Most often when people think about gender inequality and money, we tend to think about the gender pay gap, the average difference between what women and men earn from working. In the U.S., on average women earn 82 cents on the dollar compared to men. The gender wealth gap is less frequently discussed, but is even wider. The gender wealth gap is the average difference between how much money women have compared to men, or their total assets minus debts. In the U.S., on average women own 32 cents on the dollar compared to men. You read that right, THIRTY-TWO MEASLY CENTS.
What’s contributing to the gender wealth gap?
The gender pay gap. With women earning less than men in the same jobs, we end up having less to spend, less to save, and less to invest.
Investing. Women on average invest less and later than men. This is a big problem since wealth compounds upon itself, meaning the earlier you invest, the more of an opportunity your money will have to grow. This video shows you the power of compound interest and investing early.
Retirement savings. American women in 2017 held $42,000 in median retirement savings, compared to $123,000 for men. On top of that, women live longer than men which means they have to stretch less in retirement savings over longer periods and are more likely to end up widowed. Women are more likely to leave the workforce or take part-time jobs to accommodate caregiving responsibilities, resulting in lower Social Security payments and lower total retirement income.
The debt gap. On average, women pay more for debt than men and also have more debt. Americans carry an estimated $1.5 trillion in student loan debt, and nearly two-thirds of that amount, or $929 billion, is held by women.
The pink tax. Also known as gender-based pricing, the pink tax is an upcharge on products intended for women that are identical or very similar to products for men. In 2015 the New York City Department of Consumer Affairs released a report about price disparities for 794 comparable products from 91 brands sold throughout the city. It found that shampoo for women costs on average $2.71 or 48% more than the same product for men.
At the end of the day all of these factors and more compound upon each other in a vicious cycle, perpetuating the gender wealth gap. What’s more, tons of research has recently come out showing how women have been disproportionately negatively affected by the pandemic. Experts are now sounding the alarm that progress toward gender equality may be the latest in a long list of casualties of the coronavirus pandemic.
So what can we do to close the gender wealth gap? The first step is to be fully aware of the challenges we face as a society. The World Economic Forum estimates that the gender pay gap alone costs the economy $1.2 trillion annually and at the rate we’re going, gender parity won’t be attained for another 99.5 years.
You can learn more about gender lens investing and how we as both investors and individuals can work to fight the gender wealth gap here. For more resources on closing the gender wealth gap be sure to check out the organization, Closing the Women’s Wealth Gap (CWWG).