This Women’s History Month, we at Woodstock Institute are reflecting on how women are still at a disadvantage in the areas of income and wealth and what can be done to address that disparity. One of the common ways in which people build assets is by purchasing a home. Woodstock Institute’s research has shown that women are at a distinct disadvantage in obtaining mortgage credit. The Unequal Opportunity report found that applications from women were less likely than applications from men to be originated and that female-headed joint applications were less likely than male-headed joint applications to be approved. We are completing follow-up research which includes a look into whether certain neighborhoods experience more gender disparities in access to mortgage credit than others and suggestions for policy and practice solutions to expand women’s access to mortgage credit.
Sarah Thebaud’s Newsweek article noted that accumulating education and skills is not sufficient for women to attain financial equality. Thebaud conducted an experiment in which male and female entrepreneurs pitched ideas to participants, the majority of whom were in their 20’s. The results showed that participants scrutinized women more closely than they scrutinized men: “This finding suggests that when a man proposes a business idea, he can typically expect others to respond on the basis of a simple risk-benefit calculation, the kind any venture capitalist might make when deciding whether to help finance a project. But when a woman proposes the same idea, she can expect others to simultaneously be looking for cues that she in fact possesses the types of skills and traits needed to make a venture a success—abilities she’s often assumed to lack because of her gender.” Thebaud offers strategies for women entrepreneurs such as promoting the uniqueness of their business, skills, and experiences. Nonetheless, the article shows that the business world can be unwelcoming to many women--not because of any lack of education or experience--because of their gender.
The lack of economic opportunity for women during their working years translates into a lack of financial security in retirement. According to a report by AARP, most working women earn less than $30,000 annually and women over 65 are less likely than men over 65 to live in a dual-income household. At 65, women’s life expectancy is 20 years, which is three years longer than for men. As such, women live longer during their retirement but have fewer financial resources during these years than men have, due to lower wages, fewer opportunities to build assets in their name, and lower Social Security benefits. From young, aspiring entrepreneurs to retirees, women face barriers to economic opportunity and security across the years.
While women often face financial disadvantages, there is some positive news on women’s business ownership. The gender gap is getting smaller in small business lending, a CNBC article reports. The loan approval rate for women increased by about four percentage points between 2013 and 2014. This is higher than the increase in the loan approval rate for men, which increased by 2.7 percent in the same timeframe. Although women are catching up with men, however, women still have lower small business loan approval rates overall. CNBC also noted that women-owned firms employed about 8 million people and made over one trillion dollars in sales as of 2014. These numbers show that women-owned businesses are an integral part of the economy.
While we are making progress towards gender equity, women are still faring worse than men in access to mortgage and small business credit and in attaining retirement security. Woodstock is working with policymakers and financial institutions to understand why these disparities exist and to push for solutions that ensure that women have equal opportunities to earn income and create wealth.