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ParentsFebruary 9, 2017

Treat Her Right: How failing to fix the gender pay gap is hurting us all

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New Zealand has had legally-mandated equal pay for women since 1972 but, as the new Treat Her Right campaign makes clear, we still have far to go to reach true pay equality. Dr Jess Berentson-Shaw explains why the economic imbalance between genders is about a lot more than just equal pay for equal work.

Last week at Bastion Point our Prime Minister said all of us in New Zealand are in a “great enterprise” of building a country based on “fairness, tolerance and respect”. But what does “fair” actually look like, especially women in the workforce?

A while ago one of my children was having a not insignificant meltdown. It was over the purchase of shoes I think. It was, he wailed, “not fair!!!” It’s a pretty typical parent-child interaction – they are just trying to communicate their deep and enduring sense of injustice in the world, you are just trying to drink wine and please god watch the last 5 minutes of the boxset you started three years ago.

Explaining fair to a four year-old is a challenge, but later, when we were reading a bedtime story together, we stumbled upon this: “Fair is not everyone getting the same, fair is everyone getting what they need”. And there it was, sandwiched in the pages of kid’s book: an unpretentious explanation of what a fair society might actually look like.

And why does fair matter? Because if we want an economic powerhouse of a country we need to deliver to people what they need to thrive, not just the same as everyone else. Not all women are getting what they need to thrive and it holds us all back.

So let’s talk about why we need women to do better

I work in a space where every day I look at ‘what works’. What policies will deliver us a progressive country where everyone gets to fully participate, where all children have the opportunity become thriving adults? First let’s consider who is and who is not thriving. Women do well in some areas, but they are less likely to do so economically and this has a serious ripple effect for the country, because money matters. Having enough of it confers the opportunity to do well in health, education, skill acquisition and the further acquisition of wealth. Without it, it is pretty hard for not just individuals, but the families and children they support to do well too.

Treating her right and addressing the economic imbalance between genders and ethnicities needs to be regarded as ‘project of national significance’ if we are to achieve the prime minister’s goals.

Working class women protesting for equal pay, Australia, 1969

So how is the Government not treating her right?

1. Let’s start with gender pay imbalance

Comparing apples with apples (the median hourly rate of pay of men and women, which accounts for difference in part time and fulltime work) women earn 12% less than men per hour. The pay imbalance between gender and different ethnic groups is even more startling. The Human Rights Commission has a tool that illustrates imbalances in economic power. It tells us that the median hourly pay rate for a Pacific woman is $18.30 per hour; Maori women have a median wage of $19 an hour. This is compared to a European woman’s rate of $22 an hour and European man’s of $25.4 an hour. That sucks to put it lightly.

And the difference is not explained by men doing different (yep we know you mean ‘more skilled’) jobs, because analysis has shown when women do similarly skilled jobs with the same expertise as men, but do those jobs in women-led industries, they are still paid less. It is called the “occupational segregation” bleurgh. When people call for pay equity, what they mean is women also need to be paid the same for doing a different but comparable job as men.

But hold on, we have not yet even got pay equality – women being the same for the same job as men. For example female accountants in New Zealand are still paid less than their male counterparts.

This is not good, and it is especially not good because it was way back in 1972 that the Equal Pay Act was passed, extending equal pay into the private sector (Never mind that we don’t yet have equal pay in the public sector!).

Over its five-year rollout period, the Equal Pay Act tilted the imbalance by 5%, but the overall difference of 12% still remains today 39 years later. For Māori and Pacific women and those with disabilities progress has been even slower. Woo hoo! Way to go New Zealand – really shooting for the stars there.

The hourly pay imbalance means women earn less over their working lives than men, take longer to pay off their student loans and retire with less. However, that is not all, oh no.

2. The hard work of caring – it’s mainly a woman’s role, and it’s unpaid

Women undertake the bulk of the unpaid caring work in our society. That means women are out of the workforce not earning (but still working for the good of society) for much longer than men. And because economists can put a cost on anything we know the value of it.

When Statistics New Zealand undertook an analysis of unpaid work, they found it was worth around $40 billion to the economy each year, and that women accounted for 64% of this worth ($25 billion). The bulk of women’s unpaid work involves caring for children and other family members and they do it during their working years (ages 25-45). Men do also undertake unpaid work, but they tend to do it after retirement and do it outside of the home (i.e. not caring for family members), so they sacrifice less economically.

So women earn less per hour for the paid work they do, even if it is similarly skilled to men, they do important work that contributes to our economic growth at a greater rate than men (for which they are not paid at all), and they sacrifice their main earning years to do so.

So far so imbalanced

At this point someone will often make the ‘free choice’ argument. Women earn less, they claim, because they choose to work less. Women work part-time at a greater rate than men, therefore they are choosing flexibility over money, and it is the part-time nature of their work that the imbalance is really reflecting, not misogyny. This may be true for some women, but the funny (not funny) thing is when you earn less in a partnership there is not much ‘choice‘ about who reduces their work to raise the children or care for family members. Consider these two questions: Would women still be working part-time in the same numbers if they were paid the same as men? And if your work is valued less by society (and hence individuals) simply because it is done by women, then does stopping it look less like free choice too?

Now let’s layer the issue of poorly designed social policy on top of the reality of women’s economic disadvantage.

3. Family poverty is a women’s issue and no one appears to know it

The majority of low-income, low-opportunity parents in New Zealand are women. Half of parents who live on insufficient incomes and cannot cover their basic material needs are sole parents — of whom over 80% are women. Sole parents are in the main women in their 30s with one child. Given what we have discussed about pay rates and time off for caring for family members, it is hardly surprising that poverty is a women’s issue. However, our family support policies for some inexplicable reason fail to take this issue into account and the way they work means they further disadvantage women.

4. Our social policy seems to be designed by a 22-year-old man

Let’s take Working for Families. This is something all families on low incomes can access, a tax rebate on any type of income (including a benefit) supposedly to support families and “incentivise work”. However, it heavily disadvantages sole women parents in a particular way.

Without going into the boring details, Working for Families effectively rewards two-parent families who chose to have time at home doing caring work, while it punishes sole parent families who want to do the same. Here is how: In two parent households, as long as the combined hours of work add up to at least 30 hours (and one parent is allowed to work all those required 30 hours) the family can collect an additional payment – the ‘in-work tax credit’ of $72.50 a week. On the other hand a sole parent has to work 20 hours a week to be able to collect the same tax credit, they cannot share that work requirement with anyone else and if they drop below the 20 hours they lose the tax credit.

Given most sole parents are women, who tend to be in lower paid, more precarious casual work, and they do the bulk of the caring, sticking to that 20 hours and still doing the stressful work of parenting on their own is bloody difficult. A few slips and the whole lot goes down the gurgler, losing the family who is already in a precarious financial position more money – hardly ‘incentivising work’. Certainly not doing the best for children.

The whole thing is preposterously tilted to economically favour the 1950s nuclear family. It is called ‘the breadwinner paradigm’. We are now a nation of diverse family structures and gender and ethnic inequality is central to the story of thriving families. Someone tell the young blokes in the suits we are not going to go back to the 1950s.

5. Our current paid parental leave system entrenches disadvantage

The current structure of paid parental leave is another area that entrenches disadvantage – but this time between women. Those women who are doing better receive more money than economically disadvantaged women (for example women with a disability) when they have a child. Māori and Pacific women and women with disabilities earn less, have fewer qualifications and occupy more precarious jobs. Because paid parental leave entitlements are based on previous earnings and time in a job it means those with the least to start with have less support from Government for their children. All children deserve the opportunity to thrive regardless of what their parents’ economic situation is at their birth – and as we know the economic position you start in is a massive determinant of how well you do later in life in this country.

On top of this we have a social welfare approach that flies in the face of the evidence as it trips over itself to punish women who are on it.

6. The ‘mad bad women’ paradigm

Being on a sole parent benefit comes with a number of so-called “social obligations”. These obligations focus on the behaviour of sole parents, who are primarily women, and cuts off the payments when women fail to meet these obligations. The problem is there is no evidence these obligations improves the economic situation of women or the outcomes of their children. In fact the opposite is true. There is clear evidence from the US that forcing low-income sole parents into work, and applying financial punishments if they do not, does not improve outcomes for their children (and can make their lives worse). However, rewarding women, for example by allowing those who earn extra money while on a benefit to keep their benefit payments, improves the wellbeing of their children over the long term (and hence reduces costs to government). So cutting the money coming into the house by implementing ‘sanctions’ when a new relationship starts, or when an interview is missed, or paperwork is ‘lost’ by WINZ staff leads to very poor outcomes for children. And women who are already economically disadvantaged in society are trapped there.

So what needs to happen at a policy level to ‘treat her right’?

Government needs to work harder to meet the obligation of the Equal Pay Act – an act we passed over 40 years ago. We need to update our approach and look past the single issue of gender and think about other inequalities too. The government’s own report to the UN on gender discrimination says:

“The remaining gap is driven not by a conscious disregard for the law, but by a complex mix of factors, such as occupational and vertical segregation, patterns of employment and unconscious bias.”.

So let’s do something meaningful about those things then huh?

New Zealand’s social and economic policy needs to be redesigned bearing in mind that women make up the bulk of those affected by social support and that they are a group at economic disadvantage in society and they need to not be if we want to be “an economic powerhouse”. A focus on policies that actually work to support women and their children to have better economic outcomes (an unconditional cash payment is one thing that does work). Ditch the ideologically driven policies that are simply entrenching economic disadvantage for women and for Māori and Pacific women in particular.

What can you do?

Treat her right

Use whatever power and advantage you have to advocate for those who have less power. Men can advocate for women, Pakeha women can ally themselves to Māori and Pacific women, able-bodied people for disabled women. As adults we can all advocate for and amplify the voices of children.

The just-launched Treat Her Right campaign has some great ideas for actions you can take.

If fair is everyone getting what they need, a good start is asking women what they actually need to thrive. And that may mean a few more uncomfortable conversations yet…

Dr Jess works at the Morgan Foundation public policy think tank. She agitates on evidence and good social policy and believes in the power of honest storytelling. See her full bio and work here.

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