What is the gender wealth gap & why does it exist?
Welcome to the bi-weekly update (#146) where we dive deeper into key topics, themes or issues specific to women and their lived experience.
What is the gender wealth gap?
The gender wealth gap is the difference in the amount of wealth owned by women and men.
Wealth, in this case, refers to the total value of a person's assets, including savings, property, and investments, minus any debts.
The gender wealth gap is often used as a measure of economic inequality between men and women, and it can be calculated by comparing the median wealth of men and women within a particular population.
The gender wealth gap is a persistent and widespread problem that affects many countries around the world. It can have long-lasting consequences for women's economic security and financial independence.
According to the Office for National Statistics, in the UK in 2020, the median wealth of men was £217,500, while the median wealth of women was just £100,800. This means that men in the UK had more than twice as much wealth as women on average.
So why does the gender wealth gap exist?
…This issue is complex and dates back hundreds of years when women were the legal property of their fathers. And when they married, they became the legal property of their husbands.
And it wasn't until the 1970s that women were allowed to open bank accounts and have credit cards in their own name...
So put in a historical context, women are relatively new to money. They have not been equal owners of family assets. For example, globally less than 20% of landowners are women. Even as wealth expands and some women become wealthy, they still don't get their fair share.
As women start with less wealth, they move further and further away from those who have more wealth ie men. And so, women continue to accumulate economic disadvantages over time..
What are these economic disadvantages?
Women are paid less than men, regardless of whether they have children or not. British women lose £140bn a year due to the gender pay gap, an average of £9,112 ($12,000) per person, per year.
Women spend more time on housework than men (30% more in Sweden, and 60%+ in the UK). Men and women work the same number of hours, but men get paid for most of their time while women are doing most of the work unpaid.
It is virtually always the woman who quits or takes on part-time work when the children come. Cost of childcare is prohibitive in countries like the UK. What follows is often lower pay and less advancement in their career.
In the UK and the US, a mothers's salary falls by approximately 40%,10 years after having a child. In other words, women experience a 'motherhood penalty' whilst men experience the opposite ie the 'fatherhood bonus'. Men who are married with kids get a 'wage bonus' of 21% (according to TUC study)
Men are twice as likely to hold leadership posts in the private and public sector than women. The lack of advancement is one reason why women in G7 countries earn 62% of what men do.
Women's potential is often not used or developed. Women's jobs continue to be in intermediate and low skilled, which in a high-tech future continues to be a risk.
Women have less savings as a result, they invest less which compounds over time. But the impact does not stop there. If the couple divorces or the husband dies, the women/children will experience economic hardship and often fall into poverty.
It is therefore not surprising that a woman's pension will be significantly smaller. In the UK, women's average pension is one fifth of a man's. So women are more likely to be poor in old age.
Women face systemic challenges. Everywhere women have difficulty raising investment, securing loans and accessing the right talent to grow their business.
Also, women feel excluded by the financial services industry and many think they may lack the ‘financial knowledge’ or the ‘financial literacy’ to invest. However the real problem is that the industry defaults to the male customer, in the main.
Let us know what you think? How do we close the gender wealth gap? Leave a comment or tweet us @jointhepurse or janicka.
Join us next week for the online event with Vicky Pryce and Victoria Ross where we will talk about about how to close the gender wealth gap & managing your money (during uncertainty).
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