The Wealth of Women - and Why It Matters

Originally published on September 29, 2014. Image sourced from Women's Voices for Change website. 

I bumped across this article (http://www.theage.com.au/comment/lower-pay-lower-wealth-a-womans-lot-in-life-20140923-10l3rx.html) and found it both fascinating and disturbing. The report being discussed is here - https://espace.curtin.edu.au/handle/20.500.11937/49530). The thing which really caught my attention was the gap in non-housing assets for those women aged under 35 who have never married.

Now, I'd understand if they had a lower share of housing assets; it's a lot harder to save a mortgage deposit on a single wage. But they even have less by way of shares and business ownership than do divorced/widowed women of the same age group. One thing that
I believe to be true about many (not all) divorces is that it creates two poor families rather than one middling one. So I don't think it's the case that all married couples own shares and/or businesses, meaning that not all divorced women suddenly own shares after a divorce. 

What *might* be different, though, is that when married, women could have conversations with their husbands around finance, and (again, on average) possibly be exposed to different views on finance and assets. As a result, could it be that some divorced/widowed women then start to buy shares, or to look at business opportunities, after divorce or a husband's death? 

The corollary question to this, though, is why women who have never married (as a whole) do not invest in these asset classes? It is not clear from the statistics whether or not these women have children or not. If they do, then the picture is perhaps clearer, as trying to bring up kids on one wage is often a paycheck-to-paycheck existence. 

But for the women in this group who don't have kids, there seems to be a gap in knowledge or attitudes. I hasten to add I'm not looking to blame such women here; rather, I think that there are solid reasons for it. First of all, whilst young men may have more of these types of assets than young women do, it's not substantially higher - and we are dealing with average figures, so there is a fair percentage of young men with no such assets. Secondly, this younger group covers everyone between 18 and 35...which is quite a gap. If the figures showed the financial assets of those under 25, I think the gender gap would be much lower. After all, when you're 20, saving for the future is something old people worry about, right? :)

The other thing is the (likely) perception of the financial services industry. It often either comes across as family-oriented, or overtly aggressive and masculine. Cue a switch-off of young female attention on both counts.

Why am I bothering to write about such a thing, as a male in his 40's (Dear God, why?) and very little contact with the social group I'm writing about? A couple of reasons:

1) The report also shows that there is a dip in the level of assets for women aged between 35-55. Now, part of this reflects the world that this age group of women grew up within. If we go back in time, then a woman aged 55 today was 20 in 1979. In terms of trends, this was at a time before financial liberalisation, and only a few years after no-fault divorce laws came into practice in 1976. Socially, this 20 year old was not far off being married, as the average age of marriage at that time was around 22 for women (https://aifs.gov.au/institute/info/charts/marriage/index.html#median). At this time, many women were likely to quit (or be forced to quit) work when they had children. 
 
This group of women, then, could potentially have come back into the workforce during the mid-to-late 1980's. However, despite having a few years at work to build assets, the 1990's recession would have thrown many women (and men) out of work. Finally, by the year 2000, such women would be roughly 40 years of age. Despite the passing of laws against discrimation on the basis of gender, that didn't mean it didn't (and doesn't still) happen.

The tail end of this same cohort may have a similar story to tell; a woman aged 35 today was born in 1979 (and thus in some cases), could have been the first group's daughters). This group of women may have missed trying to find work during the 1990's recession, but could well have had their families and their education disrupted by the experience of living through that recession. And it is likely that their ideas around finances were shaped by this period in time as well. 

2) As the report shows, there is a gap in women's wealth attainment during their middle years, in large part because of the need to take time out for family duties. So, it stands to reason that to help women to recover from that gap, they need to be saving (and investing) earlier in life in order to make up for that gap. I'm not suggesting for a moment that the other things that help to cause that gap should not be addressed, but that if we wait for others to fix it, we'll all be long gone. 

3) I can see another problem for women in this 35-55 year age group looming as the population ages. Women are currently the main providers of unpaid care (http://whv.org.au/static/files/assets/2aaa851d/Women_and_informal_caregiving_GIA.pdf) and are likely to end up in a position where they are trying to care for parents in future, with yet more impact upon their ability to generate wealth. For those women who look to return to the workforce after raising children, this is likely to crimp their ability to do so.   

In conclusion, I'm sure there are similar problems internationally, and I think we all have a responsibility to talk about this. To educate half of the workforce, and then penalise them due to social and biological differences, apart from being manifestly unfair, is inefficient and backwards - particularly when action now will save us all effort and resources in the long run. 

Maybe the conversation needs to start in high schools? I would hope that it could be framed the right way, but maybe an appeal to the girls about being smarter than boys could work? After all, more women than men have entered higher education since 1987, so there is proof of a sort to it (http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/4102.0Main+Features20July+2013). But regardless of how it is done, we need to help the next generation of girls to understand that their financial future is best looked after by themselves - and to give them the appropriate tools and support to learn how to do it.