Women and Money: 5 Ways to Stay Financially Strong During a Recession

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recessionIn September 2022, The Federal Reserve announced another interest rate hike in an effort to combat inflation — but in doing so, it seems an economic recession is increasingly inevitable. Yet that doesn’t have to spell out trouble for your personal finances.

Whether you waded through the last recession or are only old enough to have heard the stories, the word “recession” may send a chill up your spine. It may be autumn, but this is not meant to be a scary story — in fact, it’s one of focus and resilience.

Let these five tips help keep you and your wallet afloat even in the face of a recession.

1. Set (and Stick to) a Budget

It’s one of the oldest tricks in the book for a reason. When you have a thorough understanding of the money coming in and going out, you’re able to consistently make financially sound decisions and avoid biting off more than you can chew.

First, take note of your recurring expenses each month like groceries, car payments, utilities, and your child’s school lunches. Then consider different budgeting strategies and find one that makes sense for you. For example, many women swear by the envelope method. The more a strategy resonates with you, the more likely you are to stick to it. Don’t be afraid to experiment, but commit to the one that serves you best.

As you’re monitoring your finances closely, you may even be able to identify ways to save more each month and increase your wealth.

2. Invest Wisely

We talk extensively about the gender pay gap, but did you know about the gender investment gap? Women comprise a criminally underrepresented share of the investment market. (Perhaps that’s why Wall Street’s Charging Bull has been around so much longer than Fearless Girl which made such a splash.)

But just because we haven’t historically taken up much space in this area doesn’t mean we shouldn’t start — in fact, we’d argue that’s more than enough reason to.

If you’re in a place to devote some income to investments, there are countless ways to do so — including high-yield savings accounts, mutual funds, stocks, and government bonds — each with their own risks and advantages. Even starting small can mean big returns later.

3. Solidify Your Retirement Account(s)

Technically, this may be considered an investment as well, but it deserves its own mention: Don’t forget about your retirement account.

Perhaps your employer offers a 401(k) or you’ve been considering a Roth IRA — whatever route you choose, contributing to a retirement account can only help, not hurt. Plus, your employer may even offer “matching” benefits to increase your account.

We statistically live long lives, yet almost half of women are worried about money in old age, so it’s always a good idea to look out for your future self financially and set her up for success later.

4. Advocate for Yourself (and Other Women)

Ladies, keep fighting the good fight. The U.S. passed the Equal Pay Act more than 50 years ago, yet as of 2022, women still make only 84% what men make, on average. When a recession rears its ugly head, it may be easy to focus on merely surviving without much thought on other systemic conditions.

But there’s no better time to ensure you are taken care of. If you feel you aren’t being paid enough for your contributions, chances are, you’re not. Here are three tips to negotiate a higher salary:

  • Consider the market norm for your role, industry, and experience level.
  • Prepare a range you’d like to target, not a specific number.
  • If you’re met with resistance to an increase (or to the conversation at all), ask when you might be able to expect them to reconsider so you buy yourself another chance to ask in the future.

Whether you’re considering salary negotiation for yourself or not, remember to help other ladies up the ladder, too. Empower every friend, family member, and colleague to know her worth and speak up.

5. Trust Yourself!

You can’t control the entire economy, but you can control your own financial situation, your perspective, and your mindset.

Set realistic goals for the short and long term, make wise budgeting, investing, and spending decisions, and don’t lose sight of the most important thing — taking care of yourself. And girl, you got this.

For more insights on women in the economy, check out this handy infographic from our friends at Annuity.org:

The Dollars and Cents of Women and Money

The opinions and views of guest contributions are not necessarily those of theglasshammer.com

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The Gender Pay Gap

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This month we celebrate Equal Pay Day. Take a look at these informative Pay Gap articles previously published on theglasshammer.

This week we hit “Equal Pay Day” on Tuesday, a day which symbolizes the extra days women must work to make the same salary as her male peers did last year. According to the Demystifying The Gender Pay Gap survey by Glassdoor, the biggest myth about the gender pay gap is that it doesn’t exist at all, as 7 in 10 employees across seven countries assumed men and women received the same pay for the same work. But even when narrowed down to an apples-to-apples comparison within companies, researchers found a significant gender gap exists.

Closing the investment gap for women as well as the better- documented pay gap needs to happen. What is the investment gap? And why are most women, even highly paid professional women still missing out? Sallie Krawcheck just wrote a post about the cost of not realizing what we are missing financially by not investing properly on LinkedIn.

money money moneyYou don’t need to work in a male dominated occupation to find your pay check weighs light relative to your male colleagues – particularly, if you’re in business.

In March 2015, the US Census Bureau released the latest pay statistics from 2013, including median earnings by detailed occupation, showing that full-time working women earn 78.8% of what full-time working men do. The census data revealed that across 342 occupations, women (barely) out-earn men in only nine.

Narrow the Hidden Executive Pay Gap Starting Now

Woman-on-a-ladder-searchingWomen reaching for the top rungs of the executive ladder will want to watch for the hidden pay gap. As Bloomberg writes, “Even top female workers can’t catch a break when it comes to pay inequality.”

As women move to senior ranks, the gender pay gap widens. Your best career management play? Begin closing it now.

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Closing the Investment Gap – Why Is It As Important as the Pay Gap?

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man-and-woman-standing-on-money-featuredBy Nicki Gilmour

Closing the investment gap for women as well as the better- documented pay gap needs to happen. What is the investment gap? And why are most women, even highly paid professional women still missing out? Sallie Krawcheck just wrote a post about the cost of not realizing what we are missing financially by not investing properly on LinkedIn.

Sallie is inviting theglasshammer.com readers to join Ellevest, her new women- orientated advisory for women (and men too) to close the investing gap. I caught up with Sallie this summer and she is someone who I admire greatly and Sallie is a woman who has been there, formidably at the top of the best financial institutions in the world for many years. I asked her why should we care about solving the investment gap?

Sallie responded,

“The investment gap is real and closing it is the best professional advice that nobody is telling you. We need to talk about the real costs of a career break and the real cost of earning less and investing less. We want to empower the individual. I am about unleashing the power.”

Why should we want both men and women managing our money?

A recent survey conducted by The CFA Institute called “Gender Diversity in Investment Management – New research for practitioners on how to close the gender gap” found that most female CFA members (70%) and nearly half of all CFA members in total (48%) believe that mixed gender teams of investment professionals lead to better investment performance results because of more diverse viewpoints.

Interestingly, these are the people who are involved in funds, and often run them directly. In the same survey, institutional investors also scored high in believing there was positive aspects to having a gender diverse team in place as seen in the California State Teachers’ Retirement System encouraging State Street Global Advisors to create the SSGA Gender Diversity Index ETF (ticker: SHE) in 2016 and seeded it with a $250 million investment.

Meanwhile, in the same study, retail investors were less convinced in the value of women working in wall street bringing higher returns with nearly 50% of those surveyed believing diversity does not matter when it comes to who manages money.

We can conclude from this that the people least close to the process saw the least value in it. That means people like you and me, and people who are not like you and me, can have a range of differing values, education and identities and yet have the same sexist ideas about who we think should lead companies and run money for us.

There is research including the most recent piece from Credit Suisse last week that suggests adding women makes a difference, obviously the right women, but we would say the same about men so we have to be careful to not over scrutinize this concept.

I am a fan of testing reality against research and Joe Keefe, President and CEO of Pax World Management LLC is a leader who is seeing real results.

We caught up last week and chatted about the Pax Ellevate Global Women’s Index Fund, which is chaired by Sallie Krawcheck, and has just reported a recent milestone, outperforming the MSCI World Index* for the two-year period ending June 30, 2016 and has $100 million in assets under management.

Joe is a man who gets it and one of the first men to grace our column of the same name. What is it that creates this higher performance when women are present in decision-making seats? Joe comments,

“I believe that having higher female representation at board and senior management level is a causal factor, not just a correlative factor, for higher performance because it is the entire corporate governance structure that tends to improve with women in place.

Pressing Joe on the finer details on being sure that the factor that drives the performance, he told me,

“We try to keep all other variables neutral to allow for an apples to apples comparison for performance analysis.” And added, “This is the only global index of its kind and beyond the research, this is real money from real investors in real time proving the point, not theory.”

How can we link investor gains to the talent pipeline inside firms?

As I reported earlier this year, rather than wait for companies to take action themselves or rely on legislation to be enacted, the Pax Ellevate Global Women’s Index Fund is the only global fund and the original index. State Street’s U.S. based SHE Index and other new funds also provide a way for people to fight the gender gap directly by investing in companies that put a premium on women in leadership positions.

Morgan Stanley launched a proprietary gender-diversity framework for ranking more than 1,600 stocks globally this year citing,

“Calls for more female participation in the economy have grown louder, often based on political or cultural arguments founded on fairness. Yet, a persuasive argument for diversity and equality can also be anchored to the bottom line, where ensuring that more women are working and leading in the workplace is simply good business, especially for investors who not only care about the ethics, but also want returns.”

To make sure this theory of ensuring more women are leading becomes action, the onus falls on three groups.

Group 1: The investors have to vote according to their belief in diversity. That means you and me as well as the institutional investors.

Group 2: The intermediaries need to better inform clients better and this could involve reducing the biases of some financial planners and advisors who regardless of being male or female harbor ideas and loyalties that do not help their clients.

Group 3: The other group that needs to do something to ensure that there are companies to list on these indices is of course the leaders and talent process people inside firms.

Sometimes the research on diversity enhancing performance is lost on gatekeepers such as financial advisors and consultants who often do not understand the importance of diversity. I have had a personal experience with that myself with a very “old fashioned” shall we say female advisor who told me point blank not to invest in a women’s fund (and could not seem to say the LGBT acronym). I asked Joe Keefe what to do in these situations and he told me that people should invest directly in the Pax fund or find advisors who understand the benefits of seeing the research in action.

Joe Keefe comments,

“I truly think that we are heading towards higher numbers of women on boards and in senior management teams, and I believe that we could reach 40/50% female representation in our lifetimes. More and more people are realizing that the research is right and the returns are there.”

Sallie Krawcheck, chair of the Pax Ellevate fund agrees,

“It is simply smart business to invest in women and we believe that this investment case will continue to be borne out over time by the performance of this Fund.”

Awareness is the first step, and people like Sallie Krawcheck and Joe Keefe are giving us the chance to put our money where our mouth is and maybe make up for that pay gap that most of us are experiencing (whether we choose to believe it or not.)

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Apples-to-Apples, the Gender Pay Gap Exists

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money money moneyThis week we hit “Equal Pay Day” on Tuesday, a day which symbolizes the extra days women must work to make the same salary as her male peers did last year.

According to the Demystifying The Gender Pay Gap survey by Glassdoor, the biggest myth about the gender pay gap is that it doesn’t exist at all, as 7 in 10 employees across seven countries assumed men and women received the same pay for the same work. But even when narrowed down to an apples-to-apples comparison within companies, researchers found a significant gender gap exists.

The Apples-to-Oranges Gap

Every time the gender pay gap comes up, it seems we have the apples-to-oranges data and the apples-to-apples data. Apples-to-oranges data compares men’s earnings to women’s earnings without breaking down the factors at play.

The recent Catalyst data summary of Women’s Earnings And Income reports that in the U.S. in 2014, women earned 79% as much as men in annual earnings. Based on Census data of median weekly earnings in 2015, full-time working women earned 81% as much as men, but only 72% as much within full-time management, professional, and related occupations.

Data has shown that female income tends to level off around age 35-40, as gendered workplace penalties reach full swing, while male income doesn’t level until 50-55 years old. The American Association of University Women reports that “women are typically paid about 90 percent of what men are paid until around the age of 35, at which point median earnings for women start to grow much more slowly than median earnings for men. From around age 35 through retirement, women are typically paid 75 to 80 percent of what men are paid.”

This difference has a significant impact on women’s lives, resulting in an average of $10,800 less in annual earnings, or nearly a half million dollars across a career, and a dramatically lower retirement security (44% less median income) for longer-living women, which ultimately spells an economy issue.

The Apples-to-Apples Gap

In their recent survey, Glassdoor created apples-to-apples salary comparisons by factoring in “differences in education, experience, age, location, job title, industry and even company.”

In the U.S, they found an apples-to-oranges 24% pay gap, or that women earned 76% as much as men. When they controlled for age, education, and years of experience, the gap was 19%.

When they looked at the same job title at the same employer at the same location, the highly “adjusted”apples-to-apples gap was still 5.4% – women earned 94.6 cents on the dollar of her male peer sitting next to her.

For a full-time working woman at median earnings, that’s a $2,140 loss per year. But for a woman who earns $100,000 a year, the loss is $5,400 annually.

The “adjusted gap”also increased with age – 6.2% at 35-44 years old, 9.5% at 45-54 years old, and 10.5% at 55-64 years old.

Among industries, the “adjusted”pay gap for insurance was among the biggest at 7.2% and finance was 6.4%. Among occupations, C-Suite professionals had one of the largest gender pay gaps (27.7%).

Apples-to-Oranges Is Still a Gender Bias Issue

Gender bias is still a significant driver of an apples and oranges comparison – it’s a big factor of the context that makes the difference exist at all.

According to Robert Hohman, CEO of Glassdoor, “occupational sorting”explains 54% of the overall “unadjusted”pay gap – the sorting of men and women into different industries and different roles in the economy, through non-subtle and subtle societal influences.

Education and experience were minor factors of explanation (14%). In fact, an April Gender Pay Inequality report from the U.S. Congress Joint Economic Committee stated, “The typical woman with a graduate degree earns $5,000 less than the typical man with a bachelor’s degree,”and that “women’s median earnings are lower at every level of education.”

Sincerity Is Transparency

The gender pay gap has been stagnant for the last decade 2006 to 2015 (change was 20 times faster in the preceding decade) and is not except to close until 2059.

Recent executive proposals by President Obama to target the gender pay gap by having the Equal Employment Opportunity Commission collect companies salary data has prompted reactions of government overreach, but the overall intention is to get targeted with a persistent problem.

As long as the persistent gender gap belongs to everyone, it belongs to nobody, and that’s why transparency matters. 70% of employees feel salary transparency is good for employee satisfaction and for business.

Certainly, a pointed finger sparks transparency, especially if it’s being pointed publicly or by shareholders, and especially if there’s nothing to hide. With the recent Glassdoor finding that female computer programmers experience one of the highest “adjusted”occupation pay gaps at 28.3%, the big names in Tech have been coming out to champion their equal pay.

On Monday, both Facebook and Microsoft announced publicly that men and women earn equally at their companies. Amazon and Apple have publicly stated similar findings based on employee pay surveys, prompted by shareholder proposals requesting disclosure of pay equity assessments, filed or co-filed by Pax World. Intel also shared their equal pay findings recently.

Now what if companies began to feel the same external pressure to disclose their C-Suite pay findings around that whopping 27.7% discrepancy?

When it comes to the gender pay gap, it seems the only real language of sincerity is indeed transparency, and companies have the chance now to use it.

By Aimee Hansen

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How To Make Sure Your Career Invests Back In You

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businesswomen-meetingOf all the advice women receive on how to invest in their careers, there is a fundamental principle for smart career management: make sure that your career invests back in you.

Especially for women, it’s important to manage and maximize the financial returns of your career advancement.

Return On Career Investment

There is significant data to suggest that women generally receive a lower return on their career investment than men do. Research has shown, for example, that women reap less career and financial benefits for building strong connections on Wall Street; for combining education, experience and ambition; for performing equal work; for holding top executive positions; and for leading strong company performance.

But the pay gap is one aspect of the return on career investment gap in which women may hold more power and influence than they are asserting. With smart and pro-active management, your paycheck is not the final say on your ultimate financial nest egg, especially as you advance in your career and to earn more money to optimize.

The Financial Confidence Gap

A new study from Regions Private Wealth Management identified a financial confidence gap. Among survey participants, women, especially younger women, expressed lower levels of financial confidence than men and greater uncertainty about their financial outlook.

The data showed that when it comes to making investment decisions for retirement, more women than men described their risk tolerance as “conservative.” As a result, women may be inclined to prefer financial vehicles deemed “safe,” such as savings accounts or CDs with little growth potential, rather than invest in stocks and bonds, which typically provide greater returns over the long term.

Women’s lack of confidence around investing could inhibit women from investing or investing more assertively to reach the financial goals they hope to attain with their career, and compound the impact of the gender pay gap.

Women Should Be Confident in Investing

A confidence gap is rarely a reflection of ability, as studies have shown women tend to underestimate their ability and men tend to be overconfident. The reality is women who have educated themselves regarding potential investments have reason to feel good about their ability to choose wisely.Also, women are more likely to turn to others to fill information gaps, meaning more willing to turn to financial professionals and trusted friends for guidance.

This pays off. When it comes to investing, women who do invest tend to perform as well or even out-perform men with their portfolios, showing women generally display some savvy investor strategies, even if opportunity remains.

But just as too few women negotiate their salary compared to men to maximize income growth on the front end, too few women take the opportunity to maximize their investments by considering all options.

Stepping Up to The Investment Game

Here are three tips from the advisors at Regions Private Wealth Management to step over the financial confidence gap, and get into the game of managing the assets you accumulate through career advancement:

1. Gather your financial information.

To form a complete picture of your financial situation, map out all of your savings and investments as well as any significant liabilities you may need to factor in to your overall goals, such as paying off student loan or credit card debt. If you have a spouse or significant other, discuss where all accounts are held and make sure you both are able to access them in the event of an emergency.

2. Meet with a financial advisor.

Share your financial situation with a qualified professional, who can help determine if your portfolio is aligned with your risk tolerance and structured to meet your goals. An advisor can suggest ways to diversify a portfolio to help weather market fluctuations as well as help make any necessary adjustments and introduce strategies that could provide tax or other benefits. Remember investments are different.They are not a bank deposit or insured by the FDIC, they may lose value, and they may not be insured by any federal government agency.So, don’t be afraid to ask questions. Your financial advisor should go at the pace you set and provide any background information needed.

3. Commit to reviewing your portfolio.

Check in on the performance of your accounts on a regular basis, such as once each quarter. While you may not need to make adjustments, simply seeing how your portfolio reacts to market movements can build familiarity with the investment process and build confidence in your choices across time. Meet with your financial advisor on an annual basis to ensure the portfolio remains on target or to adjust for changes in circumstances, such as an unexpected windfall.

No matter where you are in your career, stepping more confidently into the investment game, while pulling in sound financial guidance along the way, can help you maximize the financial returns of your career and ensure your career invests back in you.

 
This article was sponsored by Regions Private Wealth Management.

 

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Emerging Manager Mandates Grow but Getting Funded Remains a Challenge

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iStock_000002351861XSmallBy Beth Senko

Demand for emerging managers has grown for both altruistic and pure profit-making goals. From a social good standpoint, publicly-held pensions and investment funds reach out to emerging fund managers and brokerages as a way of selecting managers that represent the diversity of their beneficiaries. At the same time, investors are looking to emerging managers as a way of increasing their returns. The challenge seems to be getting the funds into the hands of the emerging managers.

An increasing number of states, municipalities and other public pensions, have emerging manager mandates. Each week, Crain’s Pensions & Investments, lists new manager searches from an array of funds. In just the past few months, funds that have added or are searching for emerging managers include: New York City Pension Fund, St. Louis Employees, Illinois Investment Board and CALPERS. According to a study by KPMG (formerly Rothstein Kass), Women In Alternative Investments: A Marathon Not a Sprint, the number of funds with emerging manager mandates continues to grow; however, implementing these mandates appears to be more of a challenge.

The study notes that most funding for women-owned-and-managed funds comes from high-net-worth individuals and family offices despite growth in the number of mandates at pensions and endowments. The study’s authors comment, “while perhaps not as speedy as some would like, diversity mandates, as well as demonstrated outperformance by women managers, are driving investors to increase allocations to women-run funds. In fact, nearly 25 percent of the investors polled for this report indicated they would increase their allocations to women-owned or-managed funds in the coming year by some margin.”

Is funding a supply problem?
In its 2013 study, Women in Alternative Investments: Building Momentum in 2013 and Beyond, the study’s authors noted that of the 366 women polled, only 5% had received emerging manager funding despite the number of mandates. That number improved somewhat in 2014’s study to 8.5%, but the study did not look at the size of that funding – suggesting that funding levels may still be quite low, even at firms receiving emerging manager funding.

At the same time, the vast majority of investors surveyed, (93%) have no mandate to invest in women-owned or –managed funds. The primary reason given was “lack of supply.”

Kelly Easterling, formerly a principal at Rothstein Kass (now part of KPMG) comments in the report, “Investors and women-owned and -managed funds are faced with an interesting dilemma of which comes first, the chicken or the egg. One of the reasons that investors are not able to invest in diversity funds is the lack of diversity funds available for investment. Without a large supply of funds, it’s difficult to achieve appropriate portfolio diversification or, for that matter, put enough money to work to move the performance dial. On the other hand, until there is more money flowing to women-owned and -managed funds, it’s unlikely that there will be a stampede of new fund launches. Unfortunately, that paradox slows the process down for both sides of the equation.”

Or a structural issue?
In our view, however, a “lack of supply” is too simplistic an answer to the gap between emerging manager mandates and funding. Differences in scale seem to be one aspect of this disconnect.

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Women in Venture Capital: Is There Progress on Both Sides of the Deal?

ladygraphBy Michelle Hendelman

According to recent data from PitchBook, more women-founded companies are receiving venture funding than ever before. Specifically, 13 percent of venture capital deals favored women-founded companies in the first half of 2013, compared to only 4 percent in 2004. While this growth signals a step in the right direction, it is undoubtedly a slower rate of growth than we would expect.

In that same period, the percentage of women earning MBAs increased slightly from 34.8 percent in 2004 to 35.9 percent in 2011-2012. These numbers are an improvement considering that in 1990, 33.9 percent of women graduated with MBAs. Women continue to make up a larger percentage of MBA graduates in the United States, so this makes us question just how much change is occurring when it comes to start ups and funding new ventures. Is it really still such a strongly male-dominated landscape? Where are the women?

Furthermore, PitchBook’s data reflects all industries and sectors and interestingly almost half (40 percent) of the distribution of money was allocated to women-founded companies in the retail sector in the first half of 2013.

However, when you put the industries –such as technology where women continue to be underrepresented–under the microscope, it is clear that there still a lot of progress to be made.

Looking at this from the lens of women on boards and in decision making executive roles, technology companies with at least one woman founder comprised just 10 percent of the venture capital deals through the first half of 2013.

Addressing and Overcoming the Underlying Issues
A research report entitled, “Women Entrepreneurs and Venture Capital: Managing the Shadow Negotiation,” released by the Simmons School of Management explored how gender constructs impact the male and female entrepreneurs, as well as the investors responsible for providing the capital. Simmons’ researchers claim that in addition to the overt business procedures taking place in a venture deal, there is also a very important underlying interaction occurring simultaneously: the shadow negotiation.

They write, “As Kolb and Williams suggest (2000), women in negotiation face additional issues both on and off the table as hidden agendas and masked assumptions play out as a result of often unintentional, but still powerful gendered biases and assumptions.” That being said, the researchers suggest several things that successful female entrepreneurs do in order to gain access to funding.

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Gender Pay Gap is Alive and Well in The C Suite: What’s Behind the Data?

Business meeting.By Michelle Hendelman

Recently, Bloomberg reported that women who hold executive leadership positions in Standard & Poors 500 Index companies earned 18 percent less, on average, than their male colleagues. Is this gap nothing more than a statistics problem where fewer women in those top spots yields a lower pay average? Or, are there other factors contributing to the large discrepancy between men’s and women’s salaries in the C-Suite?

Either way, the pay gap in the highest levels of leadership should be addressed, especially if women leaders are graduating from the same elite institutions and following similar career paths as their male counterparts. While C-Suite pay disparity is an interesting issue to explore on its own, it is not as if the pay gap reported by Bloomberg magically appeared at the executive level after years of salary equity between men and women.

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Negotiate with Precision: Using Round Numbers May Get You a Lower Offer

iStock_000012303174XSmallBy Melissa J. Anderson (New York City)

When it’s time to negotiate a salary or raise, what kind of number do you throw out as a first offer? According to a Columbia Business School study [PDF] published in the Journal of Experimental Social Psychology, it may be better to avoid using round numbers – for example, you may be better off asking for $98, 650 instead of a nice round $100k.

As reported in the Wall Street Journal, Quartz, and NPR, the researchers found that using a round number often leads to a lower counter-offer than if the number had been more precise. The reason why, though, is intriguing. It could change the way you talk about what you know, and negotiate for other benefits, opportunities, and everyday tasks.

The writers, Malia F. Mason, Alice J. Lee, Elizabeth A. Wile, and Daniel R. Ames, all of Columbia University, write, “First-offer recipients appear to make assumptions about their counterpart’s language and infer meanings that are not explicitly conveyed. Precise numerical expressions imply a greater level of knowledge than round numerical expressions and are therefore assumed by recipients to be more informative than the true value of the good being negotiated.”

Simply put, using precision in your offer makes you sound like you know what you’re talking about and deserve what you’re asking for.

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Does Mobility Affect the Wage Gap?

Does Mobility Affect the Wage Gap?By Melissa J. Anderson (New York City)

According to a recent Yale working paper, when married men and women relocate, men make more money, and women make less. The study is based on an analysis of population data from Denmark, and revealed that couples “chose locations with higher expected wages for the man than the woman.”

In this paper, “Geography, joint choices and the reproduction of gender inequality,” researchers Olav Sorenson, Yale University, and Michael S. Dahl, Aalborg University, set out to determine why.

“We call attention to another allocative process that contributes to the wage gap: the sorting of people to places. Workers earn more when they reside in regions with employers that value their abilities and attributes,” they write.

“In dual-earner households, however, husbands and wives often match best with employers in different regions. When couples live in places better suited for the husbands’ than the wives’ career prospects, men earn more than women.”
Studies have shown that dual-earner couples relocate less frequently than couples with one earner. Research has also shown that after dual-earner couples move, men tend to make more money, and women tend to make less.

Based on detailed calculations, Sorenson and Dahl determined that geography could account for 36 percent of the gender wage gap. “In other words, if couples split and behaved as singles (independently choosing their places of residence) one would expect the gender wage gap to narrow by roughly one-third.”

Here’s why the gap exists.

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