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DavidRichter

A Look At The Gender Pay Gap By Age And Earning Power

20th January 2014 - Posted By David Richter To News & Events
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Last month the blog Flipchart Fairy Tales looked at the relationship between age and earning power for men and women. One of the interesting things in the article was that the pay gap gets wider the higher up the income scale you go.

Men Earn X% More Than Women Full Time Gross Annual Earnings 2013

As @FlipChartRick pointed out, people tend to get paid more as they get older. Therefore a likely explanation for the pay gap widening with earning power is that many of the women who might otherwise be in senior jobs have taken lower paid ones so they can do the school run and look after the kids. According to data from the ONS, in the UK approximately 96% of births are by mothers under the age of 40 years old. If this hypothesis is correct then you'd expect the pay gap to be at its widest in the higher percentiles for age brackets of 40+ and getting progressively narrower through younger age brackets and earnings percentiles.

At the time @FlipChartRick didn’t have the data to hand to look at this but being a long-time fan of his blog I decided to delve into some figures myself. If, like me, you like nothing better than poking around in some data feel free to download my spreadsheet here, which uses figures from the Annual Survey of Hours and Earnings.

The below chart shows the percentage difference in basic hourly pay for full time employment that men receive compared to women.

test

Broadly speaking the trend is that the older you are and the greater your percentile of earning power the wider the pay gap is. This narrows to the point where the pay gap is almost non-existent for people in their 20’s. An outlier is the 18 to 21 age bracket where everything is pretty much fair until you get to the 60th Percentile but beyond that the pay gap starts to widen again. I’ve racked my brain as to why this might be and the only thing I can come up with is that more girls go on to study at university than boys (see data from the Higher Education Statistics Authority). Perhaps at the age of 18 a job that pays a couple of grand above the market rate is more tempting to boys than it is to girls. This would cause fewer boys to go on to university and instead fall into the 60th percentile and above brackets of earners for their age group.

Apologies, I digress. As I was saying, the general trend is for the gender pay gap to widen with age and with earning power, roughly in line with what you’d expect to see if having children affected women’s careers more so than those of men. It does appear in general then that having kids is a significant factor on how much a woman is likely to earn.

The below chart shows how the pay gap has changed since 2003.

test

In all but four of the cohorts the pay gap in 2013 is smaller than it was in 2003, although the rate of change is significantly slower for those aged 30+ and earning more than the median.

While things are improving there are still an awful lot of women who are sacrificing their career for the sake of looking after their kids. According to research by the CIPD 96% of companies do offer some form of flexible working. I wonder how many of these flexible working practices are available for senior positions. Looking at the pay gap trends I suspect it’s not many. From a business’s point of view this seems like an extraordinary waste of talent.
David Richter
Marketing Manager - Octopus HR
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