Gender Wealth Gaps in the U.S. and Benefits of Closing Them

September 29, 2021

Closing wealth gaps is not a zero-sum game pitting men against women and Black and Hispanic Americans against non-Hispanic white people. Everyone could benefit from eliminating these long-standing wealth gaps.

What is the state of gender wealth gaps in the U.S. as of 2019? How can addressing these gaps lead to increased economic prosperity?

Wealth is an important indicator of a family’s economic stability:

  • Large gender wealth gaps indicate that many women-headed families have smaller financial cushions than those families headed by men.
  • Savings and other assets blunt the impact of personal economic crises like losing incomes or being laid off, which occurred disproportionately for women during the COVID-19 recession, as detailed in a December 2020 blog post.
  • Wealth also allows families to invest in their own and their children’s futures through education, homeownership, business ownership and retirement savings.

Shrinking the gender wealth gap is critical for creating shared prosperity, where women hold the same economic power as men. The typical woman-headed household would then have more choices, including financial support for small business creation and to explore career options, financial stability in the form of secure retirement, and a greater ability to withstand health and other financial shocks. We all stand to gain from tapping women’s full potential, through more innovations and entrepreneurship, increased diverse ideas and broad economic growth, as explained in a June 2021 blog post.

The Gender Wealth Gap Is Larger Than the Income Gap

Women earn less than men, about 82 cents per dollar in the U.S. Equal Pay Day this year was March 24, meaning it would take women (full-time, year-round workers) about three additional months to earn what men earn in a year, on average.

Did you know, however, that women also own much less than men? In fact, the gender wealth gap is considerably larger than the gender wage gap. Families headed by women have just 55 cents in median wealth for every dollar of wealth owned by families headed by men, as discussed in a Jan. 12, 2021, In the Balance article.

Gender wealth gaps are even starker and vary more when viewed by race/ethnicity and marital status. One commonality is that across all groups, women possess less wealth than men. I wrote about this with Mariko Chang and Heather McCullough in a section in the recently published book “The Future of Building Wealth: Brief Essays on the Best Ideas to Build Wealth—for Everyone.”

Using results from the 2019 Federal Reserve Board’s Survey of Consumer Finances, we looked at families’ wealth—for singles and couples—and assigned demographic characteristics based on the survey respondent (considered to be the most financially knowledgeable person in the household). Thus, even though family wealth is shared among both individuals in a couple, the “gender” of the couple was based on the individual survey respondent. (See the In the Balance article for more information.)

What Are the Gaps Overall and by Race and Ethnicity?

In our section, we examined how race and ethnicity are very important considerations, with women of color owning pennies on the dollar compared with non-Hispanic white men. For example, families headed by Black and Hispanic women owned just 5 and 10 cents, respectively, for every dollar of median wealth held by families headed by white men. White women had 56 cents in median wealth for every dollar held by white men–a smaller gap, though still quite daunting.

These comparisons point out not only gender wealth gaps but large racial wealth gaps as well, as outlined in a December 2020 blog post on wealth inequality. Using white men, the historically advantaged group, as the comparison group is a common way to depict gaps along both racial and gender dimensions. The infographic below depicts what we found in our section: the gaps in 2019 in terms of median wealth per every dollar held by families headed by white men.

Chart comparing the wealth gap for families headed by women of color

NOTES: Demographic characteristics are taken from the survey respondent. All marital statuses are included.
SOURCES: Federal Reserve Board’s Survey of Consumer Finances (2019) and author’s calculations.

The next figure shows median family wealth levels in 2019 for a variety of racial and ethnic groups split by marital status. While the relationships are not causal, the survey respondent’s gender, race and ethnicity, and marital status are clearly related to wealth.

Wealth Is Linked to Gender, Race and Ethnicity, and Marital Status

A chart

NOTES: Demographic characteristics are taken from the survey respondent. Single respondents include those who have never been married or who are divorced, widowed or separated. Dollars are rounded to the nearest hundred. The graph is modified from “Understanding the Gender Wealth Gap, and Why It Matters,” a section by Mariko Chang, Ana Hernández Kent and Heather McCullough in “The Future of Building Wealth: Brief Essays on the Best Ideas to Build Wealth—for Everyone.”
SOURCES: Federal Reserve Board’s Survey of Consumer Finances (2019) and author’s calculations.

Addressing Gender Wealth Gaps Is Key for Shared Prosperity

Half of households in 2019 were headed by women, yet they owned only 28% of total household wealth. Gaps in wealth are also vast, with Black and Hispanic women owning just pennies on the dollar compared with white men.

These gaps matter not just for women but the broad economy as well. Closing gender—related gaps in labor market disparities, for example, could have added substantially to states’ gross domestic products. For example, a Federal Reserve data simulation tool, offered for free to the public via Fed Communities, shows that Illinois could have gained $69 billion annually between 2005 and 2019 from a simulated baseline GDP of $280 billion. That’s money that could have been spent as public investments in education, economic development, or transportation, among other expenditures, as well as created additional tax revenue.

The Wealth Gap Also Affects Men and Children

At a more micro level, there are gender wealth gaps among single families and coupled families as well. Married and partnered couples headed by women have less median wealth than couples headed by men. Because wealth is shared in coupled families, the gap affects both men and women.

Furthermore, children of typical women-headed families, particularly single women-headed families, have fewer financial resources. Parental finances are tied to children’s economic success, according to a December 2017 research paper on multigenerational wealth: The gender wealth gap could negatively affect the next generation’s productivity and thus their economic status.

How can the gender wealth gap begin to close?

  • Closing the pay gap is one clear component, though there are others, like increasing women’s access to employer-provided benefits like paid sick and medical leave, health insurance, and matched retirement plan contributions.
  • Improving the caregiving infrastructure—including access to quality, subsidized care—has also been posited as a way to increase women’s employment and attachment to the labor force, according to a 2015 review of research literature on labor force participation and child care (PDF).
  • Finally, helping women benefit more equitably from tax subsidies and deductions, which are less likely to help women because of how they are structured, can help them build wealth and increase their financial security.
About the Author
Ana Hernández Kent
Ana Hernandez Kent

Ana Hernández Kent is the senior researcher for the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. Her research interests include economic disparities and opportunity, class and racial biases, and the relationship between psychological factors and the household balance sheet. Read more about Ana’s research.

Ana Hernández Kent
Ana Hernandez Kent

Ana Hernández Kent is the senior researcher for the Institute for Economic Equity at the Federal Reserve Bank of St. Louis. Her research interests include economic disparities and opportunity, class and racial biases, and the relationship between psychological factors and the household balance sheet. Read more about Ana’s research.

This blog explains everyday economics, explores consumer topics and answers Fed FAQs. It also spotlights the people and programs that make the St. Louis Fed central to America’s economy. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.


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