Women have made significant strides in the workplace, but a new report from Merrill Lynch reveals the earning gap between men and women can sometimes widen to more than $1 million over the course of a lifetime.
The report, “Women & Financial Wellness: Beyond the Bottom Line,” attributes the wage chasm to a variety of factors, including lower pay, fewer investments, more time away from work and less in the way of retirement savings.
Bureau of Labor Statistics figures from 2016 show that for every dollar a man earns, a women in a similar job earns 82 cents. It’s worse for women of color: African-American women earn 70 cents on the dollar compared with men and Latina women earn just 64 cents.
Then there’s the cultural bias that seems to be built into our society, the study notes: Of the 1,594 pages of editorial content in the March 2018 issues of the top 17 women’s magazines, only five pages were devoted to personal finance. That’s less than 1 percent.
The report notes, however, that women have reached a tipping point that can be linked to their growing personal and financial power. Women accounted for 57 percent of recent college degree earners, the study said, and that has fueled a dramatic increase in earnings. Women’s earnings grew by 75 percent between 1970 and 2015, while men’s earnings rose by just 5 percent.
Recent legislation also could help narrow the wage gap. In October 2017, Gov. Jerry Brown signed the salary privacy bill barring California employers from inquiring about applicants’ previous salaries and benefits.
Time away from work
One of the biggest areas where women lose financial ground is in time away from work, whether it’s caring for children, an aging parent — or in some cases, an ill spouse. The report notes the average woman spends 44 percent of her adult life out the workforce compared with just 28 percent for a man. And two-thirds of the care provided to older adults is done by women.
The impact of being away from the workplace can have lasting effects. One in three mothers surveyed by Merrill Lynch said that when they returned to work after caring for their children they took on less demanding duties, which resulted in lower pay.
“They have different choices to make in life,” said Merrill Lynch financial advisor Natasha Bonelli, who is based out of Woodland Hills. “Much of that has to do with circumstances and the culture in which they are living. Asian women, for example, spend a lot of time on caregiving for their elders. The workforce needs to be mindful of things like that.”