I know we hear about the pay gap at nauseam these days and it all gets a bit ho hum to many.
We debate it, we deny it, we defy it, we try to change it, we’re all frustrated by it no matter what camp you’re in. And the reality is, no matter what data you use to calculate it, and no matter how you slice and dice the numbers you still end up with a double digit pay gap in terms of the difference between what men and women working full time earn, on average.
But have you ever thought about what this means, as a woman, to what you have to live off when you retire? Well there’s also been a lot in the media about the retirement gap over the last few months too.
Rightly so, it’s a frighteningly horrific situation that many of us are in. Turns out it has a massive impact on our retirement. As just a taster, women retire with around half the Super as men do, often only having a few years’ worth of Super to live off before needing to go onto the pension. Women are also twice as likely to live in poverty in old age and are the highest growing category of homeless people.
But why is this the case. What has caused it? How the hell has it happened?
To be honest it’s really bloody complicated and the gender pay gap is just one part.
To properly answer these questions requires a close examination of all the interconnected elements, which is a thesis in itself, so to avoid that I’ve broken it down into the simplest factors:
Gender Pay Gap
This is one of the most commonly talked about factors but is really only one of the contributors.
According to the Workplace Gender Equality Agency, the gender pay gap that we commonly talk about is the difference between women’s and men’s average weekly full-time base earnings, expressed as a percentage of men’s earnings. It is a measure of women’s overall position in the (paid) workforce and does not compare like for like jobs. It therefore also doesn’t include part time income in the equation, a common misconception. Currently it’s sitting at 15.3%. However, when you drill down into more like for like roles (like TV presenters) you often still see a whopper of a gap.
What this is, in broad terms however is that you’re probably earning less being female for a variety of reasons, some are outlined below FYI. And as we are paid super as a percentage of what we earn (typically 9.5% of our salary is paid by our employer into our superannuation), every dollar less in income for whatever reason means less money in our nest egg.
Caring responsibilities
Officially the sandwich generation, we have a stack of caring responsibilities in our lives, whether it’s caring for young children and/or older family members. When new mums take parental leave there’s generally no superannuation paid by their employer or the government. Women are more likely than men to work part time, which is often to be able to juggle all of the caring and managing the house. This again means you earn less over your working life just because you’re working fewer hours.
The way we work
More women are casual employees than men. As outlined above we do tend to work fewer paid hours (mostly because we’re involved in unpaid caring). The rise of the “gig economy” means we can be working multiple jobs without having to earn any super as all of the individual jobs we do don’t earn enough to get paid super. Turns out you need to earn $450 a month to be paid super – Equip super explains it well here.
Where we work
Not as in geographically, but as in what type of job you do (occupation) and who you’re working for (industry).
Australia has one of the most highly gendered labour markets in the world.
What that means is there are industries full of men (but not many women) and vice a versa. So think of the construction industry (men), then think of healthcare (women).
An example of occupations would be teachers (women), stockbrokers (men). You get the idea I think but if you want more stats there’s heaps here. In fact 61% of people work in an industry that is dominated by one gender – barely any are 50:50.
What’s that got to do with the super gap or the pay gap for that matter?
Well, often industries and occupations that women work in earn less than one that are dominated by men. So we get less money for what we do (also part of the pay gap), which in turns means earning less super. Crap huh.
One more crap thing about where we tend to work is that domestic workers working less than 30 hours a week don’t have to be paid super. Domestic workers are people like nannies, house cleaners and carers. Now, who could that be? A woman?
All of these things mean we earn less over the course of our working life.
And they really compound each other: earning less in the first place + working less hours + working multiple jobs and not getting super + taking time out to have kids = Super stuffed
Super Stuffed
But what does this mean for your retirement?
Sadly the Superannuation system isn’t structured to accommodate the working and caring responsibilities that often falls into the hands of 50% of the population – women. This is why we end up with 50% less super. This is significantly more than the 15.3% pay gap because it’s a function of so many more things.
This is why we have so many more women living in poverty, living on the old age pension, and finding what should be the most amazing years of their life some of the most arduous.
Many in the industry are trying to change this Sunsuper, First State super, Women in super, ANZ, to name a few. What the industry needs is something that is actually going to shift the dial and provide a tool to do that. Something that women want to use and that will actually make a difference.
I was one of those weird people crying on the bus to work the other day thinking about these realities for women. Thinking about having to live such a tough life because through no fault of their own really hits me. I know all about the super gap, having taken two lots of maternity leave for my adorable boys and then taking a big financial hit to build this game changing start up – I live and breathe the super gap problem.
So that’s why we’re about to launch Longevity App – to do something about it. We have to. For you, for me, for us. Be part of our movement!
Dr Carla Harris recently completed the SheStarts accelerator program. SheStarts is currently calling on applications for its 2018 intake. So got a great idea? Get involved.