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Most people would agree that women today stand on the cusp of enormous positive change and gains.
We live in an era when women are more educated than ever, have greater control over their personal health and freedoms, sit in boardrooms, have traveled to space and nearly took a seat in the Oval Office. Upward trends in wealth transfer and social justice efforts can be seen as driving these advances even further.
However, a deeper look reveals that these improvements are attainable by only a select few women. And even those women who do step into this newly empowered role might not fully be prepared to wield their influence to its maximum. The challenge of our time then is how to expand this umbrella and better equip modern women to leverage their influence and the power of the purse to bring more women to the table.
By any measure, social standing is achieved and cemented through economic power. A heavier bank account means more credibility and leverage. Estimates show that between $20 and $40 trillion will move into the hands of women from their parents or husbands by 2020. This shift means that close to two thirds of the consumer wealth in the U.S. will be controlled by women.
Yet, this transference is limited to certain segments of society and populations of women. It is also not a scalable or sustainable event, more akin to winning a mid-level, one-time lottery prize than building sizable passive income sources.
More sustainable change would be appreciable gains in earning power. The facts that high net worth women make up 40 percent of the country’s top wealth earners or that 43 percent of those who earn more than $500,000 are women seem notable. But the median net worth of all male-led households is still about 20 percent higher than all female-led households, mainly because there are many more poor households led by females.
Wage gaps will not be closed anytime soon without a dramatic shift in employment trends.
These high net worth stats are also undermined by studies showing that on average, women still only make 78 cents compared to a man’s dollar. That number is made even worse when you consider that it is color-dependent. If you are a woman of color, then you’re only making 39 cents on the dollar. You can’t gain economic equivalence on those wages.
Given the occupations in which women hold the greatest representation — nursing, dental assistants, cashiers, and elementary or middle school teachers — it’s fairly obvious that those wage gaps will not be closed anytime soon without a dramatic shift in employment trends.
Much of this is an ingrained social bias. Until the 1960s, women could not even open a bank account without a husband or father. And it was only little more than a generation ago that the Equal Opportunity Credit Act was passed. Consider that before this was passed in 1974, lenders could legally ignore a married woman’s income if she was younger than 25 years old or only use half of a professional women’s income if she was younger than 35 when underwriting a loan. Lenders could consider a woman’s income if a doctor verified her inability to have children or if she signed an affidavit promising to use birth control with the intention of not having children.
While this may sound shocking or even corny today, the truth is that these biases and expectations were levied against our parents and generations of women before them. How can we expect women that acquire or inherit wealth to wield it powerfully when society has told us for decades that we aren’t to be trusted with it?
I choose to believe that there are reasons for optimism: Women are on a positive trajectory and we are recording gains.
Some of this lives on in the popular culture today. Remember the Sex and the City episode where Miranda, a successful yet unmarried lawyer, is shamed by the bank, co-op board and others for trying to buy an apartment without a man? Art imitates life, and financial discrimination for women is a reality.
Motherhood is another subtle way that women bear the brunt of financial inequity. While many pregnant women are overtly discriminated against in the hiring process, the dollars and cents of motherhood and employment stack up in more covert ways.
A Brookings Institute study found 60 percent of women with bachelor’s degrees underestimated the cost of being a parent, including other demands like added commute times for daycare. It also found that the likelihood of a woman returning to work after a child declines by 40 percent.
With the expectation of mothers as primary caregivers, this has significant impact on a woman’s earning potential. It can and will lead to handicapped retirement as lost income means less pension earnings, 401k savings and Social Security payouts.
The path forward
So what to make of all these conflicting metrics and statistics? I choose to believe that there are reasons for optimism: Women are on a positive trajectory and we are recording gains.
But we must also expand our efforts to bring more women of different economic and ethnic groups into this path, to make our gains more sustainable, and to teach women to better wield their influence and economic power.
One of the clearest ways to do this is by creating a path beginning in adolescence that leads to higher earning lifetime wages. This higher class of earners can better advance in their careers, save more for retirement, expand overall net worth and earnings managed by women, and build a more diverse class of role models for future generations.
1. Tech training is key
In today’s world, any path to higher earnings for a meaningful segment of women begins and end with technology training. From engineers to farmers, the changing nature of society means that nearly everyone in today’s workforce must be tech-familiar. It is almost impossible to earn a meaningful paycheck without understanding how the web works or how to navigate a software program, but most jobs require much deeper levels of proficiency with more complex technologies.
Unfortunately, studies show that most girls begin opting out of technology-related coursework in middle school. We must reverse this trend in order to give our girls — and future female earners — a fighting chance. That begins by building engaging programs that align with girls’ unique interests and ways of learning, then carries through to more deliberate high school and college instruction, all supported by a network of passionate female role models and mentors.
Tech-familiar women will have many more career options than those that existed five years ago or even today.
Our technology workforce is forecast to be nearly one million short by the year 2020. In addition, studies increasingly show that diverse companies are more competitive and fare better overall. That means that if we’re successful, this new generation of workers will meet with incredible opportunity.
These tech-familiar women will have many more career options than those that existed five years ago or even today. They will also have the ability to close the pay gap and create a more sustainable ownership of wealth in America.
Ultimately, by building this future class of higher wage earners, we can augment and support the coming transfer of inherited wealth to build a broad, diversified base of economically empowered women in America.
But once we achieve this, how will women wield this newfound economic power? It is critical that we learn how to manage our power of the purse in a way that influences policy, education and more to continue expanding our gains and creating opportunities for others.
2. Embracing the market
The average single woman’s net worth is three times smaller than the average man’s, and the average woman has earned $1.06 million less than the average man by retirement age. That’s an enormous gap that is only partially accounted for by wage earnings.
Investing is one way to close this gap faster, but women tend to be more cautious when it comes to putting money in the market. A recent Acorns study found that 57 percent of women did not invest at all in 2017, compared to 44 percent of men. When you consider the power of compounding interest and the potential for lifetime market gains, women’s reluctance to invest — and at an early age — could be a great wealth inhibitor.
To reverse this, women earning higher wages must look to the market and other passive investment streams to augment their wealth. Interest bearing accounts at a local bank do not count!
Similarly, women must demand more ownership of household finances and investment strategies. Studies show that while many women control a household’s consumer budget and spending, most men oversee long term financial planning and savings.
That puts women at a serious disadvantage for expanding wealth opportunities, and leaves them unable to have a voice in their own retirement planning and potential. This is uniquely distressing for women because we must be prepared financially and equipped to manage those financial decisions independently in the event of a divorce or simply because our lifespans are longer than men’s.
To better ensure a safety net or even just to level the financial power with a relationship, women should engage more frequently and directly in family investment and insurance decisions.
3. Political engagement
Women understand the power of voting — recent elections have supported the key role that women play in electing candidates and supporting parties. But this power can be significantly amplified with the economic ability to donate to persons, parties and causes. Candidates tend to pay attention to voters, politicians to donors.
Regardless of your political leanings, there are universal issues that impact women. By identifying people and causes that support issues like equal pay, affordable childcare, higher quality education and more, women can put their money to work for other women.
If financial giving to a political cause is not within reach, consider spending an evening at a phone bank or a Sunday walking precincts as part of a get-out-the-vote campaign. When women’s voices are included in the conversation, meaningful change will occur.
4. Workplace influence
Similarly, women can reinforce these issues within their workplace environments. By championing causes with HR and leadership, advocating with fellow workers, or — for those in power — initiating new programs, women can open the door for others to follow in their footsteps.
Understanding company policies around equal pay or helping other women with salary negotiation techniques is one small step.
A recent Wall Street Journal article showcased just how women can work together to create change in the workplace. After years of being subjected to perceived gender bias at work, 12 high-level regional managers at Wells Fargo Wealth Management organized themselves as a named group and held a meeting. They listed issues from small (ex: women being called girls or being told to put their big girl panties on) to big (ex: promotions, pay, and lack of diversity in senior management), and demanded change. They did not stop when Wells launched an internal investigation, and instead used their collective power to begin identifying, training and mentoring other women to prepare them for senior roles at the firm.
But we do not always have to take on vocal, out-in-front leadership efforts. Understanding company policies around equal pay or helping other women with salary negotiation techniques is one small step. Researching and sharing tips for creating flexible or part-time schedules that better support working families is another.
We can also be effective role models for others. By mentoring women within our workplaces, industries or girls on an early education track, we can wield our status and influence to help shape policy and career choices that impact others.
Beyond volunteering, give monetarily to causes and organizations that matter. Even small checks or micro-giving can make a big difference. Organizations like Kiva have shown that giving just a little bit of money to a motivated woman can help launch change and businesses with outsize impact.
6. Taking ownership
Ultimately, we should feel good about where women stand in today’s society. It can be easy to feel overwhelmed or powerless in the face of political or economic pressures. But we must remember our position as compared to just a generation or two ago, and look ahead with eager anticipation for what’s within our grasp.
When faced with hurdles, we cannot simply close our eyes or rely on more vocal women to champion for social justice. We all play a role in change, and our actions can have a big impact on the woman one cube over. Furthermore, the power of the purse is our strongest weapon and the fastest way to equality. And then we must fight tooth and nail to ensure we have our fair share piece of it.
Once we’ve earned that economic status and power, it’s even more important that we learn how to wield it. In this way, we can pave the way for those that will follow, allowing them to stand on our shoulders and reach even higher.
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