A new ONS report shows that women are narrowing the earnings gap slightly and that higher degrees benefit them, but that they still earn 41% less than men over their lifetime.
Women’s average lifetime earnings has grown more since 2004 than those of men, but remain 41% lower than those of men in 2018, according to a Office for National Statistics report.
The report says that, despite men’s average lifetime earnings falling by 0.1% in 2018 and women’s average lifetime earnings increasing 0.2% compared with 2017, the average lifetime earnings of men in 2018 were £643,000 while those of women were £380,000. Taking into account the effect of weekly hours worked by men and women, the ONS says women’s human capital is 22.7% lower than men’s.
Despite this, women’s average lifetime earnings have grown at a faster rate since 2004. The average rate of increase has been 0.7% annually, while for men it has grown by an average of 0.3% a year during this period.
The report found that having higher degrees had a positive impact on earnings and that for those aged between 26 and 55 years, the premium associated with having a higher degree is greater for women than for men. For example, among those aged 36 to 45 years, it says that women with a Master’s or PhD degree will earn, on average, £108,000 more over the rest of their working life than those with an undergraduate degree, compared with a premium of £92,000 for men. This suggests, says the ONS, that, in terms of future earnings, it is more beneficial for women to obtain higher degrees than for men.
However, women with a Master’s or PhD degree have around 33% lower lifetime earnings than men, on average, with the same level of qualifications, depending on their age. Across every age group, the average future lifetime earnings of women with Master’s or PhD degrees is substantially lower than that for men with undergraduate degrees. For example, women aged 26 to 35 years with higher degrees have average lifetime earnings of £803,000, whereas men of the same age with undergraduate level qualifications have average lifetime earnings of around £1,160,000.
Meanwhile, the Financial Conduct Authority (FCA) says the number of women in senior roles has barely changed in 15 years. It says that just 17% of senior roles are filled by women, almost the same as in 2005, although there has been more improvement at some of the biggest banks. And research by wealth manager AJ Bell suggests that high childcare costs and limited benefits are proving a disincentive for parents to return to work after having children. The study found that parents with two toddlers in nursery are spending more than £32,500 a year on childcare.