Research Paper

The Gender Gap in Financial Health

Identifying Barriers and Opportunities for Improving Women’s Financial Health

By Meghan Greene, Andrew Warren, Jess McKay

Thursday, July 14, 2022
Thursday, July 14, 2022
 The Gender Gap in Financial Health
Executive Summary

A Longstanding Issue, Now More Urgent Than Ever

The Financial Health Network’s research has consistently shown a sizable gap in the financial health of men and women.1 Moreover, recent data found that while financial health improved overall for the country during the pandemic, the gap between men and women actually widened.2

What is driving this financial health gap, and why did it grow over the course of the pandemic? More importantly, what policies, products, and solutions can we leverage to foster parity?

About Financial Health
Financial health is a composite framework that considers the totality of people’s financial lives: whether they are spending, saving, borrowing, and planning in ways that will enable them to be resilient and pursue opportunities.

About the Research
Data is drawn from a nationally representative survey of individuals ages 18-64, conducted November-December 2021. Supplemental focus groups with women were held in February 2022. This paper includes a number of quotes from these discussions.  Our analysis leverages the FinHealth Score®, a measurement framework that can assess the financial health of individuals over time. For additional details, see Methodology Summary or download the full report.

Outlining the Gender Gap in Financial Health

To help increase understanding of the disparate financial realities of men and women, this report explores the concept
of a financial health gender gap. According to our survey among individuals 18-64:

Only one in five women (20%) are Financially Healthy versus 29% of men.3 Even after controlling for income and other demographic factors, women are still 5 percentage points less likely to be Financially Healthy than men.
Women are also more likely to be Financially Vulnerable than men (24% versus 17%) – meaning they struggle in nearly all areas of their financial lives.
Women report worse outcomes on all measures of financial health: spending, saving, borrowing, and planning.
Women are more likely than men to say that their financial situation is worse now than it was prior to the pandemic (28% versus 23%).
Only 11% of Black women and 7% of Latina women are Financially Healthy. By contrast, the same figure rises to 25% for White women.4
Women who are married or living with a partner are more likely to be Financially Healthy than women who are not (24% versus 13%), but still less likely to be Financially Healthy than married or partnered men (32%).

Barriers to Financial Health for Women

The reasons for the gender gap in financial health are numerous. We highlight four systemic challenges that, if addressed, would make a significant difference in women’s ability to manage their financial lives, safeguard against risk, and take advantage of opportunities.

Income Disparities and Discrimination
  • Women are more likely to have low household incomes (defined here as $30,000 or less) than men due to the wage gap, occupational segregation, and unequal caregiving burdens, among other factors.
  • Only 4% of women with low household incomes are considered Financially Healthy.
  • 40% of women report being subjected to sexual harassment in the workplace. 36% report that they have been discriminated against because of their gender. Some data suggest even these figures are underestimated.
  • After controlling for marital status, race, income, and age, women who report being subjected to harassment (including sexual harassment) while working were 7 percentage points less likely to be considered Financially Healthy, compared with women who did not report being subjected to harassment.
Limited Support for Care
  • 70% of women with children under 18 report making a career change, such as reducing their hours, taking a leave of absence, or switching to a less demanding job because of their parenting responsibilities, compared with 55% of men.
  • More than half of women with children under 12 who are not working or working part time say they would like to work more, but cannot due to the cost of child care.
  • Nearly half of women who are caregivers for an adult or a child with disabilities (45%) report reducing hours, quitting a job, or otherwise adjusting their careers to manage their care responsibilities.
Burdensome Debt
  • More women report carrying unmanageable levels of debt than men (39% versus 31%).5
  • 51% of Black women report unmanageable debt, compared with 39% of White women.
  • Among those with household student debt, one in three women say they are “very concerned” about their ability to pay off debt, compared with one in five men (33% versus 18%).
  • Women are also more likely than men to report that their households have past-due medical bills (29% versus 22%).
  • 44% of women ages 18-29 say that debt has led them to delay purchasing a home, getting married, having children, or making other life adjustments. This figure contrasts with 34% of men in the same age bracket.
  • Almost 2 in 5 Black and Latina women (39% and 36%, respectively) say they have altered their life trajectories due to debt, compared with one-fourth of White women (26%).
Insufficient Savings for Retirement
  • Only 42% of working-age women say they are confident they will have enough money to live off of in retirement, versus more than half of working-age men (53%).
  • Among nonretired women ages 50-64, 35% report having no personal retirement savings whatsoever.
  • Women are less likely to report having longer-term investment vehicles in their own name, which can have substantial financial impacts on their long-term ability to manage expenses – as well as their financial solvency if a partnership dissolves.

This report focuses on policy- and employer-level solutions that could make a meaningful difference in leveling the playing field for women.

Policy Solutions
  • Address the wage gap.
  • Build our care infrastructure.
  • Expand the availability and portability of retirement plans.
  • Implement Social Security policy changes.
  • Ease the burdens on existing student loan borrowers and enable more students to pursue affordable education.
Employer Solutions
  • Create supportive workplaces.
  • Expand access to benefits and improve benefits options.
  • Support struggling employees through targeted programs.
  • Ensure effective harassment prevention and appropriate protections for survivors.
  • Apply behavioral insights to financial benefits design.

With its disproportionate effect on women, COVID-19 has made the precarity of our current situation painfully clear.6 Moreover, a vast range of research has shown that the U.S. economy loses billions of dollars due to imbalances in labor force participation and gender wage gaps.7, 8 As we look to a future beyond the pandemic, we have the opportunity to help build a more sustainable economy that invests in and reaps the benefits of a financially healthy populace.

Investing in women would benefit us all.

Introduction

Since the Turn of the Millennium, Women’s Progress Has Plateaued

Women in the United States made many strides towards equity in the latter half of the 20th century: Labor force participation grew by leaps and bounds; the number of women earning college degrees expanded rapidly; and the gender pay gap shrank considerably.9

Yet, progress has slowed in the 21st century. In some respects, it has stalled entirely:

  • Women’s labor force participation has stagnated.10
  • The wage gap between men and women has stubbornly held at 82 cents on the dollar – with the gap far wider for women of color.11
  • A wage gap exists in 98% of occupations, with the total loss over one’s career reaching hundreds of thousands of dollars.12
  • There is also a vast wealth gap: Single women own only 40 cents for every dollar that is owned by single men.13

All this was true even before the COVID-19 pandemic, which saw job losses and caregiving burdens disproportionately borne by women, especially women of color.14 These disparities and many more have contributed to a stark divide in the financial realities of men and women.

With this report, we explore the concept of a financial health gap in gender, offering a new lens for understanding the disparate financial situations of men and women, as well as potential solutions. The framework of financial health enables us to explore not only one narrow measure of a person’s financial life, such as their credit score or salary, but rather to look holistically at one’s ability to meet immediate needs and safeguard the future.

Leveraging a nationally representative survey as well as insights from focus groups, we explore four issues that meaningfully shape women’s financial health in the United States:

  1. Unequal income
  2. Limited support for caregiving responsibilities
  3. Burdensome debt
  4. Barriers to retirement preparedness

The themes outlined in this report are not an exhaustive list of the factors that shape the financial health gap – far from it. The factors leading to disparities in financial health between women and men have innumerable systemic, institutional, societal, and cultural roots. Moreover, they are experienced differently by women depending on their identity, including their race and ethnicity, sexual orientation, ability, and class. Yet, there are clear and actionable steps that can ameliorate the gaps associated with each of these elements. Such steps would not only improve financial health for women, but also benefit financial service providers, employers, and the U.S. economy as a whole.

Two years into a global pandemic that disproportionately impacted women, significant awareness has been raised about the realities that women face. However, we have not seen significant progress by way of action. We hope this report can contribute to understanding that will lead to products, policies, and solutions that can improve the financial health of women overall.

The State of Women’s Financial Health

Across the Board, Women Are Facing Financial Disadvantages to Men

The data by gender is stark: Women are far less likely to be Financially Healthy than men. Only one in five working-age women (20%) are considered to be Financially Healthy, versus 29% of working-age men. Furthermore, nearly one-fourth of women ages 18-64 (24%) are classified as Financially Vulnerable, compared with 17% of men in the same age bracket.

Figure 1: Men are nearly 1.5 times more likely to be considered Financially Healthy than women.

Financial health distribution by gender.

Certainly, one major factor contributing to these differences is income, as the next section will discuss. Due to unequal pay, occupational segregation, discrimination, disproportionate caregiving responsibilities, and more, women report lower incomes than men.

At the same time, a broader set of cultural, societal, and institutional factors have resulted in women facing additional financial health challenges and barriers. Controlling for income, race and ethnicity, marital status, and age, women are still 5 percentage points less likely to be considered Financially Healthy than men.

Gaps exist between women and men in all areas of financial health: spending, saving, borrowing, and planning. Women are less likely than men to report being able to meet immediate expenses, having savings cushions, having manageable levels of debt, or feeling confident in their future security.

Women are also not recovering from the pandemic as quickly as men. Twenty-eight percent of women say that their financial situation is worse than it was prior to the pandemic, compared with 23% of men.15

Table 1: Women report lower financial health across all eight indicators of financial health.

Indicator Women Men Difference
1. Spend less than income 47% 52% -6%*
2. Pay all bills on time 56% 64% -7%*
3. Have enough savings to cover at least 3 months of living expenses 51% 56% -5%*
4. Are confident they are on track to meet long-term financial goals 34% 42% -8%*
5. Have a manageable amount of debt or no debt 61% 69% -8%*
6. Have a prime credit score16 64% 68% -5%*
7. Are at least moderately confident their insurance policies will cover them in an emergency 38% 47% -9%*
8. Agree with the statement: “My household plans ahead financially” 58% 66% -8%*

* Statistically significant (p < 0.05).

By Race and Ethnicity

Our data show a chasm among women by race and ethnicity: Only 11% of Black women and 7% of Latina women are considered Financially Healthy, versus 25% of White women.17

Figure 2: White women are far more likely to be considered Financially Healthy.

Financial health by race and ethnicity.

Compounding the gender discrimination faced by all women, Black and Latina women face additional challenges to achieving financial health that result from race-based discrimination and decades of disinvestment and marginalization. The intersectional impact of these barriers has constrained financial security and limited economic opportunity for Black and Latina women. (For notes on terminology and data limitations with respect to race and ethnicity, please see the full report).

The COVID-19 crisis exacerbated these inequities, with people of color disproportionately impacted and women of color particularly likely to lose work.18, 19 Our data find that, even as of late 2021, Black and Latina women are still struggling with the fallout. Over half of Black and Latina women reported that they are “just getting by” or “finding it difficult to get by” (54% for each, versus 39% of White women).

Furthermore, Black and Latina women report extremely high levels of material hardship. Black women (44%) and Latina women (42%) are more likely than White women (21%) to indicate that they are often or sometimes worried about running out of food. They are also more likely to report trouble paying their rent or mortgage (35% of Black women and 40% of Latina women, versus 21% of White women).

By Marital Status

Figure 3: Women who are married or in partnerships are more likely to be Financially Healthy than those who are not.

Financial health by marital status.

* Statistically significant vs. married/partnered women (p < 0.05).

Married and partnered women, overall, report better financial health than single women (24% versus 13%). This is explained in large part by the fact that partnered individuals are more likely to have multiple streams of income.

However, married and partnered men are still more likely to be considered Financially Healthy than married and partnered women (32% versus 24%), suggesting differences in perspective, financial confidence, and potentially even balance of power. For a range of reasons discussed in the following sections, married and partnered men report more confidence than married and partnered women that they will be financially stable if their relationship ends: 40% of these men say they would be financially stable if they separated from their spouse, compared with just 32% of the women.

4 Barriers Facing Women

Examining Facets of the Gender Gap in Financial Health

Barrier 1

Income Disparities and Discrimination

Income is intimately intertwined with financial health, and women’s earnings persistently trail those of men. In our study, women were more likely than men to report a household income of $30,000 or less (29% versus 25%). Among women who have household incomes under $30,000, only 4% are Financially Healthy.21 By contrast, 50% of women with household incomes over $100,000 are Financially Healthy.

 

Select Factors Contributing to Women’s Lower Incomes22

Unequal pay

  • The wage gap persists and has hardly budged for decades.23
  • Unequal pay exists in nearly all occupations.
  • Discrimination remains extraordinarily widespread: In our study, 36% of women reported experiencing on-the-job discrimination because of their gender, compared with just 11% of men. (See Deep Dive: Workplace Harassment below.)

Occupational segregation

  • Women are overrepresented in lower-wage jobs and underrepresented in high-paying ones.24
  • Women of color disproportionately work in industries that offer lower wages, less access to workplace benefits and supports, and fewer opportunities for advancement.

Greater likelihood to work part-time and have career gaps

  • Disproportionate caregiving responsibilities make women more likely to work limited hours.
  • Women are more likely to take time off from work for care responsibilities, interrupting career trajectories.

The National Women’s Law Center estimates that the average wages lost due to the wage gap over the course of a woman’s career total $406,280.25 The lower pay results in limited cushions for both meeting everyday needs and preparing for the future.

64% of women studied report challenges meeting household expenses in the last 12 months, compared with 57% of men. Of this group of women:

  • 36% reduced spending on basic needs such as food and clothing.
  • 30% pulled funds from emergency savings.
  • 26% increased credit card debt.
  • 21% skipped credit card payments.

Deep Dive

Workplace Harassment

To date, limited data exists on the financial impacts of sexual harassment at work. By one estimate, costs can reach more than $1 million for people who are pushed out of high-paying, male-dominated careers.26

Our study aims to add to this literature not only by analyzing the prevalence of harassment, but also by identifying associations between one’s experience of being subjected to harassment and their financial health. Our nationally representative survey included an optional module that focused on discrimination and harassment. Of women who agreed to participate in this module, 57% reported being subjected to some kind of harassment or discrimination at work, with 40% reporting sexual harassment at work.27, 28

Table 2: More than half of women report being subjected to harassment or discrimination at work.

* Statistically significant vs. men (p < 0.05).
Respondents were given the option to complete a survey module focused on discrimination and harassment. Figures above are among the respondents who opted in (76% of women and 76% of men).

We found that being subjected to harassment on the job is associated with materially lower financial health. After controlling for marital status, race, income, and age, women who reported being subjected to harassment, including sexual harassment, while working were 7 percentage points less likely to be considered Financially Healthy, compared with women who did not report being subjected to harassment.29 Importantly, causality could work in both directions: Women who are more Financially Vulnerable may be more likely to work in places where they are subjected to sexual harassment, and/or sexual harassment could lead to a series of costs and financial strains that result in increased vulnerability, including job loss. Furthermore, some studies suggest that workplace harassment increased during the pandemic, disproportionately affecting frontline workers.30

Barrier 2

Limited Support for Care

Parenting

Among women, those without children under 18 are far more likely to be Financially Healthy than those with children (25% versus 13%). Even after controlling for marital status, race, age, and household income, women who have children are still 5 percentage points less likely to be considered Financially Healthy than women who do not.

Fatherhood is also associated with lower financial health, but due to a confluence of factors including income, fathers are still more likely to be Financially Healthy than mothers (20% versus 13%). Women remain far more likely to take primary responsibility for child care – regardless of employment status – and are far more likely to take time away from work or adjust their hours or careers. The Institute for Women’s Policy Research has found that 43% of working women will experience at least one year without any earnings, nearly twice the rate of men.31 Furthermore, nearly 80% of single-parent households are headed by mothers.32

In our study, 70% of mothers with children under 18 reported reducing their hours, taking on additional hours, quitting a job, taking a leave of absence, or switching to a less demanding job at some point because of their parenting responsibilities. By contrast, the same is true for only 55% of men with children. (See Table 3.) In particular, mothers are more than twice as likely to report quitting a job, twice as likely to take an unpaid leave of absence, and 1.5 times as likely to report having reduced their hours than fathers.

Table 3: 70% of mothers report making a career change as a result of becoming a parent.

Responses to the question, “Have you ever done any of the following as a result of becoming a parent?”

Responses Women Men
Quit a job 32%* 15%
Reduced my hours 30%* 20%
Took a paid leave of absence for maternity leave or other parental leave 28% 22%
Took an unpaid leave of absence from my employer 20%* 10%
Switched to a less demanding job 19% 18%
Took on additional hours to pay for the cost of child care 12% 17%
Took a paid leave of absence from my employer for some other reason 8% 6%
Other 2% 2%
Any of the above 70%* 55%

* Statistically significant vs. men (p < 0.05).

This question was asked to those who reported that they are a parent or guardian to a child under the age of 18. (For women, n = 820; for men, n = 336.)

Whether permanent or temporary, many of these job shifts can have longer-term implications for financial health. Of mothers who had made a change in work status other than increasing their hours, 41% said it had at least a modest negative impact on their career advancement, 45% said their financial future had been negatively impacted, and 38% said they would need to delay retirement.33 (See Figure 4.)

 

Figure 4: Many mothers who have taken leave or adjusted their careers report financial impacts.

Responses to the question, “Please indicate whether this change/these changes affected you in any of the following ways.”

 

The massive costs of child care contribute to women leaving the workforce. In our study, among women who have children under 12 and work part-time or are stay-at-home parents (n = 211), 62% indicate that they would like to work more, but child care is too expensive.

Availability of child care is also especially salient at this moment in time. The COVID-19 pandemic drastically limited availability of child care, with an estimated 9% of child care centers closing permanently.34 Among women who have children under 12 and either work part-time or stay at home, 54% say that they would like to work more, but child care is unreliable.

Deep Dive

The Unexpected Burden of Diapers and Period Products

There has been limited research on the impact of two expenses that women disproportionately carry: personal hygiene products such as tampons and pads, and diapers for young children. While perhaps relatively small on an absolute basis, these costs accrue over time. A year’s worth of period products is estimated at more than $80, while a year’s worth of diapers for a young child is estimated at $900.35, 36 Difficulty affording these supplies can cause mental strain, shame, and even missed days of work.37, 38

Our research finds that challenges affording these basic supplies are widespread. In our survey, among women with children under 4 (n = 235), 45% say they sometimes or often worry about how to afford diapers.39, 40 Twenty-five percent of women report that they worry about affording pads and tampons for themselves or another person in the household.41 Neither product is currently considered essential under most state definitions and thus are subject to sales tax. They are also excluded from programs such as the Special Supplemental Nutrition Program for Women, Infants, and Children.42

Caregiving

According to the AARP and the National Alliance for Caregiving, about one in five adults nationally are serving as caregivers, and a disproportionate number are women.43 Beyond mental, physical, and emotional burdens, these individuals face clear financial challenges. Family caregivers incur thousands of dollars in out-of-pocket expenses each year, and around one-fourth of family caregivers are forced to take on more debt, AARP has found.44

Caregiving, like parenting, is associated with lower financial health. Among women, those who have been caregivers over the last 12 months are less likely to be considered Financially Healthy compared with non-caregivers (18% versus 28%). Nearly half of women caregivers (45%) said they had reduced 
their hours, increased their hours, quit a job, took a leave of absence, or switched to a less demanding job because of their caregiving responsibilities.45 Among women caregivers with a career change other than increased hours, 53% said the change had at least a modest negative impact on their financial future.

Barrier 3

Burdensome Debt

Women are 25% more likely than men to report carrying unmanageable levels of debt (39% versus 31%).46 Among Black women, the weight of debt rises even higher: 51% of Black women report having unmanageable levels of debt, compared with 39% of White women. Below we highlight two forms of debt that weigh particularly heavily on women.47

Student Debt

Women have made remarkable advancements in higher education, now earning the majority of college degrees at all levels.48 However, these accomplishments collide with rising costs and lower earning power, resulting in women holding nearly two-thirds of all outstanding student loan debt. Researchers have found that it takes women two more years to pay off student debt than men.49

This is creating substantial strain for borrowers. In our study, among those reporting student debt (in their households overall), women were nearly twice as likely as men to say they are very concerned about their ability to pay off their household’s student debt (33% of women compared with 18% of men).

Student debt was also one of the most common financial concerns cited by focus group participants from a range of age groups. Several participants noted that they had foregone additional education in an effort to avoid debt, while others wondered whether their education was “worth it” given the years- or decades-long debt obligation they now held.

Medical Debt

Medical debt also falls disproportionately on women.50 In our survey (which was limited to people ages 18-64), 29% of women report that their households have past-due medical bills, compared with 22% of men. In particular, women of color shoulder medical debt at disproportionate rates: 41% of Black women and 40% of Latina women report having past due medical bills, compared with 25% of White women.

The Kaiser Family Foundation suggests that this is due in part to childbirth costs, as well as women’s lower incomes.51 Other research has found that women’s longer lifespans contribute to women accumulating lifetime health care costs that are one-third higher than those of men.52

This debt has a significant impact on women’s life trajectories, particularly young women and women of color. Forty-four percent of women ages 18-29 reported that debt had impacted their life choices, compared with 34% of men in the same age group. Additionally, almost 2 in 5 Black and Latinx women (39% and 36%, respectively) reported that debt impacted their life decisions, compared with just one-fourth of White women (26%). Focus group participants also underscored how overwhelming managing debt can be, and many expressed that they wished they better understood how to navigate the environment.

Table 4: Women of color and young women are more likely to report impacts from debt.

Responses to the question, “Have your debt obligations led you to do any of the following? Please select all that apply.”

Race and ethnicity Age
Life choices influenced by debt Black women Latina women White women Women 18-29 Women 30-49 Women 50-64
Delay buying a home 26%* 29%* 18% 33% 25%^ 6%^
Forgo additional education 18%* 10% 11% 17% 14% 4%^
Delay having children 8% 7% 8% 18% 6%^ 1%^
Delay getting married 9% 6% 6% 15% 6%^ 1%^
Limit number of children 8% 12%* 6% 12% 9% 1%^
Any impact 39%* 36%* 26% 44% 36%^ 9%^

* Statistically significant vs. White women (p < 0.05).
^ Statistically significant vs. women 18-29 (p < 0.05).

Barrier 4

Insufficient Savings for Retirement

While older individuals tend to report greater financial security than younger people, the financial health gap remains throughout the entire lifespan we studied.53 While 38% of men ages 50-64 are considered Financially Healthy, just 31% of women in that age bracket are.

Notably, women trail men in retirement savings. More than half of men (53%) say they are confident they will have enough money to live off of in retirement, versus only 42% of women. This is more than just a subjective issue of confidence: Women are less likely to say they have a retirement account in their own name or report that they have personally set aside funds for retirement.54 (See Table 5.) Even among women ages 50-64, 35% report no personal retirement savings at all.

In our focus groups, we found that the planning horizon for finances is still quite short for many women – only a few years. Few women under age 50 even mentioned retirement as a goal. This aligns with survey data finding that 58% of women say their households plan ahead, compared with 66% of men. When families struggle to make ends meet, retirement can feel like a distant dream.

Table 5: Women are less likely than men to have personal retirement savings or feel confident about retirement funds.

Confidence, personal savings, and calculation of retirement needs by gender.55

Women Men
Very/moderately confident in having sufficient funds for retirement
(among all respondents)
42%* 53%
Have no personal retirement savings
(among nonretired respondents)
42%* 33%
Have calculated how much money is needed to retire
(among nonretired respondents)
27%* 37%

* Statistically significant vs. men (p < 0.05).

Fewer years in the workforce and lower-paying jobs contribute to lower retirement savings, which, coupled with women’s longer lifespans and greater likelihood of costly medical expenses, contribute to higher poverty rates among older women.56 According to research by the National Women’s Law Center and the Center on Poverty and Social Policy at Columbia University, men and women enter adulthood with comparable rates of poverty, but women begin experiencing significantly higher rates of poverty during their childbearing years, with the gap widening during retirement.57 Women ages 65 and older are 80% more likely to live in poverty than men in the same age bracket.58

Another factor contributing to the financial health divide in retirement is account ownership. Women are less likely to report having longer-term investment vehicles in their own name, including retirement accounts, brokerage accounts, pensions, and other financial assets.59 This could have substantial financial impacts on women’s long term ability to save for the future, as well as their financial solvency, if a partnership dissolves.

Table 6: Women are less likely than men to have most investing vehicles.

Account ownership
(Anyone in the household)
Account ownership
(Solely in own name)
Men Women Men Women
Checking account 94% 91%* 58% 58%
Savings account 79% 79% 49% 48%
Retirement account 66% 61% 53% 44%*
Real estate, housing, or property 55% 55% 17% 17%
Brokerage account, annuity, and/or profit sharing/stock plan 50% 39%* 33% 23%*
Other financial assets or accounts 35% 27%* 24% 15%*
Pension 28% 27% 22% 16%*

* Statistically significant vs. men (p < 0.05).

Ownership of long-term accounts may be connected to financial management roles within households. Among married and partnered couples, women are less likely to say they manage long-term finances. 71% of married and partnered women say they take primary responsibility for household shopping (groceries, etc.), but only 41% report primary responsibility for making decisions about savings and investments (such as whether to save, how much to save, or where to invest).

Stories from Everyday Women
Video

Stories from Everyday Women

To better understand the issues we uncovered throughout our research, we spoke with women across the country about their financial lives. This is what they told us.

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The Opportunity in Closing the Financial Health Gender Gap

Women Remain Optimistic, but Need Policy and Employer Support

Despite the financial challenges they face, women show incredible resilience and hope for the future. Fewer than one in 10 women (9%) reported that they believe they will be worse off a year from now than they are today.60 In focus groups, women used words like “stable,” lucky,” and “climbing” as they thought about their future.

But to bring this optimism to life, significant changes are needed to better support women throughout their lives and level the playing field between men and women. Making change a reality would benefit not only women, but also businesses and the broader economy as a whole: Researchers from the Federal Reserve found that closing gaps in gender and race could have added $2.6 trillion to our economy in 2019.61

Below we identify several areas that research suggests could bring meaningful change, highlighting some of the many organizations that are leading the charge. We place particular emphasis on structural changes that policy makers could enact, as well as policies and benefits that would support the financial health of women workers.

Policy Needs

 

1. Closing the wage gap and assuring living wages

Our existing laws are not fully protecting women from unequal pay or discrimination, and too many women, particularly women of color, do not earn a livable wage, despite full-time labor.

Many organizations have worked tirelessly to bring attention to this issue. The following groups are just a few of those that have outlined policies to address gender inequities in pay:

2. Building a care infrastructure

Perhaps more than any other moment in time, the COVID-19 pandemic has revealed the critical need for a more robust care infrastructure, including more affordable child care and elder care, paid leave, and fair pay for care workers.62 Care Can’t Wait, a consortium of more than a dozen leading organizations, has aligned on care as a critical element of our economy and an essential component for continued pandemic recovery and economic growth.

3. Expanding retirement plan availability and portability

Numerous states are introducing programs to make workplace retirement plans available to workers who don’t currently have access.63, 64 Such programs could provide a vehicle for long-term saving to those who are currently excluded. The Center for Retirement Research tracks uptake of such programs at the state and federal level.

4. Rethinking Social Security

Social Security benefits are based on a person’s 35 highest earning years; women receive Social Security benefits that are, on average, 80 percent of those men receive, with mothers receiving even less.65 Some researchers have called for adjustments to Social Security policy, such as adjusting the spousal benefit or providing a caregiver credit.66 The National Institute for Retirement Security has outlined additional policy recommendations to strengthen women’s financial security in retirement. 67

5. Fostering affordable higher education

The current trajectory of higher education costs is unsustainable and disproportionately burdens women, especially women of color. Advocates including the Student Borrower Protection Center and AAUW have been exploring a range of solutions that would ease burdens on existing borrowers and enable more students to pursue affordable education.

Employer Needs

 

1. Creating supportive workplaces

Flexible work schedules, salary transparency, and restrictions on requesting salary histories in interviews have all been cited as playing an important role in narrowing the income gap.68, 69 TIME’S UP and ideas42 have compiled a guide to using behavioral practices to promote pay equity.70

Beyond these specific measures, the Financial Health Network has developed an Employer FinHealth Toolkit to support HR professionals in advancing employee financial health more broadly. We are also working with JUST Capital, Good Jobs Institute, and PayPal to make employee financial well-being a C-suite and investor priority.71

2. Expanding benefits

Expansion of availability of benefits to part-time workers could also close the gap in individual retirement plan ownership for women, while expansion of affordable health care options could help women avoid medical debt.72 In consultation with leading providers, the Financial Health Network has detailed a series of actions that employers can take to help employees avoid medical debt.73 WISER (the Women’s Institute for a Secure Economic Retirement) provides tools and resources for women across a range of issues.74

3. Supporting financially struggling employees

For individuals who are grappling with debt or who need to build credit, employers can play an important role via financial coaching or debt management services, programs like emergency savings or emergency grants, or contributions toward student loan repayments.75, 76

4. Ending harassment and supporting survivors

Employers clearly have an essential role to play in creating safe workplaces, including assessing for risk factors associated with harassment, enacting comprehensive anti-harassment policies, and holding employees who commit harm accountable.

Ensuring paid leave, including paid survivor leave, can be an important step to support employees who are subjected to harassment. FreeFrom, a national organization that advocates for survivors of intimate partner violence, has designed a template for a paid survivor leave policy

5. Leveraging behavioral lessons

Employers can apply behavioral insights to the design of their financial benefits, such as auto-enrollment in retirement plans and auto-escalation. The Employer Toolkit’s “Designing for Engagement” section section identifies opportunities for employers to simplify benefits as well as motivate and support employees to make the most of their benefits.

 

Of course, there is no one “silver bullet” policy or product that would address the financial health gap. Improving the financial health of women requires a systematic and collaborative effort from many stakeholders, but there is no doubt that addressing the gap would benefit us all.

Acknowledgments

This report benefited from the review of numerous experts on women’s economic security, including:

  • Melany De La Cruz-Viesca, UCLA Asian American Studies Center;
  • Kirkley Doyle, FreeFrom;
  • Julie Kashen, The Century Foundation;
  • Ana H. Kent, Federal Reserve Bank of St. Louis;
  • Heather McCulloch, Aspen Institute and Asset Building Strategies;
  • Kate Ryan and Olivia Storz, Institute for Women’s Policy Research.

We also thank numerous other experts who provided invaluable guidance on our research design, including representatives from the Diaper Bank of North Carolina and the National Diaper Bank Network, Futures Without Violence, the Institute for Women’s Policy Research, the National Partnership for Women and Families, the Women’s Institute for a Secure Retirement, and the Urban Institute.

We are grateful for the guidance and support of Jo Christine Miles at the Principal Foundation.

Rob Levy and David Silberman provided essential input into this research initiative, as did Helen Robb and Stephen Arves. We also thank our Financial Health Network colleagues who provided feedback on this draft: Uzma Amin, Beth Brockland, Andrew Dunn, Thea Garon, and Tanya Ladha. Naomi Adams Bata, Fawziah Bajwa, Dan Miller, and Jacquelyn Reineke were also critical in communicating the findings.

SSRS served as our research partner for this initiative. We thank Jordon Peugh, Jania Marshall, Kristen Conrad, Shannon Sesa, and colleagues for their close collaboration on quantitative and qualitative research design and data analysis.

Funding for this research was made possible by the Principal Foundation. The findings, interpretations, and conclusions expressed in this piece are those of the Financial Health Network and do not necessarily represent those of our funders or partners.

This report is part of the Financial Health Pulse research series. The Financial Health Pulse provides regular updates and actionable insights about financial health in America. The Financial Health Pulse is supported by the Citi Foundation, with additional funding from Principal Foundation.

Methodology Summary

A Glance at Our Research Approach

This initiative was completed in two parts. In November and December 2021, the Financial Health Network, in partnership with the survey and market research firm SSRS, surveyed a nationally representative sample of 992 men and 2,008 women ages 18-64 drawn from SSRS’s probability-based Opinion Panel. The survey data are weighted to be representative of the noninstitutionalized United States adult population ages 18-64, using gender, age, education, race, census region, marital status, and employment status benchmarks from the 2021 U.S. Census Current Population Survey.

Survey data was supplemented with qualitative research. In February 2022, SSRS conducted four virtual focus groups among women who previously completed the survey and were not considered Financially Healthy. This paper includes a number of quotes from these discussions.

Technical Notes
All comparisons cited in this report are statistically significant at p < 0.05, unless otherwise noted. Percentages reported are rounded to the nearest whole number, and thus may not always sum to 100% in tables. For additional methodological details and notes on terminology and data limitations, please download the full report.

The Gender Gap in Financial Health

To access complete text, data tables, and methodological details, download the PDF version of the report.

Download the Report

Endnotes

  1. Andrew Dunn, Thea Garon, Necati Celik, & Jess McKay, “Financial Health Pulse®: 2021 U.S. Trends Report,” Financial Health Network, October 2021.
  2. Ibid.
  3. Unless otherwise noted, the figures reported are from respondents ages 18-64 surveyed in our 2021 national survey. For more details, please see the Methodology section.
  4. For the purposes of analysis, we classify as “White” individuals who indicated that they were White and did not select any other race or ethnicity; similarly, those who selected “Hispanic, Latino, Spanish, or Latinx” and did not select any other race or ethnicity are classified as Latinx/Latina, and individuals who selected “Black or African American” and no other race or ethnicity are included as “Black.” Respondents who selected multiple races are categorized as “Multiple Races.” See Appendix for more information.
  5. Respondents were asked the question: “Now thinking about all of your household’s current debts, including mortgages, bank loans, student loans, money owed to people, medical debt, past-due bills, and credit card balances that are carried over from prior months… As of today, which of the following statements describes how manageable your household debt is?” Response options were: 1) Have a manageable amount of debt; 2) Have a bit more debt than is manageable; 3) Have far more debt than is manageable; 4) Do not have any debt.
  6. Julie Kashen, Sarah Jane Glynn, & Amanda Novello, How COVID-19 Sent Women’s Workforce Progress Backward,” The Century Foundation and the Center for American Progress, October 2020.
  7. How much could US states gain by closing racial and gender gaps in the labor market?,” Federal Reserve, Fed Communities, June 2021.
  8. Amanda Novello,The Cost of Inaction: How a Lack of Family Care Policies Burdens the U.S. Economy and Families,” National Partnership for Women and Families, July 2021.
  9. Paula England, Andrew Levine, & Emma Mishel, The gender revolution is stalling—What would reinvigorate it?,” Brookings, June 2020.
  10. Ibid.
  11. The Wage Gap: The Who, How, Why, and What to Do,” National Women’s Law Center, October 2020.
  12. Ibid.
  13. Single Black women own just two cents on the dollar compared with all single men, and single Latina women own only eight cents. See Elyse Shaw, Cynthia Hess, Chandra Childers, Jeff Hayes, & Adiam Tesfaselassie, Assets for Equity: Building Wealth for Women in Central Ohio,” Institute for Women’s Policy Research, April 2019.
  14. Meredith Covington & Ana Hernández Kent, The ‘She-Cession’ Persists, Especially for Women of Color,” Federal Reserve Bank of St. Louis, December 2020.
  15. This aligns closely with Institute for Women’s Policy Research‘s survey data from February 2021, in which more than one in four women (26.6%) reported that their families were worse off financially than they were a year prior. This could imply that despite passage of time, women are not feeling more financially secure. For more, see Jeff Hayes & C. Nicole Mason, IWPR Women’s Priorities and Economic Impact Survey,” Institute for Women’s Policy Research, February 2021.
  16. Credit tiers were mapped according to survey responses to the question, “How would you rate your credit score?” Responses of “Excellent,” “Very Good,” and “Good” were mapped to Prime.
  17. The difference in the percentage of Black and Latina women who are Financially Healthy is not statistically significant.
  18. Risk for COVID-19 Infection, Hospitalization, and Death By Race/Ethnicity,” Centers for Disease Control and Prevention, April 2022.
  19. Meredith Covington & Ana HernándezKent, The “She-Cession” Persists, Especially for Women of Color,” Federal Reserve Bank of St. Louis, December 2020.
  20. This is not a holistic summation of factors affecting women’s financial health. For example, we do not explore in depth several other issues that have implications for financial health, such as one’s experience of intimate partner violence or access to reproductive health services; nor do we examine elements of one’s identity like sexual orientation or ability. We also do not explore attitudinal differences that could result in lower financial confidence or aversion to risk; we focus instead on structural differences. We would value additional research to explore these issues further.
  21. Men with household incomes under $30,000 are twice as likely (8%) to be Financially Healthy, a statistically significant difference.
  22. The Wage Gap: The Who, How, Why, and What to Do,” National Women’s Law Center, October 2020.
  23. Ibid.
  24. Ibid.
  25. Ibid.; among women who work full-time, year-round over a 40-year career.
  26. Ariane Hegewisch, Jessica Forden, & Eve Mefferd, Paying Today and Tomorrow: Charting the Financial Costs of Workplace Sexual Harassment,” Institute for Women’s Policy Research & TIME’S UP Foundation, July 2021.
  27. Seventy-six percent (n = 1,528) of women surveyed agreed to participate in this module, as did 76% (n = 752) of men.
  28. Some studies indicate that as much as 85% of women will experience workplace sexual harrassment. See Ariane Hegewisch, Jessica Forden, & Eve Mefferd, Paying Today and Tomorrow: Charting the Financial Costs of Workplace Sexual Harassment,” Institute for Women’s Policy Research & TIME’S UP Foundation, July 2021.
  29. A regression controlling for demographic factors estimated that women who reported workplace discrimination were 3 percentage points less likely to be considered Financially Healthy, though the difference is not statistically significant.
  30. No Rights, Low Wages, No Service: How Increased Violations of Workers’ Rights in 2021, Coupled with High Harassment and Low Wages and Tips, Have Pushed Workers to Leave the Service Sector,” One Fair Wage & Food Labor Research Center, September 2021.
  31. Stephen J. Rose & Heidi Hartmann, “Still a Man’s Labor Market: The Slowly Narrowing Gender Wage Gap,” Institute for Women’s Policy Research, November 2018.
  32. National Single Parent Day: March 21, 2022,” U.S. Census Bureau, March 2022.
  33. Men who adjusted their careers for parenting responsibilities also reported similar financial impacts, but they are significantly less likely to make one of these changes overall. Mothers are 50% more likely than fathers to report making a change other than taking on more hours (39% of fathers versus 61% of mothers).
  34. Sally Ho & Josh Boak, Worsened by pandemic, child care crisis hampers broader economy,” PBS, October 2021.
  35. Sarah Larimer,The ‘tampon tax,’ explained,” Washington Post, January 2016.
  36. How much does it cost to raise a child?,” New York Life.
  37. Fred Carstensen & Peter Gunther, Better Health for Children and Increased Opportunities for Families: The Social and Economic Impacts of the Diaper Bank of Connecticut,” Connecticut Center for Economic Analysis, May 2018.
  38. Chabeli Carrazana, “Am I even fit to be a mom?’ Diaper need is an invisible part of poverty in America,” The 19th, November 2021.
  39. Of all parents in our survey with children under 4 (n = 399), 36% indicated that they sometimes or often worry about how to afford diapers. This is in line with the (limited) findings that currently exist, though questions are asked in different ways. For more, see Megan V. Smith, Anna Kruse, Alison Weir, & Joanne Goldblum, Diaper Need and Its Impact on Child Health,” Pediatrics, August 2013; and Meijer and Huggies® Partner to Donate Up to 400,000 Diapers to the National Diaper Bank Network,” Kimberly-Clark Corporation, PR Newswire, March 2022.
  40. This group reflects a somewhat lower-income cohort; 36% of women in our sample with children under the age of 4 report household incomes of less than $30,000, compared to 27% of all women in our sample.
  41. A 2021 study conducted by U by Kotex found that two in five people have struggled to purchase period products. Black and Hispanic people who menstruate are more likely to agree they’ve struggled to afford period products in the past year (35% and 36% respectively, versus 23% of White respondents). See Period Poverty,” Alliance for Period Supplies.
  42. Emma Goldberg, Many Lack Access to Pads and Tampons. What Are Lawmakers Doing About It?,” New York Times, January 2021.
  43. In our study, 36% of women said they had ever served as a caregiver, compared with 29% of men. Of that group, 61% of men and 66% of women had served as a caregiver in the past 12 months (not a statistically significant difference). This data aligns with the findings from Caregiving in the United States 2020,” AARP & National Alliance for Caregiving, May 2020.
  44. Michelle Cottle, Who Will Take Care of America’s Caregivers?,” New York Times, August 2021.
  45. Respondents who said they had served as a caregiver within the past 12 months were asked, ”Have you ever done any of the following as a result of being a caregiver? Select all that apply.”
  46. Respondents were asked the following question: “Now thinking about all of your household’s current debts, including mortgages, bank loans, student loans, money owed to people, medical debt, past-due bills, and credit card balances that are carried over from prior months … As of today, which of the following statements describes how manageable your household debt is?” Response options were: 1) Have a manageable amount of debt; 2) Have a bit more debt than is manageable; 3) Have far more debt than is manageable; 4) Do not have any debt.
  47. In our study, fewer women report having credit card debt than men (54% versus 57%), though this does not take into account credit card ownership. The literature on the gendered nature of credit card debt is limited and would benefit from further study. In a review of data from Q2 2019, Experian found that women carry less debt across all categories except for student loan debt, but the differences aren’t always significant: Men have just $125 more in credit card debt than women. When adding up all types of debt analyzed, men carry more than 20% more debt than women. Other studies (e.g., FINRA Investor Education National Financial Capability Study, Federal Reserve) have found that women have higher rates of credit revolvership.
  48. Kevin Miller, Deeper in Debt: Women & Student Loans,” AAUW, 2017.
  49. Deeper in Debt: 2021 Update,” AAUW, 2021.
  50. Matthew Rae, Gary Claxton, Krutika Amin, Emma Wager, Jared Ortaliza, & Cynthia Cox, The Burden of Medical Debt in the United States,” Kaiser Family Foundation, March 2022.
  51. Ibid.
  52. Berhanu Alemayehu & Kenneth E Warner, The Lifetime Distribution of Health Care Costs,” Health Services Research Vol. 39,3, June 2004.
  53. Thirty-one percent of women ages 50-64 are considered Financially Healthy, versus 12% of those ages 18-29.
  54. Respondents were asked, “Please estimate the total value you personally have set aside for retirement. Do not include your house, business assets, investment real estate, or savings likely to be used for some other purpose, such as educating your children or supporting your parents. Please also do not include money from a spouse or partner’s retirement accounts.”
  55. Data in Table 5 is compiled from three survey questions:
    • “How confident are you that your household is currently doing what is needed to meet your longer-term goals?” (Posed to all respondents.)
    • “Please estimate the total value you personally have set aside for retirement. Do not include your house, business assets, investment real estate, or savings likely to be used for some other purpose, such as educating your children or supporting your parents. Please also do not include money from a spouse or partner’s retirement accounts. Your best guess will do.” (Posed to nonretired individuals.)
    • “Have you ever tried to figure out how much you need to save for retirement?” (Posed to nonretired individuals.)
  56. Jennifer Erin Brown & Joelle Saad-Lessler, Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future,” National Institute on Retirement Security, March 2016.
  57. Robert Paul Hartley, Ajay Chaudry, Melissa Boteach, Estelle Mitchell, & Kathryn Menefee, A Lifetime’s Worth of Benefits: The Effects of Affordable, High-quality Child Care on Family Income, the Gender Earnings Gap, and Women’s Retirement Security,” National Women’s Law Center & Columbia University Center on Poverty & Social Policy, April 2021.
  58. Ibid.
  59. The National Institute on Retirement Security has found that women have lower levels of eligibility for retirement plans, due in large part to a greater likelihood to work part-time; see Jennifer Erin Brown & Joelle Saad-Lessler, Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future,” National Institute on Retirement Security, March 2016.
  60. This compares with 13% of men, a statistically significant difference.
  61. Shelby R. Buckman, Laura Y. Choi, Mary C. Daly, & Lily M. Seitelman,The Economic Gains from Equity,” Federal Reserve Bank of San Francisco, April 2021.
  62. Thea Garon, Jess McKay, & Jessica Mason,Unpaid and Unprotected: How the Lack of Paid Leave for Medical and Caregiving Purposes Impacts Financial Health,” Financial Health Network & National Partnership for Women & Families, September 2021.
  63. State-Administered IRA Programs: Overview and Considerations for Congress,” Congressional Research Service, March 2022.
  64. Ibid.
  65. Social Security Is Important to Women,” Social Security Administration, January 2021.
  66. Alicia H. Munnell & Andrew D. Eschtruth,Modernizing Social Security: Caregiver Credits,” Center for Retirement Research at Boston College, August 2018.
  67. Jennifer Erin Brown & Joelle Saad-Lessler, Shortchanged in Retirement: Continuing Challenges to Women’s Financial Future,” National Institute on Retirement Security, March 2016.
  68. Flexible work arrangements reduce wage gap for mothers,” University of British Columbia, ScienceDaily, May 2018.
  69. Stephen Miller, Transparency Shrinks Gender Pay Gap,” SHRM, January 2020.
  70. Elizabeth Weingarten, Pranav Trewn, Manasee Desai, & Katy Davis, From Ideal Worker to Ideal Workplace: Using Behavioral Design to Create More Equitable Companies,” ideas42 & TIME’S UP Foundation, March 2021.
  71. The Worker Financial Wellness Initiative – Making Workers’ Financial Security and Health a C-Suite Priority,” JUST Capital.
  72. Uzma Amin & Michelle Proser, Preventing Medical Debt From Disrupting Health and Financial Health: Executive Summary,” Financial Health Network, March 2022.
  73. Ibid.
  74. Closing the Coverage Gap,” Center for Retirement Research at Boston College.
  75. Better for Employees, Better for Business: The Case for Employers to Invest in Employee Financial Health,” Financial Health Network, 2019.
  76. Amelia Josephson, Megan Skaggs, & Beth Brockland, Helping Employees Manage Debt: Designing Debt-Related Benefits To Match Employee Needs and Preferences,” Financial Health Network, February 2022.