The gender pay gap gets a lot more press than the wealth gap, but income inequality only tells part of the story. Wealth isn’t just money in the bank, it’s insurance against tough times, tuition to get a better education and a better job, savings to retire on, and a springboard into the middle class. In short, wealth translates into opportunity, something that a huge percentage of Americans don’t have.
So what’s the difference between the gender pay gap and the wealth gap? The pay gap is what women earn in comparison to men, while the wealth gap is what women "own" in comparison - the wealth gap therefore is more comprehensive than the single income gap. Here’s a comparison:
Income can be a huge factor when it comes to the wealth gap, but other causes include higher student debt, less confidence in investing, taking career breaks for family reasons, needing to work time to accommodate family schedules, and a higher likelihood to be denied a mortgage than men.
The pandemic hasn’t helped matters either. Over the last year, we’ve experienced a “she-cession” where women left their jobs at 4x the rate that men did, further widening the gender wealth gap too. Women were more likely to be laid off than their male counterparts, and throughout the pandemic, they’ve been more likely to leave to provide childcare for their children when in-person schools and daycares closed.
Add to all these factors that lower-income women and women of color are unlikely to benefit from savings and investment incentives offered through the U.S. tax code, and the result is that millions of women and their families are trapped in a cycle of debt. It’s undermining their capacity to build wealth or take a risk on launching an entrepreneurial venture.
How Do We Empower Aspiring Entrepreneurs?
Closing the gender wealth gap starts with education and awareness, empowering women to break the cycle of debt, and equipping them with the tools and financial knowledge to start their own businesses and be entrepreneurs. It’s essential that aspiring entrepreneurs understand the fundamentals of business and finance in order to start viable businesses that will build real wealth for themselves.
While women-owned businesses are growing in number, currently they produce minimal wealth for their owners. Here’s my advice for how how female entrepreneurs can level up their success:
There are a number of places online to apply for grants and loans specifically for female entrepreneurs including Hello Alice
and The Amber Foundation
. By setting a strong plan, seeking out viable investors, and keeping your margins in mind, women can cultivate healthier cash flow in their businesses that can then be reinvested into scaling.
By setting a strong plan, seeking out viable investors, and keeping your margins in mind, women can cultivate healthier cash flow in their businesses that can then be reinvested into scaling.
We can make it easier for women to find education and funding specifically geared towards their unique challenges (i.e. longer life, wage gap, higher healthcare cost, caregiving burdens, etc.) by taking a hard look at how leaders from both genders are being trained to mentor. And that means making sure there aren’t biases against women in these areas. Women can also consider looking for an online network or community to draw inspiration from. Seeing the big picture is important to have a firm grasp on the whole financial picture so that launching a business becomes more accessible.
The time is now for a call to action to educate everyday people to make the right choices with their money. If we as a collective group of Americans can level up our financial literacy, we’ll see a trickle-down effect with less people living in a rent-seeking economy and more entrepreneurs to establish much-needed businesses that give back to their communities in all neighborhoods. And don’t just take it from me, research has proven the benefits of female-owned businesses.
A recent study from RAO Global
shows that women-owned businesses are the most promising market opportunities of our generation, with women managing nearly $30 trillion in assets by the year 2030. What’s more, in America and globally, female entrepreneurship and the financial independence
that comes with it is key to lifting these women and their families out of poverty. If we can all work together to empower more female entrepreneurs, everyone wins.