Why Women Are Poorer Than Men and What We Can Do About It

1. Women Face Systemic Economic Inequality Despite Progress

In every part of our lives that touches on money women are financially disadvantaged, from work to state benefits, from savings to childcare and entrepreneurship.

Persistent inequality: Despite significant advances in women's rights and opportunities, economic inequality between genders remains entrenched across all aspects of life. Women earn less, save less, and face greater financial insecurity than men.

• Pay gap: Women earn 18-19% less than men on average across Europe and Australia
• Wealth gap: By age 30-44, women have wealth of £293,700 vs. £376,500 for men
• Entrepreneurship: Less than 1% of venture capital goes to female-run startups

This systemic disadvantage stems from a complex interplay of social, cultural, and institutional factors that continue to prioritize men's economic interests over women's. Addressing this inequality requires recognizing its pervasiveness and implementing wide-ranging policy changes.

2. Historical Oppression Shapes Modern Financial Disparities

Until 1950, in England the definition of a person too incapacitated to deal with income tax was: 'Any infant, married woman, lunatic, idiot or insane person.'

Legacy of discrimination: The current economic inequality faced by women is rooted in centuries of legal and social oppression that treated women as property and denied them basic financial rights.

• Pre-1870: Women could not own property in many Western countries
• Until 1980s: Women often needed male guarantors for bank loans
• 1970s-80s: "Marriage bars" prevented married women from working in many professions

This historical context is crucial for understanding why women continue to face economic disadvantages today. The effects of generations of women being denied financial independence, education, and career opportunities continue to ripple through society, shaping modern disparities in wealth accumulation and economic power.

3. Myths About Women and Money Perpetuate Inequality

The myth of the risk-averse woman affects how we are treated when we seek financial advice.

Challenging stereotypes: Pervasive myths about women's financial capabilities and risk tolerance contribute to their economic disadvantage and must be debunked.

Common myths include:

• Women are risk-averse investors (false - when they do invest, women often outperform men)
• Women lack business acumen (false - companies with more women in leadership are often more profitable)
• Women are spenders, not earners (false - spending patterns are similar between genders)

These myths influence everything from career advancement to investment advice, creating a self-fulfilling prophecy that keeps women from achieving their full economic potential. Challenging these stereotypes is essential for creating a more equitable financial landscape.

4. The Gender Pension Gap Leads to Old-Age Poverty for Women

Women live longer than men. Throughout history, in every place with reliable records, and in every year, women have outlived men, in countries with high and low mortality from Jamaica to Scandinavia, Bangladesh to Malaysia, even in those with massive gender inequality and pay gaps.

Retirement insecurity: Women face a significant pension gap compared to men, leading to higher rates of poverty in old age despite longer life expectancies.

• UK pension gap: Women retire with average savings of £157,000 vs. £315,000 for men
• Causes: Lower lifetime earnings, career breaks for caregiving, part-time work
• Result: 70% of people living alone after 65 are women, many in poverty

The pension gap is a stark example of how lifetime economic inequalities compound over time. Addressing this requires rethinking pension systems to account for women's unique career patterns and caregiving responsibilities, as well as broader efforts to close the gender pay gap and value unpaid care work.

5. Economic Policies Often Ignore or Disadvantage Women

When governments, employers or supermarket chains purchase items in bulk they benefit from significant discounts from suppliers. The UK government put out a tender for a company to provide sanitary products in English schools at a cost of £20 million in its first year, or £11 per pupil.

Gender-blind policymaking: Economic and social policies often fail to consider their disproportionate impact on women, perpetuating and sometimes exacerbating gender inequalities.

Examples of gender-blind policies:

• Austerity measures that cut public services women rely on more heavily
• Tax systems that inadvertently penalize secondary earners (often women)
• Lack of investment in childcare infrastructure

Implementing gender-responsive budgeting and policy analysis could help ensure that government decisions don't unintentionally disadvantage women. This approach considers the different needs and circumstances of women and men in all stages of policy development and implementation.

6. Women Bear Hidden Costs in Everyday Life and Healthcare

Paying rent has become a much bigger problem for women since the government slashed the Local Housing Allowance, a payment to help those on the lowest incomes afford rent and housing costs.

Invisible burdens: Women face numerous hidden costs in daily life, from higher prices for gendered products to inadequate healthcare coverage for women-specific issues.

Hidden costs include:

• "Pink tax" on products marketed to women
• Lack of coverage for menstrual products and birth control
• Higher healthcare costs due to dismissal of women's pain and symptoms

These costs accumulate over a lifetime, contributing significantly to the overall economic disadvantage women face. Addressing these hidden burdens requires increased awareness, consumer advocacy, and policy changes to ensure equitable pricing and healthcare coverage.

7. The Workplace Remains Biased Against Women's Success

Women are offered lower starting salaries than men straight out of university, while a report from the American Association of University Women found an unexplained 7 per cent pay gap for women just one year following graduation – even after accounting for factors including college major and occupational choice.

Persistent workplace barriers: Despite progress, women continue to face significant obstacles to career advancement and fair compensation in the workplace.

Key workplace issues:

• Gender pay gap starts early and widens over time
• Lack of women in leadership positions (only 5% of Fortune 500 CEOs are women)
• Bias in hiring, promotion, and performance evaluations

Addressing these issues requires a multi-faceted approach, including stronger equal pay legislation, unconscious bias training, mentorship programs, and efforts to change corporate culture. Companies must also address the "motherhood penalty" and provide better support for work-life balance.

8. Beauty Standards and Social Expectations Limit Women Economically

The ultimate outcome of beauty pressure is a narrowing of girls' aspirations and social participation. The study of 49,000 females mentioned above found that a significant minority of adult women do not turn up to work or job interviews due to body image concerns.

Costly expectations: Societal beauty standards and gender norms place additional economic burdens on women and can limit their career aspirations and choices.

Economic impacts of beauty standards:

• Higher personal care expenses for women
• Time spent on appearance takes away from career development
• Beauty expectations in certain professions create additional barriers

These pressures not only have direct financial costs but can also impact women's confidence and willingness to pursue certain careers or leadership positions. Challenging these norms and promoting more inclusive definitions of professionalism and beauty is crucial for economic equality.

9. Investing and Financial Literacy are Crucial for Women's Empowerment

Investing can be exciting – the kinds of areas that are being tipped for their long-term investment potential today include driverless cars, clean energy, biotechnology and China.

Financial empowerment: Improving women's financial literacy and encouraging their participation in investing is essential for closing the wealth gap and achieving economic equality.

Key points:

• Women invest less than men, missing out on potential wealth accumulation
• Financial education should start early and be tailored to women's needs
• Encouraging women to invest can help close the retirement savings gap

Promoting financial literacy and investment among women is not just about individual empowerment, but about changing the landscape of who controls and benefits from capital in society. This shift has the potential to create broader economic and social changes.

10. Collective Action and Policy Changes are Needed to Achieve Equality

This book has exposed some of the myriad reasons why equality in money and wealth continues to elude us. Female economic inequality is like a bowl of spaghetti: dozens of strands entangled, and it's hard to see where each begins and ends. But pull on a single strand and others begin to unravel.

Systemic solutions required: Achieving true economic equality for women requires collective action, policy changes, and a reimagining of economic systems.

Potential solutions:

• Gender-responsive budgeting at all levels of government
• Universal childcare and paid family leave policies
• Quotas for women in leadership positions in business and politics
• Valuing and compensating unpaid care work

Individual actions are important, but they must be complemented by broader societal changes. This includes challenging deeply ingrained cultural norms, reforming institutions, and creating economic systems that value traditionally feminine work and traits. Only through comprehensive, systemic change can we hope to achieve true economic equality for women.

Last updated: November 19, 2024