Published in: Banks | March 10, 2020

The Pink Tax: Why Women Pay More in Stores

By:  Dana George

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While women cannot avoid the pink tax, they can find ways to minimize its effect on their finances. 

What would you say if I told you that I could guess your sex, based solely upon how much you pay for dry cleaning or shampoo? I might not get it right 100% of the time, but my ratio would be impressive nonetheless. That's because women pay more than men for so many products and services that it's easy to guess the sex of the person making a purchase. The practice of charging women more is so commonplace that it has a nickname: the pink tax. It's also sometimes referred to as the gender tax, or my favorite, the super-unfair tax. I made that last one up, but feel free to adopt it as your own.

Where is the pink tax applied?

A study commissioned by the New York City Department of Consumer Affairs (DCA) found the pink tax lurking around every corner. Shampoos and conditioners packaged for women cost 48% more than the same products for men. Buying a women's leg support is 15% more expensive than a man's, a women's cane will set you back an extra 12%, and a woman can expect to pay 11% more for razors and body lotion. In need of a "feminine" helmet? You will pay 13% more than the guys pay for theirs. You'll also pay 7% more for girl's toys and accessories and 4% more for girl's clothing.

Two women walking down a street arm in arm carrying shopping bags.

Image source: Getty Images

How the pink tax piles on

Research from The Ascent on the gender pay gap showed that in 2018, women's median weekly earnings were 81% of men's. What that means is that overall, women face higher poverty rates throughout their lifetimes and are less prepared for retirement. And that's just for starters. Having less income also means loss of opportunity -- opportunity to travel, change jobs, start their own businesses, or otherwise pursue their dreams. 

The pink tax adds insult to injury, charging a premium to those who already earn less. 

According to campaign group Ax The Pink Tax, on average the pink tax costs women an extra $1,351 per year. By the time a woman reaches the age of 40, she has already lost $54,040 -- money she could have tucked away in a savings account rather than spent on female-only items and services.

Why does the pink tax exist?

One common justification for charging women more than men for the very same products is that companies pay a higher tariff on women's clothing. 

According to the Wall Street Journal, as of 2018, 42% of clothing and footwear for women and girls was imported from China, compared with just 26% for men and boys. What that means in 2020 is the trade war with China will ultimately impact a greater number of women than men because more women end up buying Chinese-manufactured garments. 

Still, today's trade war does not explain how tariffs on female-related items ever got so high in the first place. A 2016 study from Texas A&M found that tariffs on women's clothing can be as much as six times higher than tariffs on comparable men's clothing. And that's comparing apples to apples, or in this case, wool blazers to wool blazers. Sometimes the resulting price is a bit higher and sometimes it is incomprehensibly higher. For example, the tariff on women's silk shirts was six times more than that of men's. 

Other justifications include the cost of fragrances, special packaging, and higher design costs. And then there are those who simply see the pink tax as a way to make money. Michael Cone, a trade lawyer who spent years researching the practice, told CNN he was convinced this was a case of price gouging.

How to avoid the pink tax

As much as it stinks to face higher prices on items as a woman, it is possible to practice a few creative shopping tactics to avoid having to pay those inflated costs.  

  • Shampoos, conditioners, and lotions marketed to women cost more because of their spiffy packaging and appealing fragrances. If you want to skip the tax, sniff the men's versions to find another fragrance that appeals to you. If you check the back of the bottles, you're likely to find that they've been made with precisely the same ingredients (other than fragrance). You will also save by buying the men's version of hair care products, razors, laxatives, and vitamins. Why pay extra money for eye-catching packaging and flowery fragrances?  
  • Be a savvy shopper. Northwestern University conducted a study to find out if better-informed consumers paid more, and what happened was interesting. Men and women both called various repair shops and asked about the cost of having a radiator replaced. Of those who said they had no knowledge of what the job should cost, men were quoted an average price of $383 and women were told the job would cost $406 -- $23 more. Similarly, the DCA study found that women are twice as likely to be quoted a higher price on used cars than men. To avoid this issue, do your due diligence before you inquire about prices. Have a ballpark figure of what you should be paying and let the person quoting you a price know that you've done your homework.
  • Any time you're tempted to pick up a package of pink disposable razors rather than the less-expensive blue version, or pay twice as much for a hair trim than a man would, remember this: Every dollar spent on the pink tax is a dollar you don't have to pursue your passions or retire in style. The truth is, you have the power to wrest the money from the hands of advertisers. 

It strikes me as odd that companies actively overcharge women in this way. As the ancient playwright Euripides once warned, clever women are dangerous. One would think retailers would have figured that out by now.

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