Money Culture

Women’s Wealth Gap Exceeds Pay Gap

If the difference in men and women’s pay is a gap, then the wealth difference can only be described as a chasm.

Women earn 80 cents for each dollar a man earns. But a woman has 32 cents of net worth to a man’s dollar.

One byproduct of the #MeToo movement is the fresh light it has put on the age-old women’s issues of unequal professional status and pay.  But Elena Chavez Quezada, senior director of the San Francisco Foundation, explains in this video that wealth – home equity and financial assets minus debts – provides a more accurate picture of financial stability over the long-term.

A 2018 report found that net worth for older women, adjusted for inflation, has actually declined over the past two decades.

“If we are going to build women’s economic security, we have to talk about income and wealth inequality,” said Quezada, whose foundation promotes economic security for women and minorities.

Of course, wealth can’t be separated from pay. Women are able to save less, because they earn less and are more likely to have part-time jobs. A smaller share of them have a retirement plan at work than men, and the typical female worker saves 6 percent of her pay, compared with 10 percent for men, according to the Transamerica Center for Retirement Studies.

Although single women have slightly higher rates of homeownership than single men, if a woman can’t afford as large a down payment as a man, she starts out with less home equity.

Older women of color saw the largest decline in their net worth, according to the 2018 report, which was conducted by the University of Pennsylvania’s School of Social Work and the non-profit Asset Funders Network.

They “lost a disproportionate share of their wealth during the foreclosure crisis, because a larger percentage of their wealth was tied up in their homes,” the report concluded.  Women of color purchased their homes with subprime mortgages in disproportionate numbers and felt the brunt of the resulting foreclosures.

Quezada suggested that policies be targeted to women and mothers, such as additional day care support, caregiver credits under Social Security for mothers, and more state IRA programs like CalSavers and OregonSaves for workers who don’t have employer retirement plans, especially at small employers.

“These strategies support everyone, but they would really benefit low-income women and women of color, who are most affected by the women’s wealth gap,” Quezada said.

Squared Away writer Kim Blanton invites you to follow us on Twitter @SquaredAwayBC. To stay current on our blog, please join our free email list. You’ll receive just one email each week – with links to the two new posts for that week – when you sign up here. This blog is supported by the Center for Retirement Research at Boston College.

5 Responses to Women’s Wealth Gap Exceeds Pay Gap

  1. Tony says:

    Check out this policy brief by Martha Jaimes – a New School graduate student. Women are just as thrifty as men. They have less wealth because they have interrupted work histories: https://www.economicpolicyresearch.org/images/Retirement_Project/Single-Women-Widows-PN-edited-12.21-final.pdf

  2. Tony – wish I’d known about this study when I wrote the blog. Thanks!

  3. Donald Mayfield says:

    So it is ‘I owe, I owe, so it’s off to work I go” just like always on men “got it” sooner than women.

  4. Sam says:

    http://freakonomics.com/podcast/the-true-story-of-the-gender-pay-gap-a-new-freakonomics-radio-podcast/

    Claudia Goldin, Harvard University, explains the same thing Tony points out. He’s a quote from the podcast “If you take women who don’t have caregiving obligations, they’re almost equal with men.”

  5. Brian Kehm says:

    Thanks for bringing more light to the pay/wealth gap issue with women. I’m interested in learning more about the policies used to alleviate the gap. Automation is also likely playing a key role…