The gender pay gap is real, as many of my clients can attest. As successful women executives working in tech, law and business, they regularly find themselves standing on the wrong side of a cavernous gap that blocks them from earning the same as their male counterparts, and often even from progressing through the ranks at their workplace.
The gender pay gap sees women paid about 82 cents to every dollar earned by a man, according to analysis by the Pew Research Center in 2022. This pervasive divide is driven in part by gender and racial discrimination, workplace harassment, job segregation and a lack of workplace policies that support family caregiving, which is still most often performed by women.
Women who leave work to raise their children face decreased wages when they return. They also face very real biases about being less committed to their work, which can lead to a lack of growth opportunities. Age is another factor that is wrongly synonymous with “worth.” For women aged 45 and over, the pay gap extends to 73 cents for every dollar a man makes at the same age. When looking at race, the gap only grows.
As well as seeing my clients battle with this, I’ve experienced the gender pay gap firsthand.
After repeatedly confronting the unique financial challenges that women executives face, I knew I had to go my own way. WealthChoice was created as a place where I can do the work I love in a way I know will have the most impact, and that I am fairly compensated for.
It seems like the most basic request: to simply be paid the same as men who do the same work as us (or sometimes even less!). And yet a gender wage gap has been recognized in a shocking 94% of occupations, stretching all the way to the C-suite. The gender wage gap continues to permeate our professional lives, impacting the health, wealth and well-being of women across the whole of the US.
So What Can Be Done About the Gender Pay Gap?
My job is to advocate for the betterment of the lives of the women I work with. I take great joy in watching them find empowerment and satisfaction in their financial lives. So it really galls me when I hear of the unequal pay or stifled professional development they experience at work.
While I can’t change the numbers on their paycheck, a major way I can help my clients is by ensuring they use the money they do earn as wisely as possible. And the good news here is that there are certain wealth strategies we can put in place that will cushion their financial plan from the negative impact of the gender pay gap.
I recently took on a new client, a woman who is a top tier executive in a large tech firm. When discussing her income I sadly wasn’t surprised to learn of the pay disparity she experiences, despite her senior position.
We spent a lot of time chatting about how this affects her at work, and the mental and emotional toll it takes when feeling so overlooked and underappreciated by her male peers. Then – with an admitted glimmer of “We’ll show them!” – I set about telling her how I will help her work to negate this wage gap as much as possible through well considered and impactful financial choices.
Pay parity is a hugely important element we factor into our planning processes with our clients at WealthChoice.
After all, the earning power of women dictates our ability to live the life we want – and that is the hallmark of our approach to financial planning and the management of women’s wealth.
Working closely with our clients to understand their dreams, goals, ambitions and areas of personal fulfillment is integral to how we operate. Having a plan to maximize your income is critical for any executive – male or female – but it is a really important consideration for female executives, business owners and professionals who are battling an uneven playing field.
The Importance of Knowing a Woman’s Worth
When you’re not getting paid what you’re worth, you don’t get the opportunity to save as much as you should. That translates to lost incomes, lost social security benefits (which are scaled on your pay), and lost portfolio growth over time.
While we’re all familiar with the fact that women executives are paid less than men for doing the same jobs, a lesser known fact is that the average woman executive leaves a million dollars on the table over the course of her working life, simply by not knowing how much she is worth, or asking for what she deserves.
How is this possible, you ask? It starts with knowing your professional value. Where men generally have no problem asking (or overasking) for what they are worth, women seem instinctively averse to it. Moreover, women executives often don’t know the market value of their work. Women report salary expectations between 3 percent and 32 percent lower than those of men for the same job.
Failing to negotiate plays a significant role in wage disparity. A study from Carnegie Mellon University revealed that 8 times as many men as women graduating with a master’s degree negotiated the starting salary of their first job. The first job sets the tone for your earning potential over your entire career. By not negotiating, a woman stands to lose over $500,000 by age 60.
What Does the Gender Pay Gap Mean for Our Economy?
Gender equality around pay has long been an issue in the US labor market. June this year marked 60 years since the passing of the Equal Pay Act, which “prohibited discrimination on account of sex in the payment of wages”.
Yet the situation in the US is still only slightly better than the world average – where most women are paid around 20% less than men – but 18% less can still make a significant impact to a well-structured financial plan. This has a persistently negative impact on the American economy as a whole.
According to Moody’s Analytics, we can expect to see an additional $7 trillion injected into the global economy – that is about 7% – if the pay gap between men and women is narrowed more rapidly. The problem is, at the current rate, the gender pay gap will only be closed in about 132 years.
However, if women in the US were to receive equal pay, then it is anticipated that this would cut poverty among working women and add in the region of $482 billion to the American economy.
For example, in the state of California, where we have a number of clients, pay equality would equate to a significant economic boost. “If women were paid the same as comparable men in California, the state’s working women would have earned $51.8 billion more dollars, an earnings increase that, by itself, is greater than the entire economy of South Dakota ($45.9 billion)”, wrote the authors of briefing paper for The Institute for Women’s Policy Research, Heidi Hartmann, Jeff Hayes and Jennifer Clark.
How Does This Impact Women’s ‘Wealth Gap’?
As I wrote in my book, Corner Office Choices, no matter what industry you work in, being a woman in that industry will bring unique challenges that men don’t have to deal with. The response isn’t to resign ourselves, nor is it to get overly caught up in fighting for systemic change. Instead, the most constructive approach is to identify what those challenges are, and get the resources you need to overcome them.
Over the past two decades, very little has been done to fundamentally shift the status quo. This means more women play a juggling act with their time and their money, but with fewer opportunities to invest more into their own financial futures.
Just recently, the Center for American Progress think-tank released a paper determining that persistent gender pay gaps had cost American women $61 trillion in financial resources since 1967, when the Equal Pay Act was signed. While all women are impacted, Latina and Black women workers continue to be worse off.
The personal upshot of this is that women continue to be caught in a ‘wealth gap’, unable to catch up with their male counterparts. As Rose Khattar, Director of Economic Analysis at the Center for American Progress, said about the report’s findings: “That’s lost wages that could have been injected into the economy in the form of consumer spending. That’s wages that women could have used in terms of investments to build up their wealth.”
Just consider these three personal impacts that the wealth gap might be having on your own financial planning:
- Retiring in Style: The long-term implications of the gender pay gap are particularly noticeable when you start drilling down into the retirement income women can expect versus men. Since earnings over the course of a woman’s life are below that of a man, they receive less in pensions and Social Security which means that when it comes time to retire they can expect to have 70% of a man’s retirement income. Worryingly, many women go into retirement with less income than they had when they were working; making it impossible to maintain their standard of living.
- Emergency Fund Savings: As a female breadwinner, or as a working woman contributing to the family finances, some believe it is important for women to save even more into their emergency funds. This is, in part, due to the household demands on women and their more precarious standing in the labor market. And yet they have one hand tied behind their backs as they build up these savings.
- Investing in Stocks: Earlier this year a report by BNY Mellon noted that if women invested in the stock market at the same rate as men, there would be – at very least – an extra $3.22 trillion in assets under management. The gender pay gap was just one of the factors behind this imbalance highlighted in the report, the others being financial confidence, education around investing and less disposable income (which is where the pay gap really bites).
The Benefit of Women-Focused Advisory Firms
Many of the issues impacting how women accumulate wealth can be linked to personal preferences for investing – since traditionally women tend to be more conservative and have lower risk tolerances – but also because the financial world is geared towards men and, by and large, continues to be male dominated.
However, having a female financial advisor in your corner also makes a big difference. After all, women have unique financial needs and often find themselves handed cookie-cutter advice that might suit a man, rather than benefiting from crafted solutions that help them live their best life.
Women want more than just accepting what is pushed across the table at them, they value honesty and transparency, relationships built on trust and access to investing information that aligns with their personal values. Many women find they can get this by using a female advisor.
It’s important for women executives to recognize that no matter where they start, there’s only so much time they have left, and only so much money they can make within that time frame. It is vital to understand the long term implications of how they choose to use their resources.
My job is to help women executives understand that their current way of life is a choice, and to help them see what other choices are available to them. What do they need for their own life? What does quality of life mean to them? And what is involved in creating it?
At WealthChoice we tailor-make our clients a financial plan that not only takes the issue of gender pay disparities into account, but seeks ways to counter these issues and provide sustained financial stability and growth.
Please do get in touch if we can help you navigate any gender pay gap issues you’re experiencing. We stand as your advocate, support system, and ultimate cheerleader as you head to work every day and learn to bridge the gaping wage divide until the day eventually comes when we no longer have to. Until then, we’re here for you.
