Is it natural that someone aged 60 is paid less than a 35-year-old colleague? Why does pay start to drop for women when they reach 40, when men’s pay only starts to decrease when they are 50? The age pay gap almost goes unnoticed. We have a culture that values youth, and a gradual decline to retirement is something we take for granted.
That needs to change.
More of us are already working longer, and more of us will need to do so, as we live longer. The three-stage life of childhood, adulthood, and retirement, is out of date. We are beginning to work, live and learn differently, with four, five or more life stages and transitions replacing the three-stage – childhood, work retirement – model we are used to.
Access to engaging, challenging and satisfying work is a fundamental need whatever age we are. Recommendations from our Missing Million report offers guidance on the actions business can take to make this a reality for the older worker.
Advancing years signals a decline in earning power
Earning power as you get older is different for women and men. For women, this peaks by the age of 40, whereas men continue to earn more into their 50s. Post 60, a woman’s earning power slumps to less than what men are earning in their twenties.
For men too, wages start to drop off at 50. A preliminary analysis of this year’s Business in the Community age benchmark data shows that this reflects access to senior roles. It is the ability to access higher paid, senior manager jobs that you lose as you get older.
Variations across different organisations and sector are significant, but there some universal truths. You are unlikely to be well paid if you work part time. You are unlikely to be well paid if you are a woman over 40, or a man over 55 – unless you are in the top echelons of your highly skilled profession, in which case, you can set your own terms.
We have, rightly, spent decades battling with the gender pay gap – the age pay gap now needs our attention as well. We need to better understand where the gaps can be explained by individual choice – the highest paid might choose to stop earning because they can afford to, distorting the figures. A better understanding of, and action on, the compound discrimination that older women face is also a business imperative. We could and should hope to see signs of change, as the baby boomer generation resets the terms of retirement, and millennials expect more from their employers than the linear progression of the past.
Alongside these issues, the continuing part-time pay penalty also needs to be addressed. The gradient in the chart showing the age pay gap for part-time work is less steep because part-time jobs are so limited to low paid work. Whilst far more women work part time, because of childcare, men do not fare well either when they need to reduce their hours.
It is right that working longer is part of the solution to the pensions crisis – but it is not easy to save in your 50s and 60s if you can only get a low paid job.
There is nothing inevitable about being paid less as you get older, nothing mandatory about gradual decline. In a 100 year life, we will be learning, grafting and thriving – and getting paid fairly – well beyond age 50.