What will it take to overcome the pay gap?

In the 98 years since the passage of the 19th Amendment, gender equality has made remarkable strides. Case in point, women now contribute $7.6 trillion to America’s GDP annually1, own an estimated 11.6 million businesses, and by 2020 are expected to control $22 trillion—or 51% of wealth—in the United States.2 But despite these significant gains, there is still a long way to go before true equality is won.

Three recent reports from Bank of America explore the changing role of women in today’s society—the successes they’ve achieved and the challenges that remain. Watch the video below for highlights of a panel discussion featuring women leaders from across Bank of America discussing key findings from the reports. And then read on to learn more.

While the financial achievements women have won are remarkable, there is still much work to be done to create a truly level playing field. Where pay equity is concerned, Maddy Dychtwald, co-founder of Age Wave notes, “We look at the pay gap as that eighteen cent differential. But when you look at it over a woman’s lifetime, it can add up to $410,000.”

“The economic implications of closing that pay gap are important,” adds Jill Carey Hall, U.S. Equity & Quantitative Strategist, BofA Merrill Lynch Global Research, and co-author of Women: The X-Factor, one of the three reports. Case in point, McKinsey Global Institute found closing the gender pay gap could add $12 to $28 trillion to the global economy. “That’s about the current size of the U.S. equities market,” notes Carey.

What’s more, when you take into account common workforce interruptions such as childbirth and caregiving along with the pay gap, women can earn up to $1,051,000 less than men over their lifetimes, according to Women & Financial Wellness: Beyond the Bottom Line, a report by Merrill Lynch and Age Wave.

So, what can be done to keep the momentum around women’s economic equality moving, as well as combat major challenges that remain?

Educate, communicate and cooperate

61% of women would prefer to discuss their death over finances

An important place to start is encouraging frank conversations about money. “[Women] talk about a lot of stuff – in detail – but we don’t talk about money,” remarks Lorna Sabbia, head of Retirement and Personal Wealth Solutions with Bank of America Merrill Lynch. In fact, 61 percent of women would prefer to discuss their death over finances, according to Women & Financial Wellness. Dychtwald adds that part of the problem is that “many women aren’t exactly sure how to start the conversation.”

 

“The power of woman-to-woman mentoring comes through loud and clear in our Women’s Entrepreneurial Journey white paper, with many of the women giving back to younger entrepreneurs,” says Karen Reynolds Sharkey, National Business Owners Strategy Executive with U.S. Trust. “We can all help each other by opening a door, providing an introduction, taking someone to a meeting--it all adds up to us, as a community, helping each other.”

Women: The X-Factor suggests that the power and influence of women in business, the economy and society will continue to grow. The researchers behind the report found that companies featuring gender diversity on their boards saw more stable earnings and lower volatility. Additionally, global assets that take gender into consideration as part of overall investment considerations grew at an annualized 100% between 2014 and 2017.

As with the right to vote, women face a complex path on the road to financial equality, but they aren’t in it alone. Whether it’s advice on areas like investing, climbing the career ladder or starting a business, women can find powerful guidance in family, friends, and employers, as well as from women across generations who have been there before.



1. A Day in the U.S. Economy Without Women, The Center for American Progress, March 2017
2. The 2017 State of Women-Owned Businesses Report: A Summary of Key Trends, American Express OPEN, November 2017

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