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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 the pink tax?

What is the pink tax, and why is it important to know about? 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. Here's a quick fun fact about “blue vs. pink” marketing—it was historically the other way around.

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.

Is the pink tax real?

A New York City Department of Consumer Affairs study examined gender pricing in 794 comparable products and 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.

The Balance conducted its own study recently and found that products for women in the personal care category generally cost 12.7% more. Clearly, pink tax prices have not improved much.

How does cost impact you?

So not only is the pink tax real, but 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!

When did the pink tax start?

The pink tax is decades old by now. But it was discovered in 1994 by California's Assembly Office of Research that in some cases, there was a higher cost to get a woman's blouse washed and dry cleaned than a man's button up shirt.

Now that you have answers for "what is the pink tax" and "is the pink tax real" let's dive into some examples and product categories so you can see where you are paying more!

Pink tax examples that show 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, shaving creams, body wash, and deodorant. There are price differences even though such products are similar no matter the gender.

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).

Statistics

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 very often.

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

You won’t only find the pink tax in retail stores. The gender pricing phenomenon 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.

5. Insurance

Unfortunately, our pink tax examples also include insurance. 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 under the Affordable Care Act, 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.

6. Sales tax for necessary items

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 tampons and pads have tax?

Tampon tax

Dubbed the “tampon tax,” the practice of taxing feminine hygiene products 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.

Inequality

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.

States making a difference

There is some good news about these consumer products, though. Some states have gotten rid of the tampon tax.

These states include New York, New Jersey, Massachusetts, and many others. This is a victory, and hopefully, more states will follow suit soon.

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. These price differences impact their ability to save money for the future.

Expenses

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.

Missed opportunities

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 female consumers to take potentially lucrative financial risks. For instance, starting a business or owning real estate.

Investing impact

Earlier, we discussed 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!

You now know the answer to "what is 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.

Government

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.

Personal

On a personal level, you have the power as a consumer to vote with your dollar and ax the pink tax on women's products! 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 discriminatory pricing by gender.

Publicity

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 avoid gender discrimination and ax the pink tax is to shop items to avoid the mark-up. 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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