The influence of 'the pink tax' is about more than just higher prices. Here's how it works and how it affects women's finances.

• The pink tax is a premium placed on certain products designed for women.
• In many cases, women pay more than men for the same personal-care items, while earning less.
• The Pink Tax Repeal Act hopes to ban this practice nationwide but hasn't been passed. 
• This article is part of Women of Means, a series about women taking charge of their finances.

Women play a crucial role in the economy and in the workplace but remain underpaid and responsible for doing most of the unpaid work at home, such as caring for their children or aging parents.

In fact, an analysis by Oxfam found the monetary value of women's unpaid labor globally was worth a staggering $10.9 trillion dollars. Women's contributions to society are clearly worth a lot, and it's important that women know their worth and how to navigate their financial circumstances.

And while women typically live longer than men, they often face financial barriers, such as having less invested for retirement and being charged more for certain products, which is known as "the pink tax."

What is the pink tax?

The pink tax is the premium that is often baked into women's products. 

"The pink tax is something that has been ongoing for decades as far as we can trace it back," Judit Arenas, APCO Worldwide's senior director and head of gender practice, said. "It's gender-based pricing, which basically means that there's an upcharge on products that are traditionally intended for women but which ultimately are the same as products traditionally intended for men."

The pink tax is named for the color manufacturers use for products targeted at women — things like razors, soap, and shampoo that, in theory, don't need to be gendered. Additionally, marketers will sometimes create smaller versions of an item to try and sell it to women. 

"There are so many offerings with what is commonly referred to as this 'pink it or shrink it' strategy," said Tonya Williams Bradford, an associate professor of marketing at the Paul Merage School of Business of the University of California, Irvine. "These products are smaller and priced at a premium."

This practice starts early, with girls' toys and clothing found to be more expensive in many instances up until adulthood, when personal-care items and services cost a higher premium for women. 

Example of the pink tax 

Whether it's personal-care items, clothing, or services, you might be paying a premium if you're purchasing items traditionally targeted at women. 

"The pink tax is important for female consumers because it actually spreads across the entire chain," Arenas said. "We're talking about haircuts, dry cleaning, and other services that will be significantly different in pricing and have higher pricing for women than they do for men." 

Data from the New York City Department of Consumer Affairs 2015 report "From Cradle to Cane: The Cost of Being a Female Consumer," makes it clear that many personal-care items geared toward women come with a premium tacked on. While many consumers and brands have become aware of the issue since then, prompting social-media campaigns like #AxThePinkTax, certain products may still be costlier for women.  

This year, that number is likely to be more, especially given the spike in inflation. Looking at deodorant at Target, you can get a glimpse of some of this discrepancy. Women's deodorant is listed at about $6, while men's deodorant is listed at $5. Of course, these numbers can vary by retailer, brand, and the state you live in, as well as with sales tax. 

A 2021 report titled "Investigating the Pink Tax: Evidence Against a Systematic Price Premium for Women in CPG" found that certain women's products, like deodorant, were more expensive but items like razors were not. The report questions whether the pink tax is still prevalent.

How the pink tax affects women of color 

The pink tax is pervasive and affects all women, but the pinch may be felt even more by women of color.

Data from the Bureau of Labor Statistics showed that as of 2020, women who worked full time earned just 82% of what a man earned. In other words, women made $0.82 for each dollar a man made. The gender pay gap was worse for women of color, who earned even less compared with white men.

According to the data, Black women earned $0.64 for every dollar a white man made, while Hispanic women earned $0.57 for every dollar a white man made. Asian women were found to earn more, with multicultural Asian women earning $0.98 cents to a white man's dollar and Asian women earning $1.01, according to the Center for American Progress' analysis of the bureau's data.  

Earning less affects purchasing power, and with the pink tax, women of color are affected even more. On top of that, the pandemic has largely affected women, especially women of color who work in low-wage occupations. Some women have not had the luxury of working from home and had to deal with childcare issues, which pushed some out of the workforce altogether.

There isn't much data on how the pink tax directly affects women of color, which could reflect a bias in research or lack of nuance. Studies and data on gender are not one-size-fits-all and should be intersectional, also looking at price discrepancies for women across race and class lines. But anecdotally, Black women may pay more for hair care and have added fees tacked on at a salon, as described in this piece from The Cut.

Based on the racial pay gap mentioned above, that means Black women earn less compared with white women and likely have to pay more as a woman for things like haircuts but may pay even more as a Black woman.

Women of color may also be affected by the pink tax depending on where they live and what shopping choices are available to them.

"Women of color will have less purchasing options and choices. We've seen that very much happens in terms of food and the challenges of shopping deserts," Arenas said. "A lot of these communities will have a single source of options and not necessarily have the option to shop around." 

How to fight the pink tax 

In the day-to-day, the way the pink tax affects women may feel negligible or almost imperceptible. But paying more over a lifetime can have sweeping implications for women's finances.

In a 1994 study conducted by the California Assembly Office of Research that's often cited today, it was estimated that, compared to men, women paid more than $1,300 extra per year because of the pink tax. If that same amount of money were invested with a return of 5%, that would add up to around $16,000 in 10 years' time. If a woman put that amount yearly into such a fund, it would come out as a whopping $160,000 in 40 years.

This amount of money is significant, especially since there's also an investing gap with women putting away less than men for retirement.

"When you add in compounding and what that might look like in terms of retirement savings or contributions … it makes a huge difference in a woman versus a man's life," Bradford, the marketing professor, said.

To combat the effects of the pink tax, it's important to be a strategic consumer and be aware of this price difference. Consider buying gender-neutral toiletries like soap, razors, and shampoo that don't really need to have two versions — one for men, one for women. Also, if you see this pricing gap out in the wild, use your voice. 

"I encourage consumers to contact their favorite brands. They all have ways for you to get in touch with them, and let them know this doesn't sit well with you," Bradford said. Bradford also recommended contacting your congressional representative or senator to voice your support for the Pink Tax Repeal Act to move things forward. 

The bottom line 

The pink tax is a subtle way that women end up paying more throughout their lives for certain items. 

"This is one of these historic practices where there's a lot of opportunity for change, but it just hasn't been at the forefront because very few people actually know about how pervasive and how impactful the pink tax can be," Arenas said.

Add this to the already high cost of makeup, hair products, and clothing — which are often areas women spend in to look "presentable" — and it becomes clear that women are paying a lot, in more ways than one. 

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