by Latoya Peterson
Better paying jobs aren’t enough to ensure women’s economic stability, according to a new study. For black women and Latinas in particular, a focus on bridging the “wealth gap” rather than the pay gap may make the most sense.
New research from Insight Center for Community Economic Development reveals disturbing data about a widening wealth gap in the United States, particularly in reference to women of color. While feminist organizers have long pursued fair and equitable wages, much more attention needs to be paid to the enormous disparity in wealth that undermines the future economic security of black and Latina women in particular. Insight’s “Lifting As We Climb: Women of Color, Wealth, and America’s Future” details this impending crisis.
Wage equity is still a large problem for women—while the gender wage gap is widest for white women compared to white men, black, Latina, and Native American women take home far less than their white counterparts. But earnings are only a small part of overall financial stability. What matters more than income in the long run is the accumulation of wealth. As lead researcher Mariko Chang explains in her presentation summarizing the data, “wealth confers benefits income doesn’t.” While income is vital for day to day survival, only wealth can generate further income, provide collateral for loans, be passed from generation to generation through inheritance, and provide the individual with the means to survive without a paycheck. Sadly, for many of women of color, the wealth gap is even wider than the income gap. Most women of color have no assets except for their cars—once the blue book value of the vehicle is removed from the calculation of median wealth, black women are left with a scant $100 in assets, while Latinas can only claim $120.
The report explains: “To put it another way, single black and Hispanic women have one penny of wealth for every dollar of wealth owned by their male counterparts and a tiny fraction of a penny for every dollar of wealth owned by white women.”
The wealth gap begins early. As might be expected, half of all young women, regardless of race, “are beginning their adult years with a median wealth of zero, meaning [they] had no wealth or had debts greater than the value of their assets.” As they move into adulthood, such factors as rising school debt, family financial insecurity, less disposable income and the increasing use of credit cards to fund life essentials (like groceries and gas) inhibit wealth accumulation. As women of color continue along their career paths, more and more barriers to wealth building are encountered. In comparison, young men of all races tend to begin with a positive net worth, and maintain higher levels of wealth throughout their lifetimes.
Who Can Step onto the Wealth Escalator?
“Lifting as We Climb” coins a term, “the wealth escalator,” to explain how various benefits designed to help the middle class tend to skip over black and Latina women. Such job related benefits as paid sick days, pensions and insurance enable people to amass a large amount of savings and disposable income, which can then be applied to investments and property that is then treated favorably in the tax code. However, our shifting corporate culture in America has seen an overall reduction in benefits like health insurance coverage, pension plans, and 401K contributions by companies, leaving women of color scrambling to cover these types of expenses out of pocket.
Home ownership is another area in which black and Latina women lag behind their counterparts and are more likely to be pushed into a sub-prime mortgage: among single women, only 33 percent of black women and 28 percent of Latinas are homeowners compared to 57 percent of white women. The parenthood years are also fraught with peril as women of color are more likely to be supporting multiple children, as well as extended family, on their weaker salaries.
And not having opportunities to build wealth leaves women of color at a disadvantage in retirement. According to the report: “Women of color ages 65 and older are least likely to receive retirement income from pensions or from assets. For instance, while 49 percent of white men and 30.5 percent of white women receive income from pensions, 26 percent of black women, 17 percent of Asian women and 12.7 percent of Hispanic women receive any income from pensions. Likewise, whereas 66 percent of white men and 60.4 percent of white women receive income from assets, 40 percent of Asian women, 25.4 percent of black women, and 23 percent of Hispanic women receive any income from assets.”
What Can Be Done?
The Insight Center recommends a variety of solutions to help bridge the wealth gap: improve opportunities for employment through targeted job training programs, ensure that government created jobs include fringe benefits and paid time off, strengthen unionization, set a higher wage standard for care positions, fund universal early childhood education programs to assist employed mothers, provide more benefits for the self-employed, remove penalties such as asset limits from government programs that work against women trying to climb out of poverty, and restructure the Social Security program through such measures as minimum benefits and adjustments for part-time workers. All of these recommendations focus on policy measures that would go far in reducing wealth inequality.
Outside of the report’s recommendations and guidelines for ending the wealth gap, another step to take would be launching an aggressive, feminist backed campaign to improve financial literacy and investment opportunities for women and girls. While feminists have already taken the lead on advocating for pay equity, other campaigns need to be launched in tandem. A renewed focus on advocating that more jobs include fringe benefits and health insurance would simultaneously stabilize more families and provide more disposable income through health care savings and pretax retirement deductions.
A campaign based around savings and investments should convince women of the necessity of having a savings account of one’s own and how smart investments now can help provide a better future for their families. (Some one-third of single Latinas and one-fourth of single black women have no checking or savings account.) This program should be designed with a cash-strapped individual in mind—many of the current programs based on savings and investment assume that women have a regular and reliable source of income, as well as thousands of free dollars to invest when many people are scraping by without the “latte and lunch” expenses financial experts ask people to cut.
“Lifting as We Climb” is a much needed wake-up call for activists and policy makers alike. As inequality continues to rise in the United States, direct action is needed to ensure that minority women are not left any further in the dust.
The views expressed in this commentary are those of the author alone and do not represent WMC. WMC is a 501(c)(3) organization and does not endorse candidates.
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45 Comments
This is a really important consideration. However, I feel like I am missing one vital piece of information. If the statistics support the idea that black and Latina women have less wealth than black and Latino men, where are the men getting their wealth from? Is the gap in men having savings accounts in their own names, and not joint account? Is the same trend happening in real estate? Until we understand not only the racial discrepancies, but gender discrepancies, we don’t have the whole picture.
Very interesting article, and applies to many folks not just feminists, minorities, etc. The trend of working to buy products and services you don’t need just for the resulting in accumulation of debt instead of accumulating wealth is a serious issue throughout our country. Everyone should stop buying things today that end up becomming junk tomorrow. And this doesn’t take into account the home mortage issues.
Also, barefoot and pregnant? That’s a little disingenuous, as Marianne is *always* barefoot. She’s also not only shown as a warrior, she’s frequently shown with more domestic symbols of prosperity, such as wheat or branches (laurels?), or, if I recall, sometimes with scales to represent justice/reason. And, according to the Wikipedia, one of the first depictions of Marianne was in the context of motherhood: she was portrayed by the artist Honoré Daumier nursing Romulus and Remus.
Isn’t there a direct correlation between wealth and income? If minority women do not have sufficient income, how can they be expected to accumulate wealth. There are many many millionaires and billionaires that acquired their wealth in real estate. Purchasing real estate takes good income and good credit. Even in today’s economy, real estate is one of the best ways to build wealth. It all starts with education and employment.
With regards to the statement – Most women of color have no assets except for their cars – I have to disagree on the suggestion that a car is an asset. For most people, as associated with the above statement, the car is a money-eating machine required to get from A to B and requires a constant inflow of cash while losing asset value on a monthly basis.
I think that while this has been a tremendous problem in the past, it has to be getting better. With all of the affirmative action plans, and the public’s awareness of disparities such as these, it seems that these steps should be getting us closer to the common goal of equality.
I think our society as a whole as become too materialistic and not focused on the big picture. The younger generations (myself included!) want everything NOW, not in 20 or 30 years. That is why they find it so difficult to accumulate any wealth, they are always striving for bigger and better than what so-and-so has. It’s really quite sad.
Having owned an executive recruiting firm in Arizona since 1989, we have not witnessed this wealth gap related to same backgrounds/educations/skills. I believe the gap that exists is based on skills and education gaps. Admittedly, there is still a gender wage gap but even that has improved over my years in recruiting and, thanks to the hard work of many women, the gap is disappearing in some professions. What I believe is true is that 10% of your attitude is determined 10% by what happens to you but 90% comes from how you choose to react. Our real power, as women, is to realize that we have 100% control over ow we choose to react.
Thanks for a thought provoking article
This article deals mostly with savings and income from employed women. It seems to me that building wealth from an employment is already a difficult situation. Why not invest in education for women to build small businesses. That is one of the truth wealth builders still available.
We just have to make sure the Wealth Escalator is going UP and not down. Good article.
I think wealth building is a mindset. Regardless of sex and race, not all people with high paying jobs are wealthy. So, I agree with the campaign that will “improve financial literacy and investment opportunities for women and girls”. Even a simple training that stresses the importance of savings and investments for the future is a must for long term wealth building. Whether a person is ready to start now or sometime down the road, the basic principles must first be learned before they can be applied.
I believe the gap that exists is based on skills and education gaps. Admittedly, there is still a gender wage gap but even that has improved over my years in recruiting and, thanks to the hard work of many women, the gap is disappearing in some professions.
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I feel that women are not paid nearly enough for the work that they put in each day. Sometime a female worker can and will put in more time and effort into a project than a male counterpart would.
I notice that a couple has more than double the wealth of 2 singles. I see synergy happening. My personal story is similar. As a couple our net worth is much greater than when we were both single. We’re working together, helping each other grow, and improving the money-behaviours we had when single. I’ve always made good money, but I’ve been more of a spender than a saver. My partner has been a saver and investor. We’re using the best of both worlds now.
I think we need to understand the Laws of Wealth Creation and that there’s different advice or strategies based on who you ask and what their personalities and strengths are. When you know who you are and you operate in an area creating wealth based on this you start to be in flow.
Acquiring wealth and keeping wealth – especially for retirement – are two different issues. You may be able to get it but what’s your plan for keeping it. Many have not taken care to position what they have saved so they avoid taxes, maximize earnings, GUARANTEE income for life GUARANTEE they can never lose a dime & other issues faced in retirement. There are three phases in the life of our personal savings; accumulation, protection & distribution. Many, for instance, have 401K’s but are losing their savings in volatile investments. There are better ways: http://letstalkretirement.com for more info.
But the days are changing. Now the woman are fully aware of the rights. Some of the things still needs to change in favor to woman.
I think that women are under paid for the work that they do more often than not perform better than men in terms effort and professionalism.
Times are changing rapidly especially with the internet…..it brings a new dimension to things. It is no longer about age, sex or race online any can succeed on the internet.
I believe that everyone should have an equal opportunity to live out their dreams regardless of sex, age or religion.
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If income is much smaller for Black and Latina women then we can also conclude that they will also have lesser wealth. I think there is connection between income and accumulated wealth. If only these women have better opportunities when it comes to education, I think they would be able to level up to their male and white counterparts.
Many of these points, such as increasing education levels generally, and financial educations specifically, could well be applied to all races and genders, not just AA and Latina women. In addition, although it may not be politically correct or popular to discuss, statistics reveal that many more AA women than their counterparts of other races are raising children as single parents. This is a problem desperately looking for a solution, as single parenthood is not conducive to accumulating wealth, either for the parent’s generation or their children.
Thankfully wealth accumulation is not entirely dependent on factors such as education and quality employment, as a look at the immigrant community will demonstrate. Many immigrants come here with little or nothing to their names, yet in a decade will own a successful business and be well on their way to accumulating significant wealth. Why is this so?
Largely, it comes down to choices we make, although luck may certainly play a part. Too many Americans take for granted the opportunities presented them. Furthermore many make the wrong life choices if their desired goal is wealth accumulation. Many young people of all races would prefer to play, rather than do what is necessary to extricate themselves from their economic situation, and when they are working, they put instant material gratification ahead of future wealth. Get a motorcycle, iPOD, flat screen TV, trip to the Bahamas, new outfit, etc, or save for a home or new business? That is a choice we make, and all too often people are just not prepared to make the sacrifices necessary to become wealthy in the future, when they can enjoy life a bit more now.
In part, it comes form not knowing how the financial, business, and wealth generating systems work. There have been far too many examples of highly successful people who have risen from inner city poverty to dismiss the possibility. What choices did they make, as opposed to the choices made by those who have never accumulated significant wealth? Those are questions to ask yourself.
There will always be the gender wealth gap. I can’t see how it will ever change as long as all the male chauvinists hold all the top jobs, they will always keep women lagging behind.
It is so hard to believe that there is still so much discrimination in the western world today. Until I read this I was of the opinion that people were pretty much equal based on their skills and education levels. I am sad to be so wrong.
I believe this goes much farther into just race or gender, it is more of a upper, middle and lower class of an issue. I for one being male believe we all should be treated fairly and given the opportunities to bring more income to one another.
The internet is one such way that is completely non biased, so for gaining wealth I believe that working online is the one way for everyone regardless of race religion color and background that we as a society can all succeed!
Prosperity (I prefer that term to ‘wealth’) should be available to anyone willing to put forth the effort. I’m convinced that the inequalities based on race and gender will someday be a thing of the past.
“Home ownership is another area in which black and Latina women lag behind their counterparts and are more likely to be pushed into a sub-prime mortgage” – Author
I don’t understand – the statement above was never explained. The sentence following the above mentioned statement gives no further explanation. How exactly are they more likely to be pushed into a sub-prime mortgage when buying a home?
Aside from that, this certainly is a thought-provoking article. I had always thought of wealth as directly and, other than inheritance or possibly the lottery, solely the correlated to income. I hadn’t considered the ramifications of sick days, health insurance, etc. on wealth accumulation. Probably because I’ve never been privy to those types of benefits at work.
I think the biggest factor driving the disparity is the level of wealth that Black and Latin women are starting out with. If you are starting out with negative wealth, and don’t have access to the higher levels or education, it is hard to get yourself into a position that will allow you to accumulate wealth. It is a vicious cycle, especially in this economy, where more jobs are being slashed and the people that are maintaining their positions are losing benefits and pensions. If you have ever had a substantial credit card debt, you know that it is nearly impossible to dig yourself out without filing bankruptcy.
I like to think that this problem transcends race in today’s society but with statistics like this it becomes disparaging. I think part of the issue we’re dealing with is a lack of moral fiber ingrained in our society. It’s spend, spend spend, get, get get all the time and no one is trying to save. Even after this economic scare we don’t change our ways. I pray things turn around, and quick.
Personally, I think that us men are in “trouble” when it comes to the feminist movement. Women really do seem better at so many things…
Hard to believe that such disparities still exist today in the world’s most prosperous economy. What I really find incredible is the huge disparity for white/non-hispanic married/collaborating couples, more than 5 times the next group?
Personally, i think the world is sick and every day more so. This conversation is about some statistcs that are made about this but just like said, woman are better in so many things and still where are the woman on top in all the big businesses? Goverments just dont want our globe to be healthy…it`s all about money…nothing els metters….
I feel that you have done a lot of research to make this article. The only thing that I might suggest is that we all can accumulate wealth if we just decide that is what we are going to do, and get busy with the action necessary.
There are many examples that can be made for and against statistics like the ones here. We are all born with the same God given talents. We just need to decide to use them
It looks like you put a lot of research and effort into this article. It is a shame that in this day and age there is such a wide gap.
It’s difficult to envision a world in which this sort of disparity is finally and completely erased. Most of the solutions that Insight suggests could only be implemented by a truly democratic organization. Such organizations seem increasingly difficult to find.
Very interesting post. But I disagree with the point that reads “Most women of color have no assets except for their cars” – I don’t agree that the automobile is to be considered an asset. Your car is de-valued on a monthly basis and requires cash to be spent on maintenance, gas etc..
Great post though, Thanks!
In Asia, it is different. Men are usually richer than women. Many companies’ CEO or owners are men. As a woman, I don’t see it fair, of course. But sometimes, I need to wake up to the fact that men acquired these positions because of their family’s wealth.
Actually in China, if their child is not a boy, they abort the child because of two reasons:
1. Men will not add to their huge population. Of course, because they don’t give birth.
2. Wealthy families prefer men to acquire their wealth. It is believed that men are more powerful and are better in handling money than women.
With this, it means more men than women in Asia. And the probability of having more wealthy men is high.
Great research you have there, great job!
Anyway, I agree with some who commented that there will always be the gender wealth gap.
Nice post Latoya. I think there should be more focus on the financial education part of minorities.
I’m a big brother to a black teenage boy and one of the biggest things I’ve noticed is how him and his family view money. What they earn is basically immediately spent. Saving for the future is really a foreign idea to them. And you can’t build wealth without saving — no matter how much money you make.
Yes, there’s an income disparity that I don’t really know how to fix, but until there’s a larger culture of saving, increasing incomes won’t affect wealth at all.
I agree that there is still a huge gap in income equality between men and women of all races. I personally am seeing a shift in the real estate investing space. Home ownership may still be held mostly by men and men certainly still out number women in the Real estate investing space . . . that being said women are powering through and stepping outside the social norms becoming big time players in this industry. A lot of them were stay at home moms, minorities, and even women who have lived their entire lives in low income neighborhoods. This “recession” is allowing them to see opportunities to generate income within their own neighborhood through real estate investing and begin to close the inequality gap one woman at a time!
My personal experience growing up in the black community in Chicago has shown me a significant contributing factor to the disparity in wealth for blacks in general, is the “poverty mentality” that pervades black society. Kids don’t do well in school for a number of reasons but their lack of hope for entering into a successful career limits their ambition. The role models in sports, music and the drug scene also limits their view on the abundance of opportunities available to everyone as an American.
Mr. Obama took a step in the right direction by signing into law equal pay for women. But I also agree other intangibles need to be addressed equally.
We are a minority owned business ourselves and it seems defiantly harder to receive bank loans this year. Its really unfortunate considering all the banks received our money to save themselves and are getting free 0 percent money and can not even loan it out to us.
Small business owners such as myself that own a small website design, graphic design, and printing/marketing company need capital to expand but we can not secure any loans to do so.
Hopefully that all changes soon.
I don’t think that wealth should be a feminist issue. Bottom line the sexes are a bit different, and as an employer, I am very aware of that.
I always hesitate before hiring a young lady in her 20’s, not because they aren’t as (or more) talented, but I can see the 3 months of paid leave as handwriting on the wall….
These statistics are hardly surprising given that wealth has nothing to do with income. Wealth tends to breed wealth. Although there are plenty of “self-made millionaires” the reality is that wealth is rarely self made. Wealthy people generally come from wealthy families and long lines of “wealth” – there are a range of reasons including mind-set, greater opportunity and mentorship.
As hobby farming, organic gardening, outdoor pursuits, and responsible stewardship gain popularity, more and more women are becoming active investors (and wealth builders) in the traditionally male dominated arenas of timberland and farmland investing. Good choice!!