{"id":5958,"date":"2025-01-03T23:14:21","date_gmt":"2025-01-03T23:14:21","guid":{"rendered":"https:\/\/marriott-stats.com\/nigels-blog\/?p=5958"},"modified":"2025-03-24T14:21:48","modified_gmt":"2025-03-24T14:21:48","slug":"is-the-gender-pay-gap-closing-part-1","status":"publish","type":"post","link":"https:\/\/marriott-stats.com\/nigels-blog\/is-the-gender-pay-gap-closing-part-1\/","title":{"rendered":"Pay Gap Trends #8A – Is a Smaller Pay Gap Good News?"},"content":{"rendered":"

The gender pay gap in the UK continues to narrow in 2024.\u00a0 The good news is the pay gap is narrowing at a faster rate since 2017 when Gender Pay Gap Reporting<\/strong> (GPGR<\/strong>) for employers become mandatory<\/a>.\u00a0 The bad news is women are not progressing up the pay scale and are working longer hours, men today are worse off than their fathers were 20 years ago and the smaller pay gap is simply the by-product of wage compression induced by above inflation rises in the minimum wage.\u00a0 This is a sobering picture which tells me on balance, a smaller pay gap is not good news.<\/p>\n

This article is part A of a 2-part blog.\u00a0 Part B will be published at a later date.<\/em><\/span><\/p>\n

<\/p>\n

5 Observations I will make using 6 Charts<\/strong><\/span><\/h5>\n

When I look at gross annual pay for the median man and the median woman in the UK between 1999 & 2024, I observe –\u00a0<\/span><\/p>\n

    \n
  1. The gender pay gap is closing at a faster rate today than it was before 2017.<\/span><\/li>\n
  2. The gender paid hours gap has narrowed by at least 2<\/strong> hours per week over the last 10 years with women working more hours and men working the same or fewer hours.<\/span><\/li>\n
  3. For the last 20 years, the median man has been paid \u00a310,000 to \u00a311,000<\/strong> more per year than the median woman and the median woman has been paid \u00a34,000 to \u00a35,000<\/strong> more per year than the annualised minimum wage.\u00a0<\/span><\/li>\n
  4. Between 2009 & 2024, the median man’s pay increased by 40%<\/strong>, the median’s woman’s pay increased by 65%,<\/strong>\u00a0the annualised minimum wage increased by 91% <\/strong>and\u00a0the consumer price index increased by 51%<\/strong>.<\/span><\/li>\n
  5. When adjusted for inflation, the median man of 2024 is paid \u00a32,000<\/strong> less<\/strong> than the median man of 2004 whilst the median woman of 2024 is paid \u00a36,000<\/strong> more<\/strong> than the median woman of 2004.<\/span><\/li>\n<\/ol>\n

    These 5<\/strong> observations come from 6<\/strong> charts which I present and explain in this article.<\/p>\n

     <\/p>\n

    Data used in my 6 Charts<\/strong><\/span><\/h5>\n

    I am using UK gender pay gap data as measured by the Office of National Statistics<\/strong><\/a> (ONS<\/strong><\/span>).\u00a0 ONS<\/strong><\/span> use their ASHE<\/strong><\/span> (Annual Survey of Hours and Earnings<\/strong>) survey to estimate pay by sex (and thus the pay gap) as of April 5th of each year.\u00a0 For more details on ASHE<\/strong><\/span> and links to the ONS <\/strong><\/span>website, please read my article “Are we there yet?<\/a><\/strong><\/em><\/span>”<\/p>\n

    ONS<\/strong><\/span> publish two data sets at the end of October of each year in two different places and it’s important to understand the distinction.\u00a0 Together, they allow you to calculate 30<\/strong> different gender pay gap statistics for the UK as explained in my article “When is Equal Pay Day in 2024<\/a><\/em><\/span><\/strong>” –<\/p>\n

      \n
    1. Gender Pay Gap in the UK<\/strong><\/a> – this is an annual report showing pay gaps broken down by a variety of categories.\u00a0 However, the main data download here<\/a> only shows the pay gap, not the pay figures by sex used to calculate the pay gap.<\/li>\n
    2. Pay & Hours Data by Sex<\/a><\/strong> – here you can download a zipped file of spreadsheets containing the pay figures by sex used to calculate UK pay gaps.\u00a0 However, this only shows data for 2023 & 2024.\u00a0 To get time series data going back to 1997 in some cases, you will need to download this file as well<\/a>.<\/li>\n<\/ol>\n

      I will be using Median Gross Annual Pay for All Employees<\/strong><\/span> throughout this article<\/span>.\u00a0 <\/span>I now take the view pay gap discussions should begin with total annual pay since it encompasses all the differences between men and women such as pay rates, hours worked, permanent or temporary, etc.\u00a0 That does not make the other 29<\/strong> statistics worthless, they still have their place depending on where pay gap discussions lead you to.<\/p>\n

       <\/p>\n

      The Gender Pay Gap 1999-2024 – Median Gross Annual Pay<\/strong><\/span><\/h5>\n

      For every \u00a31<\/strong> paid per year to the median man in 2024, the median woman was paid 71.7p<\/strong>.\u00a0 When ONS<\/strong><\/span> began publishing gender pay gaps in 1999, the median woman was being paid 54.8p<\/strong> and by 2017, when mandatory employer GPGR<\/strong> began, the median woman was paid 63.3p<\/strong>.\u00a0 On average, for every \u00a31<\/strong> paid per year to the median man, the median’s woman’s pay increased by 0.5p<\/strong> per year before 2017 and by 1.2p<\/strong> per year since 2017.<\/p>\n

      On the surface, the rate at which the median gross annual pay gap is closing has accelerated.\u00a0 Correlation is of course not causation but it is reasonable to hypothesise mandatory employer GPGR<\/strong> has contributed to this.\u00a0 Before we can test this hypothesis, we need to be confident the observed acceleration is not the result of chance.\"\"<\/p>\n

      There are many ways of checking this and Chart 1<\/strong> here shows one such method.\u00a0 If I fit a straight line through the data for 1999 to 2017, I can extrapolate it into the years after 2017 as shown by the dashed brown line.\u00a0 This provides a reference point for what would be expected if the trend since 2017 was the same as the trend before 2017.\u00a0 For 2024, the reference point suggested by the dashed line for median woman’s pay is 68.1p<\/strong>.\u00a0 If I now allow for the typical year on year changes in median’s woman’s pay which could be expected by chance, I end up with the two solid curved brown lines either side of the dashed brown line in Chart 1<\/strong>.<\/p>\n

      If the actual median woman’s pay (brown circles in Chart 1<\/strong>) remain within the solid curved brown lines, then there is a lack of evidence to say the trend is changing.\u00a0 However, in 2023 and 2024, the median women’s pay rose above the upper brown line.\u00a0 I conclude the trend in median’s woman’s pay has changed since 2017 and in this instance the change in trend is an acceleration.\u00a0 This is the basis for my first observation of the five I will be making.<\/p>\n

      OBSERVATION 1 – The UK gender pay gap for median gross annual pay is narrowing at a faster rate today than it was before 2017.<\/strong><\/span><\/p>\n

       <\/p>\n

      Median Gross Annual Pay by Sex – 1999 to 2024<\/strong><\/span><\/h5>\n

      In 2024, ONS<\/strong><\/span> estimate the median man was paid \u00a337,143<\/strong><\/span> per year gross before tax compared to \u00a326,628<\/span><\/strong> per year paid to the median woman.\u00a0 Chart 2<\/strong> plots these estimates for every year since 1999 and from this data, I can calculate two statistics relevant to discussions about gender pay gaps –<\/p>\n

        \n
      1. The Gender Pay Differential<\/strong><\/span> is the difference between the median man’s pay<\/strong><\/span> and the median woman’s pay<\/strong><\/span>.\u00a0 In 2024, this was \u00a337,143<\/span><\/strong> – \u00a326,628<\/strong><\/span> = +\u00a310,515<\/span><\/strong>.\u00a0 I will plot the gender pay differential later on in Chart 5<\/strong> but you should be able to anticipate what it will show from Chart 2<\/strong>.<\/li>\n
      2. The Gender Pay Ratio<\/strong> <\/span>is the ratio of the median woman’s pay<\/strong><\/span> to the median man’s pay<\/strong><\/span>.\u00a0 This is what I plotted in Chart 1<\/strong> and is repeated in Chart 2<\/strong> in the purple labels.\u00a0 In 2024, this was \u00a326,628<\/span> <\/strong>\/ \u00a337,143<\/strong><\/span> = 0.717<\/strong><\/span> or as I expressed it in the previous section, for every \u00a31<\/strong><\/span> paid per year to the median man, the median woman was paid 71.7p<\/span><\/strong>.<\/li>\n<\/ol>\n

        \"\"<\/p>\n

        For context, I also plot in Chart 2<\/strong> the annualised National Minimum Wage<\/a><\/strong>.\u00a0 The minimum wage is set by the government for hourly pay only and not for annual pay so how did I arrive at the Annualised Minimum Wage<\/strong> shown by the black line in Chart 2<\/strong>?\u00a0 I ended up using a simple calculation whereby I multiply the hourly minimum wage by 1924<\/strong> which is equal to 37<\/strong> hours per week multiplied by 52<\/strong> weeks in a year.<\/p>\n

        The official minimum wage per hour for adults aged 21 or older is plotted in Chart 3<\/strong> for every year since its introduction in 1999.\u00a0 The labels show the hourly rate along with the year on year percentage change<\/span>.\u00a0 In 2024, the minimum wage was \u00a311.44<\/strong> per hour (up 9.8%<\/strong> on 2023) so when I multiply this by 1924<\/strong>, I end up with the annualised minimum wage of \u00a322,011<\/strong> shown in Chart 2<\/strong>.<\/p>\n

        \"\"<\/p>\n

         <\/p>\n

        Why did I use 37 hours per week?<\/span><\/strong><\/h5>\n

        Chart 4<\/strong> shows both median and average weekly paid hours for all employees and separately for men and women.\u00a0 The median weekly paid hours for all employees has been 37<\/strong> hours per week for every year between 1999 and 2024 which is why I used 37<\/strong> hours for my annualised minimum wage calculation in the previous section.<\/p>\n

        \"\"<\/p>\n

        What I find more interesting are the differing trends for men and women.\u00a0 For both, weekly paid hours fell between 1999 and 2012 for both the medians and averages.\u00a0 Around 2014, the trends for men and women start to diverge.\u00a0 For men, average weekly paid hours continued to fall, going from around 37.5<\/strong> hours to just above 36<\/strong> hours, whilst the median weekly paid hours remained steady at 37.5<\/strong> hours.\u00a0 For women, average weekly paid hours rose from 29<\/strong> hours to 30<\/strong> hours (same as 1999) and median weekly paid hours rose from just under 33<\/strong> hours to 35<\/strong> hours, again returning to where women were in 1999.<\/p>\n

        I use the term Gender Paid Hours Gap<\/strong> to describe the difference in median weekly paid hours between men and women.\u00a0 This is the basis for my second observation of five.<\/p>\n

        OBSERVATION 2<\/strong> – The gender paid hours gap has narrowed by 2<\/strong> hours per week over the last 10 years from 4.5<\/strong> hours to 2.5<\/strong> hours with women working more hours and men working the same or fewer hours.<\/span><\/p>\n

         <\/p>\n

        How has the pay gap narrowed – Median Gross Annual Pay<\/strong><\/span><\/h5>\n

        When I talk about the gender pay gap, I have not been using the formal definition of a pay gap as used by ONS<\/strong><\/span>.\u00a0 Their formulation can be expressed in two different ways as shown below but in this section I will focus on the first formulation –<\/p>\n

          \n
        1. Gender Pay Gap = Gender Pay Differential<\/span>\u00a0\/ Median Man’s Pay<\/span><\/strong><\/li>\n
        2. Gender Pay Gap = 1 – Gender Pay Ratio.\u00a0 <\/span><\/strong>This formulation shows the pay gap and pay ratio are measuring the same thing but I have always preferred the pay ratio formulation because experiments show the public understands this better.<\/a><\/span><\/li>\n<\/ol>\n

          In 2024, the gender pay differential for median gross annual pay was +\u00a310,515<\/strong><\/span> so when divided by the median man’s pay of \u00a337,143<\/span><\/strong>, I end up with +0.283<\/strong> or +28.3%<\/strong> i.e. the median woman is paid 28.3%<\/strong> less than the median man when comparing their gross annual pay.<\/p>\n

          I have already plotted the gender pay ratio in Chart 1<\/strong> and the median man’s pay in Chart 2<\/strong> so let’s now look at the gender pay differential in Chart 5<\/strong>.\u00a0 It appears this has been essentially stable for the last 20<\/strong> years, fluctuating between \u00a310,000<\/strong><\/span> and \u00a311,000<\/strong><\/span>.<\/p>\n

          \"\"<\/p>\n

          The second differential shown in the chart is the difference between the median woman’s gross annual pay and the annualised minimum wage.\u00a0 In 2024, the median woman was paid \u00a34,617<\/strong> more than the annualised minimum wage and this differential has also been essentially stable, fluctuating between \u00a34,000<\/strong> and \u00a35,000<\/strong> over the last 20 years.<\/p>\n

          Taken together, I arrive at my third observation of five<\/span>.<\/p>\n

          OBSERVATION 3<\/strong> – For the last 20 years, the median man has been paid \u00a310,000 to \u00a311,000<\/strong> more per year than the median woman and the median woman has been paid \u00a34,000 to \u00a35,000<\/strong> more per year than the annualised minimum wage.\u00a0<\/span><\/p>\n

          Why is this observation important?\u00a0\u00a0Over the last 15<\/strong> years, the gross annual gender pay gap has narrowed from 39%<\/strong> to 28%<\/strong>.\u00a0 How could this happen if the gender pay differential is essentially unchanged over this timeframe?\u00a0 The answer is the denominator of the gender pay gap formula has increased over time which is what brings the pay gap closer to 0<\/strong>.\u00a0 For example, –<\/span><\/p>\n