What Is Pink Tax And Is The Pink Tax Real?

what is pink tax

Living life as a woman comes with some unique challenges. One of them being an upcharge for simply existing as a female. Dubbed “the pink tax,” this unfair gender pricing differential affects products and services across industries, from hygiene items to car insurance.

Let’s look into some data about the pink tax, where it’s hitting women hardest, how it could impact your financial goals, and (last but not least) the path past the pink tax.

What is pink tax?

So, what is pink tax, and is the pink tax real? The name “pink tax” refers to a common theme in gendered products; the tendency for female-marketed goods to be manufactured or packaged in pink colors. Quick fun fact about “blue vs. pink” marketing—it was historically the other way around, as pink was considered a masculine color! It kind of underscores how arbitrary our social conventions can be, right?

These days, female products are the pretty-in-pink ones, and they’re more expensive too. The pink tax typically refers to products (or services) that cost more for women than their equivalents cost for men.

What do the overall numbers look like here?

A New York City Department of Consumer Affairs study examining gender pricing in 794 comparable products found that women’s cost 7% more on average. An older study by the State of California looked at the dollars and found that women spent nearly $1400 a year in extra costs and fees, or the equivalent of about $2,100 today.

Over a lifetime, the burden of the pink tax can easily add up to $82,000 or more. I don’t know how you’d spend a cool $80k, but I have a few ideas for mine! Now that we've answered the question "what is pink tax" let's dive into some pink tax examples so you can see where you are paying more!

Pink tax examples of where women pay more

As you can see, the answer to "is the pink tax real" is an astounding yes! So, let’s break down the pink tax examples and which industries are the worst culprits.

1. Personal care products

The most common place you might notice explicit gender pricing is in the hygiene aisle, specifically for personal care products like shampoo, soap, razors, and deodorant.

Pink packaging and floral scents don’t cost any more to produce than the equally stereotypical dark-colored male designs bearing names like “Tiger Punch” and “Hammerhead Shark Avalanche.” (Okay, I made those up, though I truly wouldn’t be surprised to see them on shelves).

But revisit the New York DCA study, starting on page 33, and you’ll see that women’s versions of these products cost anywhere from 4-48% more on average. Personal care products are one of the pink tax examples you will see.

2. Children’s toys, clothing, and equipment

While it’s parents who bear the cost of this one, gender pricing actually starts as early as childhood. The DCA study found that girls’ toys cost 11% more, girls’ bikes cost 6% more (helmets were 13%), and clothing ranged from 4-13% more...starting with onesies. Step one: exit the womb. Step two: pay the pink tax.

3. Women's clothing

Adult clothing is a little more difficult to compare since brands may not have directly equivalent male and female styles. Plus, to a certain extent, costs can differ depending on materials and how many different sizes and cuts they produce. They can also differ based on how much fabric waste occurs during manufacturing.

However, when DCA researchers looked into these factors, they concluded that the cost of manufacturing is only a fraction of the final retail price. Women pay up to 13% more for similar clothing simply because businesses know they can charge it.

4. Services and Insurance

You won’t only find the pink tax in retail stores. Gender pricing also extends to service-based industries like dry cleaning and auto repairs. In the auto repair study, the effect was less when women sounded knowledgeable about their car. So brushing up on terminology or crowd-sourcing opinions from forums like MechanicAdvice on Reddit may be worthwhile.

Surprisingly, car insurance makes the list as well, even for middle-aged women with perfect driving records. According to the 2017 research from the Consumer Federation of America, GEICO and Progressive had the biggest surcharges on women.

Before the passage of the ACA, women paid 1.5 times more than men for health insurance, despite their plans not typically including additional benefits like maternity care. Gender rating is now illegal in this space, but it’s something to watch out for when they propose changes in healthcare laws so you can be fully knowledgeable about what you choose to support.

5. Sales taxes

Finally, let’s give a shoutout to literal taxes. In America, a number of products are exempt from sales tax in most states, most commonly groceries and medications. Since these necessities are not subject to sales taxes, the question arises: why should feminine products have tax?

Dubbed the “tampon tax,” the practice of taxing menstrual supplies has been called into question by both consumers and legislators, and for good reason. These products are already non-optional monthly expenses that solely impact women. The extra 3-10% each time (depending on the state) adds unnecessary difficulties, particularly for women in poverty who already have few affordable options.

Lack of access can even cause teenage girls to miss school, adding educational inequality to the conversation. This revenue makes a comparatively small difference to state governments that measure their budgets in the billions. However, many states have refused to eliminate the tax even after having it brought to their attention.

The financial impacts of the pink tax over time

Fifty cents here and a dollar there might not seem that significant at the register, but we’ve already seen how it can add up over the years. The pink tax forces women to spend more on everyday necessities. This impacts their ability to save money for the future.

For those in debt, the extra expenses might be one more thing keeping them in the cycle of interest that keeps piling up. For women living paycheck to paycheck, it’s that much more difficult to start building an emergency fund.

In addition to up-front costs and short-term challenges, it’s also worth considering the longer-term opportunity costs. Less breathing room in the budget makes it harder for women to take potentially lucrative financial risks. For instance, starting a business or owning real estate.

An earlier source gave the pink tax number as $82,000 over a lifetime, but that figure was based on simple addition. What if that money were invested the whole time instead?

Well, no one can predict future stock market returns with certainty unless they’re a time traveler or a liar. But we can work with some average historical numbers to calculate a possible ROI.

Adjusting for taxes and inflation, investing the equivalent of $2100 per year could give you over $500,000 after 40 years. There’s not an extra zero in there; it’s half a million dollars! It goes without saying that having that kind of money in your IRA could make retirement a lot nicer (or earlier, if you’re feeling ready to move to an island).

Ax the pink tax!

Are you tired of paying the pink tax and ready for your dollars to go toward better things like debt payoff, savings, investments, and future goals? For now, there are a few things you can do to help.

Systemic change should be the ultimate end goal, so encourage your legislators to support the Pink Tax Repeal Act. The bill was introduced in 2015, but its battle against price discrimination remains ongoing.

On a personal level, you have the power as a consumer to vote with your dollar and ax the pink tax! Make it an experiment to calculate the price differentials while you shop. Also, choose ungendered products or ones that aren’t marked up.

When it comes to services like dry cleaning or car repairs, call for quotes and have someone male in your life do the same, then compare notes. From there, you can choose to support the businesses that aren’t participating in gender pricing.

You can also use your voice. When you see examples of gender pricing, you can contact the companies directly or share your findings with #pinktax hashtags on social media. No one likes negative press, and you may help them realize that it’s cheaper to adjust their prices than to lose sales.

The pink tax is bad news for women’s wallets, but you can be part of the change and support a better financial future for everyone, irrespective of gender.

Get savvy about the pink tax

Again a good way to ax the pink tax is to shop items to avoid the mark-up. For instance, switch to men's razers instead and save there. Find companies that don't up the price on females, and be sure to let others know if they do. These little things will add up to big savings and, hopefully, help ax the pink tax!

The best thing you can do for your finances as a woman is to increase your knowledge of it! You can learn all things money with our completely free financial courses and worksheets!

Also, be sure to follow Clever Girl Finance on Instagram, Facebook, and YouTube for additional financial tips and inspiration to reach your money goals!

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