Women and the Wealth Gap Presented by Mariko Chang, PhD [email protected] .

Women and the Wealth Gap

Presented by Mariko Chang, PhD

[email protected]

www.mariko-chang.com

Income vs. Wealth

Income = flow of money into a household over a period of time

Wealth = net worth; value of a households assets minus debts at a single point in time

Wealth = Assets-Liabilities Assets:

Savings, Checking Accounts Real Estate Owned Stocks, Bonds, Mutual Funds Business Assets 401k, IRAs Etc.

Liabilities: Mortgage Credit Card Debt Loans Etc.

Why Wealth?

Wealth inequality >> income inequality Top 1% - 17% income, 34% wealth Bottom 60% - 22% income, 4% wealth

Wealth confers benefits income doesn’t Can generate further income Collateral for loans Passed from generation to generation Weather financial crises

Why Care About the Women’s Wealth Gap?

About half of all households are non-married households

About half of all marriages end in divorce

Married women outlive husbands; widowhood is not a financial windfall for most

Women spend more years single than married

Women need more wealth because they live longer than men

Data

2007 Survey of Consumer Finances Sponsored by the Federal Reserve Board

Collected prior to economic crisis

People of color: Black, African American Hispanic (of any race) But: Asian, Native American, Other are

combined

Focus here on ages 18-64

Median Wealth, 2007$127,300

$31,150

$15,210

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Age 18-64

Married/Cohabitating Single Men Single Women

Percent with Zero or Negative Wealth, 2007

18%

25%

31%

0%

5%

10%

15%

20%

25%

30%

35%

Married/Cohabitating Single Men Single Women

Median Wealth for Single Men and Women by Marital Status, 2007

$11,450

$61,300

$136,900

$210

$39,200

$80,470

$-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

Never-Married Divorced Widowed

Single Men Single Women

2%

64%

59%

Median Wealth for Single Men and Women by Education, 2007

$226,700

$1,890 $7,170

$57,500

$18,820$10,960

$50,510

$170,000

$-

$50,000

$100,000

$150,000

$200,000

$250,000

HS/GED orless

Some College CollegeDegree

AdvancedDegree

Single Men Single Women

Median Wealth for Single Men and Women, 2007

$31,150

$7,900$9,730

$15,210

$100 $120$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

All Black Hispanic

Single Men Single Women

$56,100

$10,960

$2,400

$7,970

0 0$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

White Black Hispanic

Median Wealth: Parents With Children Under Age 18

Assets Owned by Single Men and Women, 2007

85%

47% 46%

10%

87%

48%

37%

6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Home Stock Business

Single Men Single Women

91%

72%

62%

92%

77%

67%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

White Black Hispanic

Single Male Single Female

Racial Differences in Ownership of Cash Accounts, 2007

50%

39%

29%

57%

33%

28%

0%

10%

20%

30%

40%

50%

60%

White Black Hispanic

Single Male Single Female

Racial Differences in Home Ownership, 2007

51%

26%23%

45%

23%

14%

0%

10%

20%

30%

40%

50%

60%

White Black Hispanic

Single Male Single Female

Racial Differences in Stock Ownership, 2007

12%

4%

12%

8%

4%

1%

0%

2%

4%

6%

8%

10%

12%

14%

White Black Hispanic

Single Male Single Female

Racial Differences in Business Asset Ownership, 2007

Percent with Forms of Debt, 2007

35%

13%

38%34%

37%

20%

49%

39%

0%

10%

20%

30%

40%

50%

60%

Home Education Credit Card Installment

Single Men Single Women

50%

34%31%

34%

29%31%

41%

26%

11%13%

27%

43%39%

50%49%

19%

27%

17%

0%

10%

20%

30%

40%

50%

60%

White

Bla

ck

His

panic

White

Bla

ck

His

panic

White

Bla

ck

His

panic

Education Credit Card Installment

Racial Differences in Forms of Debt

Why?

Earnings gap?

Median Earnings for Full-Time Workers Age18-64,

2007Women Men

Never-Married $31,246 $31,238 100%

Divorced $38,046 $43,621 87%

Widowed $36,016 $49,051 73%

Married $37,986 $52,706 72%

Median Wealth for Never-Married Persons Ages 18-64 Working Full-Time, 2007

$20,000

$1,550

$-

$5,000

$10,000

$15,000

$20,000

$25,000

Age 18-64

Men Women

Median Wealth for Never-Married, Childless Persons Ages 20-30 Working Full-Time, 2007

$1,600

$(6,560)$(7,000)

$(5,000)

$(3,000)

$(1,000)

$1,000

$3,000

$5,000

$7,000

1

Men Women

Even with the same incomes…

Women would have less wealth:

Women more likely to be custodial parents and support more people on one income Less disposable income to save or invest

Women less likely to have access to the “wealth escalator”

Wealth Escalator

Translates Income into Wealth More Quickly

Fringe Benefits Tax Code Structure of Government Benefits

Wealth Escalator: Fringe Benefits

Directly build wealth Ex: stock options, pension/401k

contributions

Indirectly build wealth Ex: health insurance, paid sick days

Women less likely to work in jobs with fringe benefits Service occupations Part-time employment

Wealth Escalator: Tax Code

Lower tax rates on certain forms of income Ex: long term capital gains

Tax deferral Ex: employer-sponsored retirement

contributions Tax deductions

Ex: mortgage interest deductions

Wealth Escalator: Structure of Government Benefits

Public Assistance Asset limits; “spend down assets”

Social Insurance Ex: Social Security

Economic Crisis

At all income levels women more likely to receive subprime loans Foreclosure

High and rising unemployment

Main Points

Wealth inequality is distinct from income inequality and much more severe

Racial wealth gap cannot close unless gender wealth gap closes

New strategies needed because excluded from existing strategies

Further Information:

www.mariko-chang.com

New book, Shortchanged: Why Women Have Less Wealth and What Can Be Done About It

Discussion

Policy Implications

Additional challenges due to economic crisis

Sharing information about successful asset-building programs for women

Others

Thank you