Closing the Gender Wealth Gap
Illustration by Ewelina Karpowiak
In the United States, women who work year-round earn somewhere near 82 cents for every dollar earned by men — but they only own about 32 cents for every dollar of wealth owned by their male counterparts. Both of these gaps are far more acute for black and Latina women.
These stats aren’t new, but the way we talk about them and design solutions needs a fresh approach, says Thasunda Brown Duckett, the CEO of Chase Consumer Banking and one of the most senior black women in finance. She’s working to improve financial literacy and health for millions of people, especially those in underserved communities. One example is a recent effort focused on expanding economic opportunities for black women.
“When we start discussions about the gender or racial wealth gap with ‘It’s hard,’ we are basically saying we have permission to fail,” she says. “We don’t use that phrase with any other metric in business. If you think ‘It’s hard,’ the next thing you say is you are going to work until midnight, or you are going to invest in figuring this out. If we take away ‘It’s hard’ when thinking about how to close the gaps, we’ll start running different plays.”
Duckett and I talked about some of these plays, ranging from changing the way we talk about money to the role of finance in accelerating women’s power and influence. This is an edited version of our conversation.
Why is addressing the gender wealth gap important?
What we need to be talking about is not just what women are making. It’s what they’re keeping. It’s not about just renting, but owning, a home, about how to transfer wealth to their children. It’s critical to talk about how the money is or isn’t working for women, so that as they are starting businesses, and as they are starting to move up with their earning income, they’re creating longer-term wealth. With more women being single parents, being the head of their household, waiting longer to get married, we have to make sure that they are creating wealth for themselves, and not relying on someone else to have the knowledge and manage those decisions.
What are the biggest barriers?
Money is stressful for most people, and particularly for women and people of color. The median wealth of single black Americans is $200 to $300, versus $15,000 to $28,000 for single white Americans. And black women face more hurdles to financial success than any other group in the United States. To me, the main thing to address is the mindset we have around money. It’s the idea that our net worth does not define our self-worth. We have to change that mindset.
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For example, Chase launched an effort called Currency Conversations, focused on helping black women save money, reduce debt, and build wealth. We bring women together and start by tackling this mindset. We’re making sure that everyone understands that they’re enough, and that having financial insecurity doesn’t define who they are. I think this is the most important thing, because if people haven’t addressed this mindset, they will not take the next step toward improving their financial health.
This is so personal to me. My father was at a Fortune 500 company for many years, and even though they had great benefits, a 401(k), my father didn’t think that they were for him. So the benefit was there. The information was there. But he did not see himself as someone who was worthy or capable of taking advantage of this benefit.
I take that with me when I’m talking to women. The language around money and finance can be really fancy, but we’re going to take where we are, learn, and talk about bite-size steps to feel more in control. Right now at Chase we have more than 13,000 women who are taking the pledge to save toward their goals. And the most important thing is, because they feel safe, because they could tell their story, they are more likely to feel like they can take the next step, which doesn’t mean saving $1,000 next month, but saving $10 next month, saving $30. That’s when we really see a breakthrough, when we have a shot at changing the wealth narrative and the wealth outcomes.
What are some other practical things that women can do to start becoming more financially empowered and secure?
It’s all about the right capabilities and experiences. In terms of capabilities, every woman should know their credit score. I like to say, we all know how to keep it 100, keep it real. But all women should keep it 700, 700 plus. That helps people know what success looks like.
Another idea is to use tools that help make saving easier. One is Autosave, which lets customers set up automatic transfers from their checking account into their savings account, whether it’s $10 a week or $10 a month. You set it and forget it. The power is that you can start small and connect it to what you’re saving for. Building habits is the best way to make sustainable progress. So you start at $5, and you start to see that compound, and you start to see that you’re able to add the money for your girls’ trip, or for your tires that you need to replace. We know from Chase data that so far in 2019, women on average have saved $588 through Autosave, but men have saved $727. I think there’s real power in helping women continue to save, because when we have a life moment, we actually have the ability to address that moment, whether it’s paying for the increase of my kids’ classes or whatever the case may be.
Finally, when I think about experiences, talking about money doesn’t have to be the worst conversation. It should be part of the sisterhood. If we’re going to get together at each other’s homes for wine and cheese, let’s pair that with how to keep it 700 plus. Let’s pair that with what we’re saving for, what goals we’re trying to accomplish. Let’s hold each other accountable.
How do these things help increase women’s power and influence?
These things help women become more knowledgeable about financial health, more confident in asking questions about what drives that financial health — like pay — and more unapologetic about what they’re saving for. All of this leads to wealth. We want women to be able to have wealth in this country to accomplish whatever it is that’s important to them, whether it’s giving back, volunteering, being an advocate, or having the resources and the confidence to remove some of the stress around money that keeps us from being present and powerful. The more we are learning and becoming more emboldened, the more we’ll be able to drive impact and accelerate progress.
What’s the role of the finance business here? It’s not a very diverse industry, especially at the senior ranks.
I think that having more women in power in finance will be a catalyst to closing the wealth gap, closing the income gap. Given that these are big industries, these jobs can grow into major careers across many different areas of finance and into other sectors, which is absolutely critical. It’s hard to talk about closing the income gap and the wealth gap without the financial sector taking a leadership role in this space.
What does the industry need to do to take on that leadership?
We have to change our mindset about how we pursue talent in certain sectors where we know those pipelines are thin. For example, Jamie Dimon, the CEO of JPMorgan Chase, really leads with a mindset around general managers versus more specialized ones. I’m the proof of concept. I was in mortgage. I became the CEO of auto. Now I’m the CEO of consumer banking.
If we focus on general management, we can move leaders around who may not have traditional background expertise, and I think we will create new opportunities for women in sectors where we have gender gaps. There will be more room to move from sectors where we over-index, such as health care and education, and move into sectors where we have a higher shot of earning more and closing the gap.
On the other hand, we also have to look at the data to say, here is a sector where we know that the income is high and we don’t have the same level of representation. What are we going to do about it? We have to start bringing women in earlier in the pipeline. That means focusing on schools and on internships, to increase women’s exposure to our industry. We know that really matters.
As one of the most senior black women in finance, how do you think about what helped you reach your own position of power and influence?
My disrupter was INROADS, an internship program giving minorities a pathway into business. If it was not for INROADS, I wouldn’t have known that corporate America could exist for me.
How can we ensure that others have similar opportunities, similar disrupters?
We have to understand that talent is created equally, but opportunity is not. We need to scale these opportunities to increase exposure, whether it’s through programs or internships or seminars. We have to make positions of power and influence more proximate to women, more proximate to people of color, so that they can see that there are possibilities for them. We should really be anchored around what are all the things we have to do to give women and minorities not a leg up, but to have them at the same starting line? That’s it.
Do you remember a moment when you realized how hard it can be for women, and harder still for black women? Or when your sense of your own power changed?
Yeah, the pregnancy moment. I was six months pregnant when I was asked to run a P&L, which was my goal. There were not enough women and definitely not enough black people running a P&L.
And the first thing in my mind was trying to explain it away, almost giving them permission to take it back. I was like, you know that I’m pregnant, right? You know I’m going to be out for three months, because this is scheduled? I was going through all the reasons why I couldn’t be in this job that clearly I could do well and clearly was a goal of mine. I had that moment of doubt and fear, as a woman who’s pregnant, who was going to go on leave, about leading something that’s really important to the business. I almost gave the company permission to say, oh, you’re right, maybe this isn’t a good time for you.
Acknowledging that moment was really an accelerator for me. All the doubt and fear in our heads, the feeling like we’re not enough, or like we didn’t check all the boxes — I needed to be aware of that. You don’t want to give people permission to respond to that doubt, you want to get past it and recognize that you’re enough.
How do you view your role as a leader?
When I think about being a black woman and being a leader in banking, recognizing that there’s still a lot of work to do to close the gender gap as well as the race gap, I think about the shoulders of giants that I rest on every day, and the cooks and the janitors and the secretaries that showed up in corporate America first as women and as minorities, whose work over time allowed me to exist here.
It was not until the ’70s, after the Civil Rights Act, that we had laws on the books to allow my talent to exist. I feel like it’s a privilege to be in this seat to drive impact and to be unapologetic about what this could mean for society, what this could mean for women, what it could mean for people of color. I think it’s what being in the seat is all about.The Big Idea
About the author: Nicole Torres is a senior associate editor at Harvard Business Review.
via Harvard Business Review http://hbr.org
October 3, 2019 at 04:18PM