Women’s Wealth Gap: If We’re So Smart, Why Are We More Likely To End Up Living In Poverty?
While everyone will likely face challenges on their journey to financial wellness, women face specific and systematic gender-based obstacles every day that make their journey more difficult and the destination of financial wellness harder for them to reach. These obstacles include the substantial and cumulative consequences of wage inequality, a lack of access to tools that can help build wealth, an increased debt burden on average as well as the historical and cultural perceptions that surround women’s roles.
Women are twice as likely to live in poverty during retirement compared to men, despite earning the majority of college degrees at every level, including 57% of undergraduate, 60% of master’s, and 51% of doctorates. They participate in comparable numbers to to men in the workforce, comprise 40% of breadwinners for their families, and contribute 40% of household income in the US. And of the children living in poverty, 56.5% live in households headed by women. So not only women, but the next generation of Americans are being left behind.
These statistics should concern everyone. But employers especially should be concerned because women’s participation in the workforce is declining, at a time when the US is facing a scarcity of skilled labor essential to the nation’s economy and to business success and innovation. And recent research indicates that companies with more women in senior management positions are more profitable. Closing women’s wealth gap could provide tremendous benefits on multiple levels — to individuals, businesses, and society in general. In this series of articles, I’ll explore the data documenting the wealth gap women experience, the reasons behind it, and what employers can do to help close it.
The income gap
One of the most persistent obstacles women face in achieving financial security is the income gap. The work that women do is still not valued equally compared to the same work performed by men. Over 50 years after the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964 made wage discrimination illegal, an earnings gap for women remains in effect. In spite of increased levels of education, women in 2016 were still paid only 80.5 cents for every dollar paid to men, a meager improvement over the 79.6 cents observed in 2015. The .9 cent increase is the first statistically significant increase since 2007.1 The American Association of University Women estimates that at the current glacial rate, women will not reach income parity for more than a hundred years, until 2119. Women of color face an even larger income gap. In 2016, black women earned 63 cents to the dollar and Hispanic women earned only 54 cents.
The income gap continues to persist for multiple reasons. These include the devaluation of work when it is performed by women, the unpaid work of caring, and the penalties incurred from salary history bias.
The consequences for women’s financial security are enormous. The income gap translates into an estimated loss of $418,800 in lifetime income over a 40-year period, according to the National Women’s Law Center.
Their research shows that looking at this gap another way, the typical woman needs to work an additional 10 years more than a man to reach the same level of accumulated income. The situation is even worse for women of color. Over a 40-year career, black women typically lose $840,040, Native American women typically lose $934,240, and Latinas typically lose more than $1 million compared to white, non-Hispanic men. To close these lifetime wage gaps, black women would have to work 23 years longer, Native American women would have to work 29 years longer, and Latinas would have to work 34 years longer. In other words, black, Native American, and Latina women could conceivably have to delay retirement beyond their life expectancy.
In the next article in this series, I’ll discuss in more depth the factors that contribute to women’s wealth gap. You can read it here.
This is Part 1 of a 4-part series, originally published on benzinga.com.
