On International Women’s Day, Inclusive Capitalism examines the gender pay gap in the gig economy

Today, on International Women’s Day, I want to look through the lens of inclusive capitalism at the glaring pay gap that exists between men and women working as independent freelancers. Legal & General has released a multi-part study of the US gig economy, partly to uncover what motivates so many people to work outside of traditional jobs, bosses and workplaces, and partly to understand what financial safety nets these people are lacking for, who choose to work as freelancers. Here we take a special look at women who have made that choice, informed by our latest report on women in the gig economy.

Some time ago we set out 10 guidelines for an inclusive capitalism. Below:

• “Inclusive capitalism benefits a wide range of people.” (#2)
• “Integrative capitalism helps to solve market or political failures.” (#4)
• “Inclusive capitalism supports environmental, social and governance (ESG) policies.” (#6)
• “Inclusive capitalism requires that we break the cycle of combined educational, financial and digital exclusion.” (#8)
• And: “Integrative capitalism strives to break the cycle of inequality between the generations.” (#9)

Gathering data and impressions from our female freelance sample, roughly half of the 1,044 people we interviewed, we found a number of startling facts about their financial situation. The number of hats they must wear to keep their lives and the lives of others running smoothly, and the work-life trade-offs that come with it. How many consider the conventional workplace to be somewhat a waste of time and prefer, as one of our interviewees put it, not “…not having a manager breathing down their necks”. How older freelance women in particular worry about their fundamental lack of long-term financial security. And, easiest to back up with numbers, the highly significant pay gap between female gigworkers and their male counterparts – a 32 percent difference on average. This compares to the total figure reported by Pew that American women earn 82 percent as much as men, a figure that hasn’t really changed in a few decades.

during an Equal Pay Day summit at the White House, March 15, 2022. Photographer: Bonnie Cash/UPI/Bloomberg© 2022 Bloomberg Finance LP

Here are some stats from today’s report. In the lowest salary bracket, 58 percent of those surveyed were women. Compare that to the highest pay bracket, where 68 percent of the group were men. In the group making over $100.00 a year from gig work, we found that only 18 percent are female, while 28 percent are male. Looking at the top concern of female freelancers, 71 percent said their top concern is their financial future. No wonder. In our sample, only 8 percent of women reported having a retirement plan.

Why is the gap so much larger for female gigworkers? One reason we found is that female gig workers are mostly in lower-paying work sectors such as beauty & health, media/writing, and online/app services. They’re far less likely to work in IT, the highest-paying sector among all the freelancers we surveyed. To give an example of how this plays out, as we’ve been told, a typical media or writing project might command a $300 fee, making it the lowest paying sector. Compare that to $1200 per project in the IT sector.

This is where inclusive capitalism can make a difference. Looking again at #8 above: Inclusive capitalism requires that we break the cycle of combined educational, financial and digital exclusion. The lack of women in tech – currently the highest-paying jobs available – could be due to a number of factors, including the relative lack of young women being trained for IT careers. The 2016 film Hidden Figures, about three black women mathematicians who, against great odds, worked as “human computers” for NASA in 1961, points out that this is not a new social problem.

Looking at the tech pay gap, the overall disparity our research uncovered tells a similar story. We found that across all categories of respondents who reported their income, whether paid per project, per hour, per week, or per month, women earn on average over 30 percent less than men (see chart below ).

Law & General

We also found that raising children and caring for them were the top reasons why many women chose to work in the gig economy rather than traditional office jobs. While 18 percent of female freelancers we spoke to said they chose gig work because of having a baby, that number rose to 43 percent for those who are already moms. In contrast, 19 percent of male gig workers who are already fathers said they were driven to gig work by a need to be more available to their children.

While it’s well-documented that not only do women make less money than men and provide more (unpaid) caregiving, we found from our survey respondents that they also have less access to retirement savings than regular workers, making them far more concerned about their financial situation future than their male counterparts. In our study, 71 percent of women said the worst thing about gig work was not having access to group pension plans and other benefits. Seven out of 10 women either expect their monthly retirement income to be under $3,000 or aren’t sure what to expect. In comparison, 46 percent of men expect a monthly retirement income of $3,000 to $6,500. In fact, the UN Department of Economic and Social Affairs recently reported that older women are more affected by poverty than older men in both rich and poor countries.

Our research on women in the gig economy paints the picture that inclusive capitalism is needed now more than ever to address these injustices in their favour. Investing in women’s long-term social well-being, as well as in their short-term equitable prosperity, are initiatives that will help bring the ‘inclusive’ to ‘capitalism’.

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In 2012, I was appointed Group Chief Executive of Legal & General, a global financial services firm with over $1.7 trillion in assets under management. From 2015 to 2016 I was a member of former British Prime Minister David Cameron’s Business Advisory Group. This experience has helped enrich my thinking on how capitalism can benefit society at large. The approach advocates using capital to create conditions in which people can create their own success, primarily through reinvestment and the creation of new assets. This is vital if we are to create a fairer society that empowers people and allows all boats to rise. I believe that with real leadership we can get there. Quick Fact: I won Most Admired Leader at Britain’s Most Admired Companies Awards 2017 for Management Today and was also City AM’s 2014 Business Personality of the Year. I have competed in numerous track and field championships, including the 800-meter British Masters, and have a PhD in economics from the Massachusetts Institute of Technology. Most recently, I was on HM Queen Elizabeth’s New Year’s Roll of Honor for 2022.

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