensionBee’s Director of Public Affairs, Becky O’Connor.

“While this finding isn’t new, our report highlights the reasons we believe women suffer a pension gap that goes beyond their gender, and has more to do with the social role they tend to fill.”

However, a higher proportion of female carers share that looking after children was their main reason for having taken time out of work. Yet, surprisingly, the report found that males are more likely to look after their parents or their partner than women. 

“This is just one finding from our research that indicates women might face a pay and pension gap because society thinks they do more unpaid care work, or are likely to do more of it throughout their careers than men, even though this may not be true if you include other types of unpaid care, not just childcare,” O’Connor adds.

Yet the childcare gap may impact mothers’ retirement outcomes more significantly than other care gaps, mainly because mothers are more likely to take part-time roles – and remain in them longer – than taking many years completely out of work.

Supporting this, is research from Phoenix Insights – Phoenix Group’s longevity think tank – which found that 59% of unpaid carers are women. This means that they contribute £102 per month less than men to their workplace pension.

By midlife, when caring duties often occur, men are saving 50% more into their workplace pension than women. 

Caring responsibilities impact retirement wealth in a variety of ways,” says Claire Hawkins, Director of Corporate Affairs and Investor Relations at Phoenix Group. “From having to take extended periods off work, reducing income and thus the ability to save for their pension, to having to retire earlier than planned, reducing long-term earnings and impacting the size of retirement wealth.

“People should never have to choose between “love or money” – caring for a loved one or going to work to earn an income. It’s disastrous that an estimated 2.6 million people left the workplace early to care for a relative or loved one.”

Modernizing the system to promote equality

These gender pay discrepancies are well-documented. But although there may not be hard and fast solutions to solve this imbalance, there are ways in which HR teams can support individuals and business leaders to at least minimize its impact.

Unfortunately, the gender pay gap is only exacerbated by women predominantly having to hold the role of caregiver, which in turn often unfairly negatively impacts the earning potential of female workers in comparison to their male colleagues,” says Sharon Steiner, CHRO at Fiverr.

Fiverr, a freelance platform based in New York, provides an alternative way for caregivers to balance their responsibilities, while still creating an income.

Steiner explains: “Freelancing has become an increasingly appealing career choice for many female workers who have historically been disadvantaged within the corporate world due to the ability to work flexibly while also setting their own rates.”

In fact, women on the platform have been shown to out-earn their male counterparts – in fact, globally, users that disclosed their identity as women were found to earn 15% more than men each month in 2022. 

Similarly, O’Connor also believes that businesses need to help employees strike the right balance, which she highlights can be done through ensuring HR policies are empathetic to both planned and unplanned needs to care.

“When it comes to childcare, offering new mothers and fathers the same amount of paid leave could significantly help level the playing field,” she says. 

Currently, there’s a lack of transparency around the parental support offered by major employers making it a difficult area for employees to navigate.

“By offering clear, supportive, gender-inclusive paid parental leave packages, employers can help employees share responsibilities from the very beginning of their roles as parents.”

In addition, offering more paid leave to people when a caring need arises, as the new Carer’s Leave Act will now enshrine, is key to preventing people having to leave the workforce. “Employers can offer to go beyond statutory minimums,” she prompts.

Flexible working should be reflected in these policies, to enable women to find the right balance that works for them.

Hawkins explains that this can be done through embracing greater flexibility around working hours and putting support in place for employed carers.

Explaining further, she says that the Phoenix Group introduced 10 days paid carers leave for all of employees in 2020, and while we are encouraged by the government’s introduction of statutory carers leave from April 6th. “We therefore urge all employers who can, to offer up to 10 days paid carers leave for colleagues that need it.”

Concluding, Steiner adds: “While there is still much work to be done it’s encouraging to see progress is slowly being made and that there are options out there for women to take back control of their schedules and pay.”