Shortchanged: Women and the wealth gap
by Alison Perlberg on 04/04/11 at 8:52 am
On the surface, the financial gender gap appears to be closing. Women now earn 78 cents for every dollar men earn, and women under 25 working full-time earn 95% of what their male peers earn. Women make up 47% of the labor force.
Despite these encouraging developments, sociologist Mariko Chang uncovered a vastly different story. In her recent talk, “Shortchanged: Why Women Have Less Wealth and What Can Be Done About It,” Chang revealed that despite the rise of women’s earnings to 78% of men’s, women own only 36% as much wealth.
Chang emphasized studying wealth rather than income because income only tells part of the story. Wealth, which embodies the total economic resources available to its holder, more accurately indicates overall financial status. Wealth can provide a financial cushion in times of distress, decrease the holder’s dependence on employment, and generate opportunities for social and political influence. In fact, the gender wealth disparity has been on the rise since 1998 despite the recent decline in the income gap. According to Chang, “The gender revolution has stalled, and the ways it has stalled are reflected in the wealth gap.”
The story is especially grim for particular groups of women. Never-married women own only 6% of the wealth of never-married men. More than half of all single Hispanic women in the US are what Chang calls “wealth poor,” possessing no assets or suffering from debts that outweigh the value of their assets. Single black and Hispanic women own a penny of wealth for every dollar owned by men of their race, and they own a fraction of a penny compared to white men. Because these racial inequalities are intertwined with gender, Chang warned, “Unless the gender wealth gap closes, the racial wealth gap cannot close.”
Also, marriage does not solve the wealth problem. Women often become economically dependent on their husbands and have less control over shared finances. According to Chang, men frequently manage the finances due to “deep rooted assumptions about which gender is better suited for these tasks,” and women’s economic self-sufficiency before marriage often impacts their relative power in the marriage. These disadvantages can be difficult to quantify, as marital wealth is often considered equally shared among spouses. Furthermore, women tend to outlive their husbands, and they experience more negative financial consequences from divorce than men. Half of all households are non-married, half of all marriages end in divorce, and women now spend more of their lives single than married.
Men enjoy greater access to the wealth escalator.
What factors contribute to this troubling gender wealth gap? According to Chang, men enjoy greater access to the “wealth escalator,” which translates income into wealth at a faster rate. This wealth escalator includes perks like fringe benefits (paid vacation days, health insurance, stock options, etc.), favorable tax codes (capital gains tax, tax credits, etc.), and government benefits (unemployment insurance, social security, welfare, etc.). Women are systematically less likely to tap into the wealth escalator because of the jobs they work in and their greater propensity to work part-time. Men are more likely to attain jobs with benefits, receive higher incomes that allow them to save more, work full-time throughout their adult lives, and possess the types of assets that receive preferential tax treatment. Even if the income gap closed today, women would not be able to turn their incomes into wealth as effectively as men.
Women also suffer from a “debt anchor” that compounds their wealth-building disadvantage. Women tend to have higher interest rates on their debts and are more likely to fall victim to predatory lending practices.
Motherhood is another primary cause of the gender wealth gap. Women are more likely to shoulder the financial burden of single parenthood, and in dual-earning couples, mothers are more likely to have primary caregiving responsibility. As Shelley Correll of Stanford University has demonstrated in her research, mothers face stereotypes that decrease their perceived credibility, capability, and worthiness of promotion in the workplace, whereas men experience a wage increase with fatherhood. Mothers receive a 4% wage penalty for the first child and a 12% penalty for each additional child.
So how can policy-makers address this dire situation? Chang provided a step-by-step recommendation for chipping away at this intimidating problem. Because current policies fail to give women access to the wealth escalator, Chang suggested incorporating caregiving into the wealth escalator and encouraging more caregiving from men. Employers must throw away the “ideal worker norm,” in which employees are expected to be constantly available, and restructure the workplace to match the needs of both women and men. In her book, Chang also recommends giving women greater access to low-interest loans, changing the definition of assets in divorce laws, disconnecting certain benefits from full-time employment, and helping single parents tap into the wealth escalator. Such policies can help ensure women and men have equal access to the wealth escalator and share equal responsibility for caregiving.
Chang argued that the wealth gap is not a “women’s problem.” Men should care about decreasing the gap not only because it affects the economic wellbeing of the women in their lives, but because they should no longer bear the sole burden of providing financially for their families. From a broader societal perspective, high levels of inequality and massive economic disadvantage prevent individuals from contributing productively to the economy and to their communities.
This talk was sponsored by the Clayman Institute for Gender Research, the Center for the Study of Poverty and Inequality, and the Vice Provost for Graduate Education at Stanford University. Chang, currently at Insight Center for Community Economic Development, received her PhD from Stanford University.
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Alison Perlberg is a graduate student in the Department of Sociology. She is part of the Clayman Institute Student Writing Team covering gender topics at Stanford.
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Baxter Wynn
Apr 5th, 2011
Excellent article. I strongly agree that the wealth gap is not simply a “woman’s problem.” We are all “shortchanged” by prejudice, discrimination and inequality.
Baxter Wynn
laynein
Apr 6th, 2011
prejudice is everywhere, not only the sex.
irlandes
Apr 6th, 2011
Marketing people will tell you that women spend most discretionary spending in the US, like 80%. If women have less it is because they spend it all as fast as they get it. Their own fault. Nothing stops a good whiner.
Alexandra N.
Apr 6th, 2011
How much of their discretionary income do women spend as compared to men? More.
How much do women save in proportion to men? Less.
I understand that there are environmental factors, but they do not account for 100% of the gap. Talking about a wage anchor and saying it’s everyone’s burden is dishonest if personal responsibility is not taken into account.
Rejean Trombley
Apr 6th, 2011
It doesnt help that women never chose to work hard and dirty jobs. how many women apply for a garbage clean up job. or go out and get an oil patch job. why dont these studies ever include the death rates of women versus men at work. the sacrifices men make to make more money is the only reason they make more. it is not a gender biased world.
Josh
Apr 6th, 2011
Interesting that this study doesn’t bother to mention the fact that of college educated individuals women now account for over 50% of the workforce and have higher average salaries than their male counterparts.
Also, as mentioned before me, the study should look at discretionary spending. Women spend far more money than men on luxury goods, men put far more of their money into investments (stocks, bonds, real estate, etc).
DebraJK
Apr 7th, 2011
There are some well informed replies here, particularly regarding the stats for college-educated women. I believe that women who grow up in or rise into a higher socio-economic status are far more likely to be equal in wealth statistically. That’s a factor brought about simply by educating oneself.
The gender roles of parenting effecting wealth are unavoidable, to a degree. Part of this is rooted in culture and religion, but part of it is a conscious maternal choice to spend more time home with small children – a choice, not a flaw. Mothers who choose to can balance parenting with financial health, as there are many resources available to teach them how.
For single-mothers without higher education, just getting by is often their primary goal unfortunately. This is a burden that many men do not have to shoulder, and therein lies the inequality. Again, I am speaking statistically, not universally.
Ellen
Apr 7th, 2011
The hostile tone of many of the comments in response to this article highlights better than any statistics the challenges women continue to face in the workplace and in our society. When men holding these prejudices are in positions of power and making decisions about promotions, I cannot believe that their female employees will get a fair judgment of their worth or their work. How dare they patronize all women as irresponsible with finances and whiny? How can they paint all women in such broad strokes with no evidence to back up their opinions, in the face of rigorous scholarship? It is prejudice and nothing more. I am far more disturbed and discouraged by these comments than by the appalling statistics of the wealth gap cited in the article. Clearly we have a long, long way to go before we even approach equality.
Emily
Apr 7th, 2011
But why are there so many divorces? Who are keeping the families together? Who is at home?
I agree women are in a position to gain over the next few decades. We are the ones rising ahead, because we are the underdogs. However, I am concerned – as a woman who makes a good income, is educated and continues to pursue lofty career & wealth goals – that men may be reluctant to the financial role changes and women may perceive men as weak. While the income generate by women relieve men of the sole responsibility for providing, it also reduces the impact of a admirable, respectable purpose in their relationship.
I question how women remain feminine, while achieving their financial goals and freedom. While I am a scientific, worldly, mechanical type, I enjoy vulnerability, intimacy and generosity in my intimate relationship. In a marriage, how do we maintain these sacred, beautiful, wonderful places in our hearts while we take out the trash, talk to the mechanic, do our taxes, fix a leaky pipe, put food on the table, and pay our mortgages?
I don’t see the full swap, stay-at-home daddy or day care as the answers to all of this wealth talk. I am wondering what is the solution that preserves happy marriages while the money-making roles swap between men and women. Why isn’t a healthy marriage included in this “wealth metric”?
What’s the point.
bruce king
Apr 7th, 2011
Women suffer in divorce because they gain in marriage. When a woman marries her standard of living typically rises. When a man divorces, his standard of living typically rises.
When women outlive men they are married to they typically inherit the majority of the mans assets — and most of the wealth in this country is controlled by older women for just this reason.
Bert
Apr 8th, 2011
I really like Emily’s reply; she is smart and well balanced. It’s a mixed bag but my opinion is more education in finances should be included in later elementary school as well as classes on advertising tricks.
AM
Apr 8th, 2011
“Unless the gender wealth gap closes, the racial wealth gap cannot close.” This is off base. If being a single parent leads to greater financial hardship, then perhaps the wealth gap would close if something else did first.
As insensitive as that sounds, the single-mother birthrates of young minority women is out of control. All of those single mothers are not having children as a result of sexual assaults and incest. They are choosing to engage in risky behavior that leads to pregnancy. As angry as women may want to be about absentee fathers, that doesn’t change the fact that making the right personal choice (or dare I say moral choice) can eliminate a potential financial hurdle.
anon
Apr 10th, 2011
How convenient
Little mention of the choices women make and the impact these choices have on their future wealth.
Sorry your job teaching 4th grade doesn’t pay as well as the guy who works as a physicist (as it should be, one requires much more skill and as a result can demand much higher pay)
It’s a fact that women are responsible for the majority of consumer spending. Poll any marketing firm.
While I live modestly and save 40% of my income maxing out my 401k and ira accounts every year the women I work with are taking time off and traveling and spending all sorts of money. The married women figure their husband makes good money so it’s no problem. The single women figure their future husband will make good money so they don’t really need to save now.
It’s naive and disgusting. For all the cries for equal rights the women i encounter couldn’t want anything farther from that. They want all the opportunity but none of the responsibility. They call for equal rights yet still want chivalry, still want men to foot the burden of funding family life and still want men to pay for everything. Go out on a date with most women and all of a sudden they think you are their financier and that you have to pay because they are spending time with you. Most women in the dating world are not really all that far separated from common street walkers. The only difference is the method of payment.
You want to know why there is a negative tone in these messages. It’s because men are sick and tired of hearing made up feminist BS about the wage gap when it simply doesn’t exist after accounting for life choices and controlling for job title and years of experience.
Men are tired of women whining about how things are unequal when they are equal opportunity wise but women choose to take time off, to have different priorities other than money and pursue lower paying less demanding careers.
Men are tired of being blamed as being gender biased or discriminatory when they aren’t and we are sick of the made up BS that feminists are using to push their point.
The 78% wage gap number is based on raw unadjusted data. Nowhere in the scientific world would drawing conclusions based on raw unadjusted data be acceptable. But in the feminist world it is, and it’s proof of discrimination.
Oh look that male engineer is making more than that female grocery clerk. DISCRIMINATION. That’s what using raw unadjusted data does and to use it is ridiculous. It compares all the money made by men to all the money made by women then says THERE’S A DIFFERENCE, DISCRIMINATION. Rather than saying well 90% of teachers are women while 90% of engineers are men. And it’s not because engineering firms aren’t recruiting women, they do and they often pay them higher salaries then their male counterparts to try and get them to meet EEO laws. Yeah there is discrimination here, it’s against the men apparently.
Bah. So much BS
Misandry NoThanks
Apr 11th, 2011
http://www.inc.com/articles/2003/01/25019.html
Women are the primary consumers in the United States.
Women represent an economic powerhouse, making over 85% of the consumer purchases (in the United States) and influencing over 95% of total goods and services. Women’s consumer spending is $3.7 trillion and business spending is $1.5 trillion. Women also purchase 50% or better in traditional “male” categories like automobiles, consumer electronics, and PCs.
You were saying?
anon
Apr 12th, 2011
There Is No Male-Female Wage Gap
A study of single, childless urban workers between the ages of 22 and 30 found that women earned 8% more than men.
http://online.wsj.com/article/SB10001424052748704415104576250672504707048.html
oh snap