On Aug. 26, 1920, women won the right to vote in the United States, a historic victory in the long march toward equal rights. Almost a century later, we still have to address the economic disparities women face in order to achieve equality in all aspects.
Today, women play an outsized role in the economy. They make up half the workforce and drive roughly 80% of consumer purchases; yet, they have limited access to the fruits of their labor. It’s well known that women earn 79 cents for every dollar earned by a man. But, most people don’t realize that women own only 32 cents on the dollar compared to men. To achieve gender equality, we have to tackle income and wealth inequality.
Measuring wealth is a much more accurate picture of how one is doing financially than measuring wages. Wealth is a balance of assets minus debts. Several factors contribute to the wealth gap facing women. In the workforce, they make less money than men, hurting their ability to save. They’re also more likely to work part-time, often because they’re caring for family members. This limits their access to employer benefits. These employer benefits help increase wealth through 401k and other retirement savings programs. Women often can’t access tax subsidies that encourage savings and investment because of the way the subsidies are structured.
To address these inequalities, we need a broad menu of solutions that addresses both income and wealth. On the income side, this means pushing for equal pay, affordable childcare and paid family leave. On the wealth side, we can start by tackling two key challenges: retirement savings and tax benefits.
Programs such as Secure Choice, under development in California, will expand women’s access to retirement accounts. When Secure Choice goes into effect, workers who don’t have a retirement program through their employer will be able to save by creating a personal account administered by the state.
Another proposal would be to make retirement benefits “portable” — tied to individuals, not employers. So, independent contractors, domestic workers and other nontraditional employees can build savings over a lifetime of work.
As policymakers in Washington begin to debate tax reform this fall, they need to take into account how their proposals will affect women. For example, two-thirds of households, many of those led by working women, don’t itemize their taxes. This means they can’t take advantage of certain deductions. Instead, these households are much more likely to benefit from refundable tax credits. Expanding Earned Income Tax Credit and Child Tax Credit should be key priorities to make the tax code work for women.
These strategies support everyone. But, they would particularly benefit low-income women and women of color, who are most affected by the wealth gap.
Closing wealth gap gives families the cushion they need to weather a financial crisis and invest in their children and communities. Research also shows that greater economic equality contributes to a strong and growing economy.
The policy changes that can help close women’s wealth gap are within reach. We will all benefit if we even the financial playing field for women.
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