Alan Kohler: Gender pay gap disgrace is about prices, not just wages

We need more inflation for women in chronically underpaid jobs, writes Alan Kohler.

We need more inflation for women in chronically underpaid jobs, writes Alan Kohler. Photo: TND

Everybody’s worried about inflation at the moment, but actually we need more inflation … for women.

The fear is that interest rates around the world are about to rise, leading to a squeeze on those with too much debt (that is, just about everyone), lower valuations of shares and property and the prospect of an accidental recession like the last few times rates went up to combat inflation.

But weak wage growth has been the most pressing economic problem for years, and arguably the most pressing social problem is the financial disadvantage of women.

Too many jobs are chronically underpaid, and they are mainly the ones done by women: aged care, child care, nursing, waiting, interior design, book editing – in fact virtually any job done mainly by women is both undervalued and underpaid.

And that’s apart from the 12.5 billion hours of totally unpaid work that is estimated that women do worldwide, worth about 12 per cent of the global economy.

Ballooning crisis in health, aged care

Right now, there is a ballooning crisis in health care and aged care because workers simply aren’t paid enough for the pressure they’re under in the pandemic: there’s no buffer, and unions are warning of an exodus from the industry if the job is not valued more highly.

It’s not so much that individual employers don’t want to pay their staff more, although there’s undoubtedly some of that. Most businesses value their staff and want them to be happy.

But they can’t charge their customers more, or think they can’t.

With child care there is a circular ceiling on prices: operators can’t charge more than the mother earns, otherwise it’s not worth going to work and having the children looked after by someone else (that is, another woman).

Women often poorly paid

But as discussed, women are often poorly paid, which flows to those looking after their children.

Government subsidies for aged care, child care and health care could be increased sufficiently to lift wages, thereby socialising the solution rather than putting the burden entirely on those using the services.

But with taxes being cut (ridiculously), government debt heading for a trillion dollars and the necessarily government-funded NDIS and defence taking a growing share of the budget, that seems unlikely, even under a Labor government.

So prices generally need to rise to accommodate higher wages, especially in industries mainly operated by women, and it wouldn’t be a disaster.

Of course, that is much easier written in a column than done, and I confess that I don’t have any simple answers.

Economic and political culture

It’s not helped by an economic and political culture over many decades that says prices must be held down at all costs.

Aged care operates with a sort of inheritance tax through refundable accommodation deposits (RADs, or bonds) with the unpaid portion of bonds having to be paid off over time out of the eventual family inheritance.

So a simple way to lift aged care wages might be to increase the RAD which would, in effect, use more of the inflated value of the property being sold when a person moves into aged care.

The government should mandate higher wages for child care workers. Photo: AAP

Child care is more difficult because the carers’ wages can’t go up until the customers’ wages do, and by definition a woman who is using child care has just been on maternity leave, which is never a good career move.

Even in industries where women are supposed to get paid as much as men, like law and journalism, a woman using childcare has just spent at least 12 months professionally becalmed.

Mandate wage rises for child carers

Probably the only way to improve the wages of child carers is for government to mandate it, or support a union case in the Fair Work Commission, and let nature, or rather capitalism, take its course.

For paramedics, nurses and other hospital staff currently overworked because of the pandemic and feeling even more undervalued and underpaid than usual, it’s a matter for governments in the public system and health insurers in the private system.

And those paymasters first need to recognise there’s a problem, and that it is their problem, and no one else, and will rebound on them in the end.

As for other undervalued female jobs such as hospitality, interior design and book editing, it’s up to the paymasters in those sectors as well – they need to price their services higher so they can pay women more.

Broader issue of fairness, equality

In my view, there is a broader social issue of fairness and equality at stake, one that deserves further government intervention.

It’s not as if government has stayed out of it.

The Affirmative Action (Equal Employment Opportunity for Women) Act was passed way back in 1986, with the Affirmative Action Agency created at the same time.

In 1999 the Equal Opportunity for Women in the Workplace Act was passed and then in 2012 the Workplace Gender Equality Act established the Workplace Gender Equality Agency, currently run by Mary Wooldridge.

All of which has helped bring the gender pay gap down from a peak of 18.5 per cent in 2014 to 14.2 per cent today.

But it’s still 14.2 per cent, largely because the work done by women is not priced high enough – that is, it’s not a wage problem but a price one.

For those jobs, at least, there needs to be more inflation.

Alan Kohler writes twice a week for The New Daily. He is also editor in chief of Eureka Report and finance presenter on ABC news.

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