WHY THE DECK IS STACKED AGAINST WOMEN

By Craig Erwin, Ph.D.

In Women and Wealth: Insights for Grantmakers, Dr. Mariko Chang cites statistics showing that, on average, men have more success building wealth than women with the same educational attainment, whether they have little education or PhDs. She found that men with graduate degrees have total wealth of $109,500, on average, compared to $58,120 for women with graduate degrees.

What accounts for the great disparity in average wealth between men and women? Dr. Chang found that one important reason is men’s inability to become pregnant. This makes it easier for men to build successful, uninterrupted careers and to reap the many perks and financial advantages that often come with them. In contrast, women’s ability to bear children increases the likelihood that their careers will be interrupted or adversely affected by having and raising children. Women tend to bear much more of the burden for childcare and elder care than men and they are also likely to support more children. Women are more likely to be single parents and to work part-time (with lower wages and few if any benefits or perks), as well.

It’s also harder for women to accumulate wealth than men because they tend to pursue less financially rewarding jobs and careers. Many women work in part-time jobs, which typically pay minimum wage and don’t provide benefits or other perks. In addition, many women have traditionally preferred careers in which they serve others, such as social work, teaching, and nursing, which tend to have modest compensation. In contrast, men have traditionally been more attracted to careers in financially lucrative fields such as accounting, finance, and consulting. Men’s jobs are also more likely to be full-time, with higher compensation; they often include wealth-building benefits such as retirement savings plans, bonuses, and stock options, and often better opportunities for career advancement. In contrast, low income and minority women tend to be especially disadvantaged because they are unlikely to have access to the wealth-building tools and benefits that may come with full-time employment, especially in the most financially rewarding fields.

If you’re a woman, what can you do about the disadvantages you face? Although there are many things you cannot control, you can make changes in your own life. If possible, put yourself in a position to pursue a full-time job in a field you find appealing, but that is also financially rewarding. Perhaps you can get a job in corporate sales, learn to program computers, or get a college degree in accounting or finance. Or perhaps you could start your own business.

Fortunately, building wealth for retirement does not require a high salary (although that doesn’t hurt). Many people with average careers and modest salaries accumulate enough wealth to retire comfortably. It does help a lot if you have regular income and know how to make the most of it; knowing how to manage your money is very helpful. Of course, it also helps to have a full-time job with a retirement savings plan and an employer match, but, even if all you have is a regular source of income, you can probably save some portion of each paycheck. And saving regularly can mean the difference between working forever and retiring comfortably, because the total amount you save is what has the biggest impact on the amount of wealth you accumulate.

Unfortunately, knowing how to build wealth won’t get you anywhere if you don’t get started. If you are truly interested in building wealth, you may need to change the way you think about careers, and/or the way you behave, spend, or save. Don’t put it off.

If you have worked outside the home, have you had your career interrupted? If so, did it affect your career trajectory? From your experience, do women or men earn more for doing similar work?

To learn more about how to build wealth and the challenges that women face, click on the following links: