The Case for Womenomics
By Joe Quinlan, Chief Market Strategist, U.S. Trust | Jan 09, 2014
Women, historically lagging men in education and earnings, have narrowed the gap and become an economic force.
In Saudi Arabia, one of the world’s most conservative nations, few women can vote or drive and most must cover their heads outside the house. So the addition of female athletes to the Saudi Olympic team, for the very first time in London last summer was particularly noteworthy. Granted, the two women — an 800-meter track runner and a judo practitioner — still had to walk behind their male teammates at the opening ceremonies and compete while wearing a veil. Even so, their presence at the 30th Olympiad was emblematic of one of the most powerful global forces today: the rising role of women.
This shift in status among women derives from a confluence of factors that include better education; improved access to family planning that lets women bear fewer children; more economic empowerment; and a shift in the nature of work, aided by the spread of technology, from brawn to brains. These and other changes mean that women are gaining greater influence in shaping and directing the world’s economic activity.
Already women represent 40% of the global workforce and more than half of university students. In the developing world, girls now outnumber boys in secondary schools in 45 countries, and there are more young women than men in universities in 60 countries.1 In the United States, meanwhile, women account for 73% of all consumer purchases and provide an estimated $5 trillion in overall spending.2
In virtually every industry — from financial services, luxury brands, basic staples, education and healthcare to cosmetics, technology, media and entertainment — it’s the wants and needs of women that increasingly dictate the future. Welcome to the age of womenomics.
Education as a Stepping Stone
Education has long been considered a route to better job opportunities and higher incomes (see Figure 1) — and women are taking an ever-larger piece of the world’s educational pie.
United States. U.S. women surpass men in college enrollment and college graduation. About 44% of women aged 18 to 24 were enrolled in degree-granting institutions in 2010, compared with just 38% of men in the same age group. What’s more, the proportion of women overall who are enrolled in college has more than doubled during the past 40 years, while the share of men has increased only modestly.3
Europe. Women in Europe are better educated than men, on average, having three more years of education and accounting for 55.4% of students enrolled in higher education. Within the European Union, in 2011, 24.8% of women had completed university studies compared with 22.4% of men.4 Moreover, a higher proportion of women are attaining higher educational qualifications than men; and more and more women are working in some traditionally male-dominated sectors.5 All of this translates into more spending power and economic decision-making as well as influence for European women.
Rest of the world.6 Educational gender gaps are closing and have reversed in many countries, especially in Latin America, the Caribbean and East Asia. Meanwhile, in China, despite a traditional bias toward men, women are playing a greater role in the workforce, with 67% of women working in 2009 compared with 33% in India, 48% in Japan and 52% in Hong Kong.
As the gap in education between men and women has narrowed, so also has the gap in earning power and potential. For example, in 1979 women in the United States earned just 62% of what men earned. Three decades later, in 2010, that figure had risen to 81%.
Women now matter a great deal in economics. To this point, a quarter of the annual increase in Europe’s gross domestic product (GDP) since 1995 can be attributed to the rising proportion of women in the workforce.7 McKinsey estimates that America’s economy today would be 25% smaller without the participation of women in the labor force.
The Global Gender Gap Report 2012, which tracks gender-based disparities worldwide, argues that closing the male-female employment gap would have significant economic implications for developed economies, boosting GDP by at least 9% in the United States, 13% in the Eurozone and 16% in Japan. Putting more women to work in many developing nations, meanwhile, might have an even more significant upside.
Already, increases in education and employment for women mean they are poised to become key economic agents of growth and change. Along these lines, according to Boston Consulting Group estimates, women will control nearly $15 trillion of the world’s annual consumer spending by 2014 and about a third of global wealth. A Harvard Business Review study from 2009 predicted that private wealth in the United States could reach $22 trillion in 2020 — with half of that in the hands of women.
Against this backdrop, many of the successful companies of the future will almost certainly be among those that focus on women’s needs as much as, if not more than, men’s. After all, Sarat Attar and Wodjan Ali Seraj Abdulrahim Shahrkhani, those two veiled Saudi Olympians, were but a small expression of the profound global shift that is womenomics.
1 World Bank, World Development Report, 2012.
2 Boston Consulting Group (BCG), 2009.
3 National Center for Education Statistics, 2012.
4 Eurostat, 2012.
5 The European Centre for the Development of Vocational Training, 2012.
6 World Bank, World Development Report, 2012.
7 Organisation for Economic Co-operation and Development (OECD), Gender and Sustainable Development, 2008.
Projections made may not come to pass due to market conditions and fluctuations.
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