The Women’s Wealth Gap Glares Harsher than Ever, So It’s Time to Close It

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The pandemic has crystalized—in the glaring sort of way—our country’s contradictions. One of them: The dueling demands we put on women to care for others and work without relief, all the while denied fair wages, benefits and other opportunities to achieve economic well-being for themselves and their families.

The life of Fita, aunt to one of us coauthors (Elena Chávez Quezada) and a fierce and savvy woman who recently passed away at 100, speaks to what many women experience. Memorialized in Quezada’s 2017 TED Talk, Fita died on her own terms, peacefully, and surrounded by love.

Yet for Fita, the years of growing old could have been even better, perhaps a little easier and less affected by the challenging life she had lived, for she lacked a lifetime of adequate support and opportunity in her working and caregiving roles. Such support enables financial security in later years.

Fita grew up in Albuquerque, New Mexico, a first-generation American whose mother immigrated from Spain and father from Mexico. When her dad’s pay from the railroad company fell short of household needs, she quit school in the eighth grade to work as a housekeeper for $3 a week. Eventually she took jobs at a meatpacking company, laundromat and concession stand. Later she joined the Army and served for a few years.

Fita went on to get married and, with her husband Mario, launch a restaurant. When the restaurant closed, she once again moved on, taking an assortment of jobs to make ends meet. Sadly, Mario suffered a debilitating stroke that left him paralyzed and needing round-the-clock care. Fita quit her job to care for him, which she did until he passed away a decade later. When Mario died, Fita went right back to work. She worked as a receptionist at a hair salon well into her nineties. In July of 2017, after a beautiful life, Fita passed away at the age of 100.

What a life she lived — a truly full one by anyone’s measure. Yet to acknowledge another reality, a much harsher one, takes nothing away from that fullness. That reality is how systemic barriers stole so much from her. She had no health care, retirement or paid leave benefits in her housekeeping job. There was no financial support, paid leave or safety net when she stepped away from work to provide critical caregiving support and no long-term saving opportunities that would have meant an alternative to her being a 90-something year-old worker. Only the modest social security payments and Veterans benefits from her time in the army offered critical support in the form of a low monthly payment, and eventually for her family, her headstone and $200 of her funeral costs paid for. The jobs she had throughout her life, while key to keeping her family afloat, didn’t offer the kind of benefits and financial security she needed.

Of course, while there was only one, singular Fita, the barriers she faced are hardly unique to her own experience. Millions of other women like her deserve better. We can take steps to ensure women age with dignity by adequately addressing the barriers that stifle opportunity and the economic security they rightfully earn.

To do this, we must tackle the wealth gap—that is, the disparity between women and men in the total value of an individual’s assets minus their debts. Income and wealth are interrelated, with an individual’s personal assets or wealth growing from their ability to save some part of their income. Wealth, more so than mere income, is what gives us a full picture of someone’s economic security. The gap between the wealth of men and women, especially women of color, is staggering. The debilitating effects of this gap burdens a woman throughout her lifetime, but the impact culminates and often crescendos in her retirement years.

Permeating the wealth gap is discrimination — a reality that many people know all too well, from people of various races and ethnicities to older workers. When the workplace discriminates against older workers, the economy loses. An AARP report found that age discrimination against workers age 50 and older cost the economy $850 billion in 2018. The source of 33 percent of that cost: women involuntarily retiring from the labor force.

In other words, in the workplace women bear a double-discrimination burden, with age combining with gender. Women are more likely than men to experience age discrimination in the workplace, including being passed over for jobs and promotions. Women of color experience this bias at even higher rates (call that a triple whammy). Women suffer occupational segregation, meaning they are underrepresented in higher-wage managerial positions and overrepresented in the lower-wage service sector. The result is that they are less likely to receive employer benefits like health care, retirement savings and higher-education funding, according to Mariko Chang, discussing the issue in her book ShortChanged: Why Women Have Less Wealth and What can be Done About It.

Women, especially women of color, face a persistent income gap, which by the end of their careers robs them of anywhere from, on average, $407,000 for white women to an even more staggering $1.1 million for Hispanic women. Consider the difference over time — in lost principal and lost compound interest — that this makes in their ability to save for retirement. Then consider the dramatically reduced Social Security benefits accrued from inferior wages. It’s no wonder that by retirement time, men’s total assets are three times greater than women’s.

Moreover, when women devote time to providing care, they pay a heavy price. Three in five caregivers of children, adult family members and others are women. As a result, they lose an average of 12 years in the workforce without access to employer retirement and pension plans and deposits into Social Security. This means that in the years when they need aging-related care themselves, women suffer even more financially. And, of course, as it is commonly known, women live longer than men, which means they must stretch less savings and reduced benefits further.

Now, a pandemic of historic economic impact has hit women the hardest, in the form of job losses, the need to fill family caregiving voids, and other effects, and that means potential long-term consequences as well. Amid this unprecedented confluence of events, women are at risk of a level of economic devastation potentially impossible to recover from.

Now, therefore, is the time we must act. Through a number of solutions, we can help enable women to achieve lasting economic security. First and foremost, we must close the income gap experienced by women. Unless we address this persistent disparity, women cannot close the wealth gap.

As part of that, we need to eradicate discrimination in hiring, compensation, promotion and retention and eliminate occupational segregation. To enable women to save and invest, we need to increase the number and size of tax credits that help those with low and moderate incomes build savings and cover costs playing a key role in the wealth equation, such as increasing the savers tax credit and creating a family caregivers tax credit. We also need to pass state and federal laws to give all workers the opportunity to tap the power of retirement accounts via payroll deduction, namely those workers — and there are 55 million of them in the private sector — who don’t have access to such investment vehicles through their employers.

Encouragingly, many states are already moving forward to create and implement retirement savings plans for private-sector workers who may not otherwise have access to workplace plans, with their effective features of payroll deduction and, better still, automatic enrollment. For example, California’s new CalSavers retirement savings program provides an Individual Retirement Account (IRA) with those features, offered specifically to workers whose employers don’t already offer a workplace retirement plan, as well as self-employed individuals and others who want a way to save more.

We must expand access to capital and other supportive, empowering mechanisms for women, especially women of color, who want to start businesses and purchase homes. And we need to increase asset limits in public benefit programs so that when a short-term financial crisis arises—life events that become all the more likely in the middle of a pandemic — they aren’t forced to raid their retirement savings or funds set aside for such sound investments as their own education.

These solutions can radically change the unfair economic obstacles that rob women of wealth. Such obstacles, of course, hurt women of color the most, and so, likewise, in providing solutions we will simultaneously address issues of inequity in that arena as well.

Women — the countless Fitas of the world — are sometimes thought of as the backbone of families, and even of nations. That’s why as we work to move on from the pandemic, we have an opportunity. The very policy solutions that can strengthen women’s economic security will benefit so many others as well, starting with their families. And the end result is a bigger benefit for all — a stronger economy for the nation.

Elena Chávez Quezada is the Chief Impact Officer at End Poverty in California (EPIC), a new effort led by former Stockton Mayor Michael Tubbs focused on poverty in California, formally launching early next year.

Debra B. Whitman, PhD, is the Executive Vice President and Chief Public Policy Officer at AARP.