Commentary

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The gender divide: forty years on

25 May 2009
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OVER THE PAST FOUR DECADES women have been playing catch up with men in terms of wages, education levels and wealth. It is hard to believe that just forty years ago, women in the public service were forced to resign when they got married; and when I was working in the public service, there were stories from the 1970s of women with young children putting in weekly leave forms because part time work was not available.

So how far have women come? She Works Hard for the Money: Australian Women and the Gender Divide, a recent AMP.NATSEM report by Rebecca Cassells, Riyana Miranti, Binod Nepal and Robert Tanton, looks at how well women are doing in terms of this catch up. The report found that women have gained ground in areas of education and employment, but significant gaps still exist in terms of lifetime earnings and superannuation.

One interesting result from the report was that the gender wage gap, adjusted for hours of work, number of children, occupation and education (which we take into account when we calculate the gap) was only 0.6 per cent for Gen Y women. This is not much – about $240 a year for a $40,000 salary.

But for Gen X women the difference was 3.5 per cent (or $1400 a year for a $40,000 salary). And for the Baby Boomer women it was 13.4 per cent (or about $5400). So the difference increases as the women get older.

Lower income at certain stages of their careers is one of the contributors to a lower lifetime income for women. So when we look at how much people earn over their whole life, we find that, on average, women will earn $1.5 million over a lifetime, whereas men will earn $2.4 million.

Further, we find that the presence of children has a significant effect on a woman’s life-time earnings. A man with a bachelor degree and children will earn $3.3 million over a lifetime; a woman with a degree and children will earn $1.8 million.

You might think that this difference in lifetime earnings is due to the time women take off to start a family, but this would only amount to about $40,000 if they took a year off, and $120,000 if they took three years off, not the $1.5 million that we find for people with bachelor degrees.

There are a number of possible reasons for this much larger difference, and some of the findings from our report shed light on the differences. For example, we find that full time women are working fewer hours per week, and that when women take time off to care for someone they tend to take unpaid leave whereas men will use flexible working hours (which means they will continue to be paid for the hours they use to care for children). We also find that full time working women spend much more of their time doing housework and looking after children than full time working men. So over their lifetime, women are spending more time doing unpaid work.

One consequence of this difference in lifetime earnings is that women’s superannuation is not as high as men’s superannuation. Using 2007 data we found that by age 55, when people are starting to think about retirement, 44 per cent of men will have a superannuation balance of more than $100,000, but only 31 per cent of women will have this level of superannuation.

So what does all this add up to? The main conclusion is that women have caught up with men in many aspects (income, employment, education), but that the time out to have and raise children, and the change in their working life to care for children, still leaves them significantly worse off at certain periods of their life, and hence over their lifetime.

The Australian government should be applauded for bringing in paid maternity leave, but the break just after having a baby is only a small part of the story. The cost of having children really adds up in the years of unpaid labour – looking after young children, dropping them off to school, looking after them when they are sick – and what this report finds is that women are still doing the bulk of this work.

Robert Tanton is Principal Research Fellow at the National Centre for Social and Economic Modelling (NATSEM).

 

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2009
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