Gender pay gap for millennials falls to 5%, but parenting penalty persists

The gender pay gap for employees in their 20s has halved in a generation to 5%, according to new research published today.

However, this improvement continues to be undone for older workers, as a wider gender pay gap persists for women in their 30s and 40s.

Females currently in their 20s will still earn significantly less than their male counterparts over their careers, according to analysis published by the Resolution Foundation’s Intergenerational Commission.

The study tracked typical hourly pay of different generations of women over the course of their careers, compared with that of their male counterparts.

It demonstrates that the gender pay gap has narrowed for every generation of women over the past century. But it also highlights the enduring “pay penalty” associated with having a family.

Looking at women’s early careers, the analysis finds that baby boomers (those born between 1946 and 1965) experienced a pay gap of 16% during their 20s. That gap fell to 9% for generation X (born 1966-1980) and then to 5% for millennials (born 1981-2000).

However, the gap continues to rise rapidly for 30- and 40-somethings. Among baby boomers the gender pay gap rose from 21% at the age of 30 to 34% by the age of 40. For generation X the pay gap increased from 10% at age 30 to 25% by age 40.

The gender pay gap for the millennial cohort rises steeply to 9% at age 30, only marginally lower than the gap for generation X at the same age.

Laura Gardiner, senior policy analyst at the Resolution Foundation, 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.

It is time to abolish the parent penalty. We welcome the reduction of the pay gap for younger women, but it’s only good news if it’s sustainable” – Rebecca Hilsenrath, EHRC

“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.

“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.”

Responding to the research Rebecca Hilsenrath, chief executive of the Equality and Human Rights Commission (EHRC) said: “It is time to abolish the parent penalty. We welcome the reduction of the pay gap for younger women, but it’s only good news if it’s sustainable and meaningful – not if it’s just a postponement of the bad news for later in life.”

Gender pay gap reporting comes into force this year for companies with 250 or more employees. They will be under a duty to publish pay gap information based on data from a snapshot date of 5 April every year and bonus data based on the preceding 12-month period.

The Intergenerational Commission was compiled by the Resolution Foundation to bring together leaders from business, academia and policy-making to find ways to “repair the social contract between generations”.

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