Magazine

What’s the Gender Wealth Gap, and How Can We Close It?

By Ellevest Team

You’ve probably heard of the gender pay gap. 83 cents to a man’s dollar. It’s a common stat (with 9.2 million search results on Google, as of this writing), and for good reason. It’s a big problem. But actually … it’s only part of the problem.

A woman climbing stairs made of money toward a screen showing another woman, bags of cash, a bar chart, and more shapes. Illustration.

The more important but lesser-known gap (only 31,000 hits on Google) is the gender wealth gap. Not how much women make compared to men, but how much they own and keep. How much they have. And it’s way bigger than the gender pay gap.

Let’s talk about it, shall we?

How big is the gender wealth gap?

The most commonly referenced reports are a few years old now, but they say that for every dollar a white man owns, women overall own just 32 cents. Black and Latinx women? Just one penny. (And that was before the pandemic-induced She-cession.)

That said, it’s hard to pin down exactly how big the wealth gap is, for a couple of reasons. First, a person’s wealth changes over their lifetime, so age can skew the results — a 22-year-old with student loans probably has a lot less wealth than a retired widow who owns her home. Plus, most wealth data is collected at the household level rather than an individual level, meaning many women’s wealth data is mixed in with a male partner’s. (One analysis from 2021 that tried to look at the gap at a household level found that women’s median household wealth was 55 cents to every dollar of a man’s median household wealth.)

But no matter how you slice it, one thing’s for sure: The gender wealth gap is massive.

Why is the wealth gap so big?

Because financial inequality hits women’s wallets in so many different ways.

  • The pay gap. Women are paid less than men. They’re promoted less often than men. They’re denied raises more often than men. And they stop getting raises a full decade earlier than men.

  • Women spend less time in the workforce, often not by choice. 95% of low-wage workers, most of whom are people of color, don’t get paid leave, which makes it nearly impossible to keep a job if they have children, sick family members, an injury, etc. But even for higher earners, traditional gender roles (or the fact that most women bring in a smaller portion of the household income) mean they’re the ones to stay at home if need be. Less time in the workforce means fewer years earning and building wealth.

  • The investing gap. Women keep the majority of their money in the bank, while men invest the majority of theirs. That means they’re missing out on the opportunity to earn the kind of returns that investing has historically produced (see: the stock market, which has gone up at an average of 10% a year since 1928). That means they could be missing out on hundreds of thousands — or millions — over a lifetime.

  • The financial industry is dominated by men. One reason women invest less than men? The industry just wasn’t built for them. (Hence: Ellevest.) A few stats for ya: 86% of financial advisors are men. 98% of mutual fund dollars are managed by men. The wealth management industry ranks worst in terms of sexual harassment. It’s a world that rewards aggressive masculinity — see Reddit memestocks, The Wolf of Wall Street, and how could we forget the Charging Bull?

  • The debt gap. Women have more student loan debt. They pay half a percent more on credit cards, even controlling for other factors. And they pay higher rates on small business and personal loans, and on mortgages. (They see lower returns in real estate investments, too, losing out on an average of $1,600 per year.)

  • The pink tax. Women pay more for a ton of things, from razors to clothing (even kids’ clothes) to girls’ toys to senior care. By one estimate, the pink tax costs women $1,350 a year. 😑

  • Women spend more on their families and spend more of their time performing free labor. Three times as many mothers who work as fathers who work say they make the majority of purchases for the family. And by one New York Times estimate, the unpaid labor performed by American women in 2019 would have been worth an estimated $1.5 trillion (!!) if they’d been paid minimum wage for that work. As sociologist Jessica Calarco puts it, “Other countries have social safety nets. The US has women.”

  • And, of course, the She-cession. Women (the vast majority women of color) lost 12.2 million jobs in the first three months of the pandemic, and many didn’t (or couldn’t) return. Even now, women are still down 1.8 million jobs from February 2020. (Men are down 1.1 million.) In fact, so many women low-wage workers exited the workforce in 2020 (and thus were no longer counted) that the gender pay gap narrowed.

Why is the gender wealth gap more important than the gender pay gap?

Because of all that stuff above. Wealth is the more holistic measure of inequality because it takes into account things like investments, emergency savings, debt, inheritances, etc — all of which are huge contributors to a person’s long-term financial stability and power.

Also! The gender wealth gap is a stronger indicator of future inequality. It takes money to make money, as they say. And it’s expensive to be poor. The gender wealth gap acknowledges that financial equality isn’t just about the money you have now — it’s also about your capacity for making things better for your descendants in the long run, how you’re able to save and create stability for future generations.

Plus, even if the pay gap disappeared, women would still be at a serious economic disadvantage thanks to centuries of legal oppression, especially for Black and Native American women. See: slavery, Jim Crow, being denied land sovereignty, unequal access to education, redlining, and modern-day inequities that all affect who gets to build wealth and how.

How to fight the gender wealth gap

Like racial injustice, and climate change, and world hunger, the gender wealth gap is a systemic issue, and it will require systemic answers. Individual action can only go so far. But of course, we fight.

Things everyone can do

  • Use your financial power. Spend intentionally. Buy from women-led businesses. Invest in women entrepreneurs. Avoid banking with institutions involved in predatory lending practices. Invest for impact.

  • Follow (and participate in) local politics. When the federal government fails to implement safety nets, it's on state-, county-, and city-level legislators to pick up the slack — and where pressuring elected officials can create tangible relief.

  • Raise kids to use money for good. Talk about money with your children (and in front of them), address negative stereotypes, choose women (while shopping, as health care providers, etc), and model equity at home.

Things men can do

  • Be an ally at work. Hire more women. Promote the women+ you manage. Sponsor their career growth. Share salary information with your colleagues. (Seriously, let your compensation package be an open book.)

  • Get involved with mutual aid. Find a mutual aid group — or start one yourself — that provides direct support to the women+ in your community. Commit to regular volunteering and donations — not just one-offs.

  • Communicate before settling the bill. Women+ make less, have less wealth overall, spend more on their families, and so on — so going Dutch isn’t always 50/50. You can always offer to pay, but it’s good to communicate early and often about who’s paying for what.

Things women and non-binary people can do

  • Fight for your next raise or promotion. You deserve more.

  • Look out for yourself when changing jobs. As much as your circumstances allow, vet job opportunities based on the companies’ commitment to and action around gender and racial equality. Don’t settle for bad family leave policies, inflexible work policies, or other red flags.

  • Apply for that business loan. Surveys have shown that women entrepreneurs are not only less likely to get business loans in their first year, but also less likely to apply. And yet: Firms run by women that receive a loan in their first year tend to outperform those run by men.

  • Start investing. Today.

  • Practice financial wellness. Build your financial foundation, build toward a better future, and foster a healthy money mindset. Look out for Future You.

A future without a wealth gap makes the world better for everyone

Here’s the thing. Actually, several things. Women are better investors and invest in things that are better for the world (which also happen to be better for bottom lines). Who knows what more women+ investors could mean for the market in the long run?

Women run better businesses. Diversity makes companies more profitable, less risky, and more innovative. Studies also show start-ups with at least one woman founder perform better. In times of crisis, women-led companies have tended to weather the storm better. So getting women into positions of power where they’re able to create and maintain wealth is a win-win.

True gender wealth equality has been demonstrated to lead to better economic growth and development outcomes. Women also tend to reinvest a lot more of their income into their families and communities. So women’s prosperity is demonstrably good for everyone.

So yes, we should close the gender pay gap. But we can go so much further than that. Let’s keep our eyes on the real prize: closing the gender wealth gap.


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Ellevest Team

The Ellevest team is working to help women reach their financial and professional goals.