Their growing clout—as entrepreneurs, executives and consumers—is changing how companies do business and spurring economic growth around the world
The first woman to hold a seat on the New York Stock Exchange, Muriel "Mickie" Siebert, passed away August 2013, leading many to look at how far women have come since she took her place at the Wall Street "table."
The economic gains are impressive: 21 women now lead Fortune 500 companies, with millions more women buying the products and services those companies produce. Perhaps one of the biggest breakthroughs for women's influence came October 2013, when Janet Yellen became the first woman to be nominated as chair of the Federal Reserve Board. Yellen's confirmation would make her not only the first woman to hold the position of gatekeeper of our economy, setting monetary policy for the U.S. government, but also one of the most powerful people, man or woman, in the world economy. It's becoming evident that the world is in the midst of a sea change in the fortunes of women. Where 30 years ago "Close the wage gap!" was the feminist rallying cry, today one notable thing about the wage gap is that it's increasingly something that men experience. The titles of two best sellers—The End of Men and the Rise of Women and Lean In: Women, Work, and the Will to Lead—suggest how far the conversation has evolved.
The numbers informing that conversation are hard to ignore. Boston Consulting Group has predicted that within 15 years, women as a group will be earning more than men. Already, the number of U.S. women with six-figure incomes is rising at more than three times the rate of men who earn that much, according to the Census Bureau. The wage gap still persists, particularly for women of color and older women who have moved in and out of the workforce during their careers. But increasingly young women, earning more than their mothers ever dreamed of, are entering upper management, with all of the power and responsibility that entails. In developing nations, meanwhile, women's earned income has been growing at a rate of 8.1%, compared with 5.8% for men, according to Deloitte's "The Gender Dividend."
This is a shift that every investor should be aware of, says Mary Ann Bartels, chief investment officer of Portfolio Solutions at Merrill Lynch Wealth Management. "Women's growing economic power has international implications, and in the coming years there will be many avenues for pursuing the opportunities it represents."
Women's success lifts all boats
As women have entered the workforce in increasing numbers, entire economies have benefited. In the four decades from 1970 through 2009, for example, women went from having only 37% of all U.S. jobs to almost a 48% share. That put an additional 38 million women in the workforce, according to McKinsey & Co.—and without that growth in the labor force, McKinsey estimates that the U.S. economy would be 25% smaller than it is today.
Global industry consultant Booz & Co. estimates that if female employment rates in the U.S. matched the rate for men, it could boost U.S. gross domestic product by 5%. The potential gains are even higher in places where women's current underrepresentation may be more pronounced. In Japan, for example, women's equal participation in the workforce could expand the economy by 9%, and in some developing nations, having equal numbers of male and female workers could add as much as a third to economic output.
Nearly 1 billion women will enter the global economy during the next decade, according to Booz & Co. "Globally, as female labor participation rates rise there is a direct correlation to a rise in growth," says Chris Hyzy, chief investment officer at U.S. Trust. "This not only leads to changes in demographics and social norms around the world—it also leads to investment opportunities." Beyond the investment opportunities, the rise in dual incomes has personal implications as well. For many families during the most recent recession, the wave of unemployment hit men much harder than it did women— leading to talk of a "mancession." Often, it was Mom's paycheck that kept those families afloat.
Primed for today's job opportunities
Here in the U.S., advanced schooling is helping drive women's professional achievement. "These women are more educated than ever and primed for the kinds of jobs that are being created in today's economy," says Jackie VanderBrug, senior vice president in the Portfolio Analytics, Consulting and Institutional Group at U.S. Trust. Indeed, women here have earned 9 million more college degrees than men have since 1982, according to the U.S. Department of Education, and now receive 57% of bachelor's degrees, 60% of master's degrees and 51% of doctoral degrees.
That's a remarkable change in a country in which, just a few decades ago, many top universities still didn't even admit women. When Supreme Court Justice Sonia Sotomayor graduated from Princeton University in 1976, her class was only the fourth to include women. And in an increasingly knowledge-based economy, those credentials and the skills that they entail are becoming prerequisites for success.
Reinvesting in their communities
As owners of small and medium enterprises, women are having a dramatic impact not only on the world of work, but on the societies in which their companies operate. That's especially true in developing countries, in part because of how women spend what they earn. "In emerging markets, women reinvest 80% of their income back into human resources—into their families, health care, education, nutrition," VanderBrug says. "That number is double what it is for men, and it's a huge reinvestment that leads to a virtuous cycle." Consider the mother in Ghana who brings home income from the solar energy business she started to help electrify her village. Her children's horizons are suddenly much wider—they go to school and emerge with the skills and motivation to follow their mother's example, finding other ways to provide what their community needs. "You have what happens to economies when people put money into human resources—all of a sudden, there is a burgeoning talent pool," VanderBrug says.
Women Power: By The Numbers
With their rising economic strength, increasing role in corporate leadership and philanthropic priorities, women are helping to drive global change. Count the ways here.
$18 trillion Projected global income of women by 2018, up from $13 trillion currently. That's twice the anticipated GDP growth for China and India combined. Source: Boston Consulting Group
75% Percentage of worldwide discretionary spending controlled by women by the year 2028. Source: Boston Consulting Group
7.8 million Number of American businesses owned by women. Source: National Women's Business Council
With their increasing workforce participation and entrepreneurial activity has come massive financial clout. Women in the U.S., for instance, now have roughly $5 trillion in purchasing power. Today, 43% of the wealthiest people in the U.S. are women, and, because women typically live longer than men, it's estimated that nine out of 10 women will eventually take charge of their families' wealth. "Over 50% of the wealth in America will be in the hands of women by 2030," notes Bartels. "That is huge."
These days, too, women are the primary household breadwinners more often than in years past, and they have more of their own money to spend. Against that backdrop, and with women in the U.S. already making almost three out of four purchasing decisions in the home, companies would do well to keep women top of mind at the level of product design. "This is not about cupholders or pink laptops or pink pens," VanderBrug says. "If we don't use gender as a tool of analysis in finance, we completely miss opportunities." As an example, she notes that it wasn't until 2010 that carmakers began testing female crash dummies in driver's seats. A company that had taken the initiative to do that earlier could have differentiated itself by showing a concern for women's safety. "Companies need to integrate gender into the initial discovery process and all the way through to include how a product is positioned and sold," she says.
"Women control consumer spending decisions to a larger degree than we had ever realized," adds VanderBrug. "And they look at those decisions differently. Women are significantly more likely to want to understand the corporate responsibility of the brands that they buy than men are." The dramatic impact of women's increased power and involvement on the social, political and economic fronts is being felt around the world. "There is a major transformation happening," says Bartels. "How do we empower corporate America to benefit from it? How do we empower investors to benefit from it? There is something big coming. We're just now starting, really starting, to embark on understanding, interpreting and deciding how to act upon these enormous changes."
SOURCE: Unless otherwise indicated, statistics in these stories come from BofA Merrill Lynch Global Research.
U.S. Trust, Bank of America Private Wealth Management operates through Bank of America, N.A. and other subsidiaries of Bank of America Corporation.