If your small business stocks its shelves with items marketed to women and those identifying as female, it’s possible the so-called “pink tax” influenced the manufacturer’s suggested retail price (MSRP). So what is the pink tax? It’s a term — not an actual tax — coined to explain the practice of charging women more money than men for the same products and services, particularly those marketed toward women (like pink razors).
What items are subject to the pink tax?
The pink tax exists in most corners of the consumer market but is prominent in the personal hygiene industry. A New York City Department of Consumer Affairs (DCA) report found a 13% price difference for men’s and women’s personal care products as recently as 2021.1
Products from deodorant to shampoo to laundry detergent marketed to women can have a higher price tag simply because they smell like lavender or have a color scheme marketed to women. However, it’s not just personal care products that cost more for women.
Women’s clothing and girl’s toys are two other segments of the market that are frequently subject to the pink tax: Women’s clothing costs 8% more than men’s clothing, and toys for girls cost 7% more than toys marketed to boys.2
Is the pink tax legal?
Believe it or not, the pink tax is legal — in some states.
Consumer goods companies and service providers are allowed to charge more for products marketed toward women. However, several states and cities have passed legislation banning gender-based price discrimination. Here are a few examples:
- California enacted the Gender Tax Repeal Act in 1995, making it illegal for businesses to charge men and women different prices for services that require the same amount of skill, time and general cost to the merchant.3 Specifically, it regulates the cost of haircuts, car repairs, dry cleaning and other professional services (not physical goods).
- New York passed a law in 2020 that made it illegal for service-based businesses, like hair salons, to price their services based on gender.4 It also made it illegal for companies to advertise discriminatory pricing.
- Businesses cannot charge customers for goods and services based on their gender alone in Florida’s Miami-Dade County.5 However, sellers are allowed to charge different prices based on the time, level of difficulty, and cost of providing goods and services.
- Legislation is in the works in New Jersey, where the state Senate passed a bill to prevent gender-based price discrimination. The bill addresses both services and products and is awaiting review by the state Assembly.6
On a federal level, there is a renewed effort to pass the Pink Tax Repeal Act, which would make gender-based price discrimination illegal in all 50 states.7
How the pink tax can affect businesses
The pink tax doesn’t just affect consumers. It can also impact businesses.
For example, say you own a small retail store. You decide to stock a line of shampoo marketed toward women. From an ethical standpoint, you want to charge the same price for all of the shampoos in the aisle. However, your local competitors that sell the same shampoo line are adding a pink tax, putting pressure on you to raise the price to stay competitive.
Here’s another example. You work as a hairstylist and rent space in a salon with other stylists. It takes you about the same amount of time and effort to cut a man’s short hair as it does to cut a woman’s short hair. However, it’s standard practice at the location to charge women more for the cut. You want your pricing to be equal for both genders, but you must follow the salon’s pricing. What can you do to make pricing more equitable?
How to eliminate the pink tax as a small business owner
Ultimately, business owners and marketers are responsible for the pink tax on products marketed to women. To eliminate the pink tax (or at least reduce its hold on female-identifying consumers), business owners can make an effort to equalize prices.
For example, if you own a bakery, pay attention to how much you charge for a glittery birthday cake versus the price for a sports-themed pastry. If you own a clothing boutique, try to source items from companies committed to fair pricing across their product lines.
If you feel stuck on pricing measures, you can address the issue indirectly by ensuring you’re practicing salary equity with your employees. The gender pay gap, where women consistently earn less than men for the same job, exacerbates the impact of the pink tax. Not only can it cost women more to purchase necessary products, but because women earn 84% of what men earn,8 it will also cut into a larger percentage of their take-home pay to make those purchases.
Small business protection for everyone
Beyond state and federal legislative efforts to eliminate the pink tax, small business owners can do their part by pricing items fairly for both genders. Several lawsuits have been related to the pink tax, and growing legislation on the topic increases the likelihood of future legal action.9
Even if your small business is unlikely to be caught up in pink tax legislation directly, there are many other ways for your company to be fettered by a lawsuit.
Think beyond pink to protect your business from the financial consequences of third-party claims, business property damage, worker injuries and more. Thimble offers commercial insurance for more than 140 professions, with options to get coverage by the job, month or year.
Click “Get a quote” or download the Thimble app to get covered today.
Sources:
- Federal Trade Commission. Investigating the Pink Tax.
- NYC Consumer Affairs. From Cradle to Cane: The Cost of Being a Female Consumer.
- California Legislative Information. Gender Tax Repeal Act.
- New York Department of State. Important Guidance Regarding Gender-Neutral Pricing and Services.
- Miami-Dade County. Price Gender Discrimination Laws.
- Bill Track 50. NJ S2039.
- Congress.gov. Summary: H.R.2048 — 116th Congress.
- Pew Research Center. Gender pay gap in U.S. held steady in 2020.
- Winston & Shrawn, LLP. Will New “Pink Tax” Legislation Green Light Class Actions Alleging Gender-Based Pricing Discrimination?
