Could The Pink Tax Cost Each Woman More Than A Million Dollars?
July 27, 2018

Could The Pink Tax Cost Each Woman More Than A Million Dollars?

Most women have been nickel and dimed: victims of the so-called pink tax. It’s when businesses charge women more money than men for the same products or services.

You might imagine a used car salesman from (let’s hope) a by-gone era. A woman walks onto his lot and he rubs his hands with glee. If the woman finds a car she likes, he might inflate the bottom-line price beyond what he thinks a man would pay.

Cost-conscious women wouldn’t fall for this stunt. But the pink tax’s tentacles reach beyond a dealer’s lot. In fact, it might cost each woman more than a million dollars. Sure, that sounds crazy. But stick with me for a moment. We’ll take a closer look.

In 2016, CBC News visited 46 Canadian pharmacies. They compared the prices of Canesten, an anti-fungal cream. Twenty-six of the stores had the men’s and women’s versions. The ingredients are the same, but the package colors differ. The women’s version is pink. Unfortunately, 14 of the 26 locations applied the pink tax. They charged women more for the exact same product.

CBC News also reported a study by the data mining company, ParseHub. They compared more than 3,199 personal care products at Wal-Mart and Loblaws, two of Canada’ biggest retail stores. When comparing products of equal size, women pay 43 percent more than men for razors, shampoo, deodorant, soap and shaving cream.

Women Pay More For Products Of Equal Size

Men Women % Difference
Hair Care $2.33 $2.60 11.5%
Deodorant $6.85 $10.42 52.11%
Razors $5.30 $8.63 62.83%
Shaving Cream $4.26 $5.02 17.8%
Soap $2.06 $3.06 48.5%

The pink tax slaps American women too. In 2015, the New York City Department of Consumer Affairs (DCA) conducted a study of 800 products in New York City. They examined 24 retailers, including online and brick and mortar stores across five different industries. They found that retailers charged an average of 7 percent more when products were marketed to females.

For example, baby clothes for girls cost 13 percent more than baby clothes for boys. Some toy manufacturers create identical products for girls and boys, with one exception: color. In such cases, the study found that pink toys cost 11 percent more than toys that weren’t pink.

It’s worse when girls grow up. Women’s shirts cost 15 percent more than men’s shirts. Women’s shampoo costs a whopping 48 percent more than men’s shampoo. According to the study, some stores didn’t over-charge for women’s products. But 56 percent of the stores did, and many of the men’s and women’s products had identical ingredients.

Women also pay more for services like hair cuts and dry cleaning. Sometimes, that makes sense. After all, it usually takes more time to cut and style a woman’s hair. But if a man and a woman have similar hair lengths and styling demands, the woman still pays more. She gets taken to the cleaners– for her hair and her clothes.

In 2016, CBS employees compared several New York City dry cleaners. A female producer and a male producer dropped off nearly identical items at several dry cleaners. Their shirts were each 100 percent cotton, button-down shirts of similar size and color. More than half of the dry cleaners charged the woman twice as much as the man.

In 1994, the State of California compared costs of similar services for men and women. The state’s study estimated that women paid $1,301 more each year than men. That’s about $2,500 a year in today’s inflation-adjusted dollars.

Then there’s the question of U.S. sales tax. When an item is considered a necessity, it doesn’t incur a sales tax. Such items include groceries, and personal care products like lip balm, sunscreen, eye drops and petroleum jelly. But in 2016, The Washington Post reported that most U.S. states charge sales tax on women’s tampons. It’s hard to imagine anyone saying lip balm and petroleum jelly are greater necessities.

The New York Department of Consumer Affairs also says gender price differences hurt when we hit old age. Women pay 15 percent more than men for supports and braces; 12 percent more for canes; 21 percent more for personal urinals.

It’s tough to know how much the pink tax costs the average woman every year. So let’s be conservative. Assume the pink tax cost $2000 a year. If such an amount were saved and invested, it might become a small fortune. Between 1972 and 2018, U.S. stocks averaged a compound annual return of 10.37 percent per year. Nobody knows how stocks will perform over the next five decades, so let’s aim low. Assume U.S. stocks averaged a compound annual return of 7.5 percent per year over the next 50 years.

If a fifteen year-old girl invested $2000 a year, she would have $1.03 million by the time she’s sixty five, if she earned a compound annual return of 7.5 percent. The prices of goods and services, however, will increase with inflation. If she increased what she saved (in line with inflation) she would have a lot more.

Fortunately, women are catching on. Some are avoiding businesses and products that charge a gender premium. According to a 2018 First Insight survey, women are also more cost-conscious than men. Such discerning shopping habits (and some good old-fashioned complaining) might help to level the field one day. Until then, women need to be much more careful with their money than the average man would be. If possible, they should avoid businesses or products that charge a pink tax. Doing so might save them more than a million dollars.

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