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The Actuary The magazine of the Institute & Faculty of Actuaries

Gender pay gap falls to 5% for millennials in their 20s

The difference between the earnings of men and women in their 20s has halved in a generation to 5%, however this widens once women enter their 30s and 40s according to research by Resolution Foundation.

'Many millennial women haven’t experienced much of a pay gap yet' ©Shutterstock
'Many millennial women haven't experienced much of a pay gap yet' ©Shutterstock

It suggests that many millennial women will still earn significantly less than their male counterparts over their careers, despite more equal pay during their first decade of employment.

The research concludes that despite the gender pay gap closing for every generation since those born between 1911 and 1925, women are still often experiencing difficulties maintaining and finding new employment once having children.

Resolution Foundation senior policy analyst, Laura Gardiner, said: “Successive generations of women have benefitted from slow but steady progress in closing the gender pay gap.

“Young women today face relatively little disadvantage in terms of their pay packets compared to what their parents’ and grandparents’ generation faced.

“But while many millennial women haven’t experienced much of a pay gap yet, most probably will once they reach their 30s, when they start having children.

“What’s more this pay penalty is big and long-lasting, and remains for younger generations despite the progress in early careers.”

The gender pay gap for median gross hourly earnings by generation in the UK is:

Source: Resolution Foundation and ONS
Source: Resolution Foundation and ONS

The analysis shows that those born between 1946 and 1965 experienced a pay gap of 16% during their 20s, but that this fell to 9% for people born between 1966 and 1980, which then fell to 5% for the most recent generation.

However this progress in the early career phase is reversed as women enter their 30s and 40s, with the gender pay gap for baby boomers rising from 21% at the age of 30, and to 34% by they were 40.

The Foundation says that as men and women work for longer, tackling the gender pay gap at all stages of women’s careers will hold the key to reducing the lifetime earnings penalty they continue to face.

This means addressing the fact that having children carries such a sharp and long-lasting pay penalty, and exploring how both women and men can maintain or start new careers in later life, particularly if they work into their 70s.

“As people continue to live and work for longer, it’s important that businesses, policy makers and civic society continue to focus on closing the gender pay gap at all ages, and for every generation,” Gardiner continued.

“After all, small hourly pay gaps quickly grow into large lifetime pay penalties that can leave women hundreds of thousands of pounds worse off over the course of their careers.”