The Pandemic’s Toll on Women’s Wealth

With many prominent women rallying this week at the Democratic National Convention in support of another white man as their presidential nominee, we can't forget the toll the Covid-19 pandemic and the recession are taking on women's financial empowerment in this country.

Women were just beginning to play an increasingly active part in the workplace, making up the majority of the U.S. workforce right before the pandemic hit.

Joe Brusuelas, the chief economist at consulting firm RSM, told the Wall Street Journal at the start of the year that the jobs report “strongly suggested that the labor market dynamics are tilting in the direction of women.” 

Well, the Covid-19 healthcare crisis and recession are certainly not helping to shift any market dynamics to benefit women. If anything, many researchers and market participants are concerned it’s making things worse for women and for women of color, especially. 

It’s not just the jobs. Outside work, the percentage of women who are primary breadwinners and caregivers is also growing, as they remain financially insecure because of systemic challenges that prevent them from keeping and growing more of what they earn.

“The pandemic exposed all these cracks in our system that were already producing radical inequality for women of color, so when Covid-19 hit they were hit the hardest,” says Heather McCulloch, founder and executive director of a non-profit called Closing the Women's Wealth Gap, in an interview. She notes it’s also “an issue for all women because they are more likely to be the primary breadwinners in their households than ever before.”

McCulloch, who’s studied the wealth gap for two decades, says it’s a more accurate measure of financial well-being than the pay gap alone.

“When people talk about solutions, they go to income: it’s the pay gap, how to increase wages,” she explains. “Our work is really focused on the fact that even if we solved for pay inequality, you’d still have this (wealth) gap for women.”

Other systemic issues McCulloch highlights include challenges that a single piece of legislature can’t fix: women’s access to appropriate financial products, access to tailored financial advice at key points in their lives, access to credit, affordable mortgages. 

She gives an example of the 1974 Equal Credit Opportunity Act, which banned discrimination “against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status or age.” That was almost 50 years ago, but many of these issues still persist.

In recent decades, the efforts to address gender inequality have been disjointed, aiming to address different symptoms of the same underlying disease: advocating for more women on boards, struggling to fix the pay gap, ending sexual harassment in the workplace. 

It should  no longer be just about getting women in the room, but making sure their voices are heard, valued and they are always treated equally when it comes to compensation, promotions and other economic benefits and opportunities.

A more comprehensive discussion of economic prosperity and how to get there is a fairly recent phenomenon.

“The ladder to prosperity is broken,” McCulloch says, noting a more comprehensive approach to wealth equality is needed. “We need to change systems.”

What the pandemic has exposed is not only that the systems are broken, but that we also haven’t been studying them and measuring progress adequately. It doesn’t matter if more women get to participate in the economy if they are still not able to save or otherwise make progress towards greater financial security.

“One of the biggest issues we have -- we don’t have a lot of data that breaks down wealth by gender and race,” she notes. “It’s really hard to do policy without data.”

In recent years, Closing the Women's Wealth Gap non-profit has collaborated with the Federal Reserve and other research institutions to measure wealth inequality in a more systematic, consistent way. 

Still, the conversation around the wealth gap is gradually creeping into  the mainstream, with Democratic presidential hopeful Joe Biden including it in his ‘Agenda for Women’.

Biden’s team is promising to “tackle this wealth gap, including by fighting for equal pay, ending other forms of workplace discrimination and harassment, encouraging and supporting women entrepreneurs and small business owners, making education and training more affordable, providing pathways into high-paying professions, expanding access to paid leave and child care, and strengthening union organizing and collective bargaining.”

It’s a start. But his victory in November is not a guarantee and these broad objectives will not be transformed into concrete policies overnight. 

While it’s important to start measuring wealth inequality in order to enact change and to elect politicians who acknowledge systemic inequalities, we don’t need to wait for that to acknowledge that this crisis is impacting women. These financial burdens could have negative ripples for months, if not years to come.

Months into the pandemic, the bills are piling up for many. The new unemployment benefits are likely not to be sufficient, if and when they do arrive. And then there is a looming housing crisis.

Amidst uncertainty, many women are not waiting around for outside help. 

Speaking at an Axios event earlier this month, Sallie Krawcheck, the CEO of gender-focused investing platform Ellevest, says more women are taking initiative to build their own emergency funds and becoming more proactive about financial planning for the future.

“We’re in an age where women are saying ‘Lean In’ didn’t particularly work, we’re moving backwards, this environment is tougher, the institutions and companies that I thought would be there for me aren’t,’“ Krawcheck says.

Whenever someone tells you that the fight for women's economic equality is over, let’s remind them that in many ways it’s just beginning.