By Jadyn Sutton
Women earn 82 cents for every dollar a man makes according to the Bureau Labor of Statistics, yet the price of goods and services marketed towards women are often inflated and are more expensive than goods and services that are gender neutral or marketed towards men. This concept is called the pink tax and is a form of price discrimination. Price discrimination is charging different prices for a good or service because the willingness to pay varies across buyers. This price discrimination is gender-based and is used to maximize the consumer surplus and turn it into economic profit. Producers charge women more for goods and services because they may have a higher demand for the product and producers profit off of that.
The pink tax is not a real sales tax, but it’s included in the cost and refers to price inflation of goods and services marketed towards women. Some of these goods include razors, shampoo, conditioner, soap, lotion, deodorant, toys, and clothing, and services like dry-cleaning and haircuts. In 2015, the New York City Department of Consumer Affairs (DCA) conducted a study and surveyed 35 product categories. They found that 42% of the time, products marketed towards women cost more, while only 18% of the time, products marketed towards men cost more. On top of that, clothing companies pay higher import taxes on certain women’s clothing than on similar men’s clothing made with the same fabric according to the 2015 study conducted by Mosbacher Institute for Trade, Economics, and Public Policy at Texas A&M University.
California has estimated that women pay more than $2,300 on goods and services marketed to them than similar products marketed towards men in a single year. Over a woman’s lifetime, that is estimated to be about $188,000 more than men. Given this, the pink tax is a contributing factor to financial inequality between men and women and the disproportionate financial burden U.S. women endure.
Although the Pink Tax Repeal Act has been introduced to Congress several times since 2016, there is currently no federal ban on the pink tax. However there has been action taken from a few states and businesses. New York and California have banned it, and states like Virginia, Colorado, Iowa, and Nebraska have eliminated sales tax on feminine hygiene products. CVS also lowered prices on its feminine care products and eliminated sales tax in twelve states on these products. As states and businesses continue to become more progressive with this issue, it is likely that the pink tax will be outlawed in more states and eventually the nation.
Sources
Bade, Robin, and Michael Parkin. Essential Foundations of Economics. Essential Foundations of
Economics, 8th ed., Pearson, 2017, p. 322.
Cole, Gail. “What Is the Pink Tax and Will It Have an Impact in 2023?” Avalara, 5 May 2023, www.avalara.com/blog/en/north-america/2023/05/what-is-the-pink-tax-and-will-it-have-a n-impact-in-2023.html.
Gillespie, Lane. “The Pink Tax: Latest Updates and Statistics.” Bankrate, 27 Feb. 2023, www.bankrate.com/personal-finance/pink-tax-how-women-pay-more/.
Taylor, Kelley. “Pink Tax: What Does Price Discrimination Cost Women?” Kiplinger, 8 Mar.
Graphic by Jadyn Sutton
