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Shortchanged: women and the wealth gap

Shortchanged: women and the wealth gap

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The wealth gap points to the lingering and troubling disparity between male and female financial security.
The wealth gap points to the lingering and troubling disparity between male and female financial security.

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Published by: The Clayman Institute on Jun 27, 2012
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06/27/2012

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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
Shortchanged: Women and the wealth gap
by ALISON PERLBERG on 04/04/11 at 8:52 am
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.
 
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.
Menenjoygreateraccesstothewealthescalator.

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