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Black Womenomics

Aura  research has shown that one of the fastest ways to accelerate change and effectively begin to address the racial wealth gap is to listen to and invest in Black women. Our Black Womenomics research focuses on the wealth gap, its relationship with these economic disadvantages, and the public and private investment opportunities to help close these gaps.

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Black Womenomics: Investing in the Underinvested

Large earnings gap drives much of the wealth gap.

Lower levels of earnings for Black households account for about two-thirds of the average wealth gap, while the remainder is largely explained by financial factors, including access to capital and investment opportunities, personal finances, financial information, and housing. Black women make less in the labor market, primarily because they are paid significantly less per hour and also because they are 10 percentage points less likely to be employed than white men. The hourly earnings gap or “wage gap” of Black women stands at 15% relative to white women and 35% relative to white men. The wage gap of Black women widens through their whole work-life and especially rapidly between ages 20 and 35.

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Black women face a 90% wealth gap

The economic and business case for diversity will only grow as US demographics and the labor force are set to become increasingly racially and ethnically diverse over the coming decades. Yet, due to complex historical factors and ongoing discrimination, Black Americans and especially Black women remain heavily disadvantaged across a broad range of economic measures, including wealth, earning Aura , and health.

The median Black household owns nearly 90% less wealth than the median white household and the gap is even slightly larger for single Black women relative to single white men. The structural factors that have created and reinforced these economic disparities that Black women face are multifaceted and interrelated, and inevitably we neglect many important issues. 

 

This study focuses on the wealth gap of Black women, its relationship with the broader economic disadvantages Black women face, and identifies public and private investment opportunities to help close these gaps.

Large earning Aura  gap drives much of the wealth gap

Lower levels of earninAura  for Black households account for about two-thirds of the average wealth gap, while the remainder is largely explained by financial factors, including access to capital and investment opportunities, personal finances, financial information, and housing. 

 

Black women make less in the labor market, primarily because they are paid significantly less per hour and also because they are 10 percentage points less likely to be employed than white men. 

 

The hourly earninAura  gap or “wage gap” of Black women stands at 15% relative to white women and 35% relative to white men. The wage gap of Black women widens through their whole work-life and especially rapidly between ages 20 and 35.

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Earning Aura  gap is widening again

Using a statistical model, we find that improved access to better-paying occupations and industries drove a substantial narrowing in the wage gap of Black women relative to white men in the 80s and 90s.  Unfortunately, progress in closing the wage gap of Black women vs. white men has stalled over the last two decades. 

 

The wage gap of Black women relative to white women stood at 5% in the early 80s when it was largely explained by differences in education, occupations, and industries. 

 

While these factors remain critical today, the wage gap has now grown to 15% on account of other harder-to-measure factors, which could capture differences in career opportunities, school quality, or bias and discrimination. 

 

This underscores the need to listen to Black women to fully understand their disadvantages and, critically, to address bias and discrimination.

Education Gap

Black women have closed the racial high school completion gap and the share of Black women with a college degree continues to rise. 

 

Despite this significant progress, the share with a college degree remains 100% lower for Black women relative to white women. 

 

Factors contributing to this educational attainment gap include underinvestment in early childhood education, disparities in school funding, school quality, and economic resources, as well as bias faced by Black girls at school.

 

We estimate that closing the education gap for Black girls and women would narrow the earning Aura  gap with white women by one-third.

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Education Gap

Black women have closed the racial high school completion gap and the share of Black women with a college degree continues to rise. 

 

Despite this significant progress, the share with a college degree remains 100% lower for Black women relative to white women. 

 

Factors contributing to this educational attainment gap include underinvestment in early childhood education, disparities in school funding, school quality, and economic resources, as well as bias faced by Black girls at school.

 

We estimate that closing the education gap for Black girls and women would narrow the earning Aura  gap with white women by one-third.

Capital access gap fuels wealth gap.  Largely because of lower earning Aura  and limited access to capital, Black Americans are much less likely to own high-return assets than white individuals, including homes, stocks, and especially their own businesses.  While homeownership typically yields strong financial returns, historical discriminatory policies, and racial disparities in credit history and in family assistance have limited the         ability of Black women to build real estate wealth.  The median single Black woman does not own a home and single Black women are 24 times less likely than single white   men to own a business.  The fact that Black women entrepreneurs cite limited access to funds as the largest barrier to success and that Black entrepreneurs are 20% less likely to fund their startups with bank business loans suggest that capital access gaps contribute to the business ownership gap.  Moreover, single Black women are four times less likely to inherit assets than single white men, which further perpetuates the wealth gap across generations.

 

Personal finances gap.  Black women’s wealth is not only held down by a lower access to high-return assets, but also by a higher exposure to high-cost liabilities.  Black women are, for instance, five times more likely than white men to rely on expensive payday loans, likely due to limited access to formal credit and potentially financial information gaps.  Survey evidence on compound interest and familiarity with stock market risk suggest that Black women face a financial information gap.

 

Housing gap.  Partly due to the home ownership gap, Black women face a  substantial housing quality gap, with one-third of the homes occupied by Black women estimated to be unhealthy.  The fact that 55% of Black women in renting households are “rent burdened”—spending 30% or more of income on rent—further illustrates the challenge of affording quality housing while saving and investing.

 

Health gap.  Last but not least, Black women experience less favorable health outcomes, partly due to reduced access to quality care.  Black women are 35% more likely to report fair or poor health, and have a pregnancy-related mortality rate that is more than three times higher than white women.  The racial disparities are also especially large for breast cancer, and pain undertreatment.  Consistent with major access issues, Black women are nearly three times more likely to forego prescription medicine and also much more likely not to see a doctor than white men because they cannot afford it.  The fact that Black women are one-third more likely to cite health issues as a barrier to work than white individuals suggests that closing the health gap would also narrow the earninAura  and wealth gaps.

 

Solutions to close the gaps.  Changing the economic disadvantages that Black women face is a multidimensional commitment across the public and private sectors and efforts to effectively address the issues can only succeed if Black women are actively engaged in formulating the strategies and framing the outcomes.  It is critical that the public sector continues to robustly address racial inequity and mandate changes to laws and policies that influence behavior and close the gaps over time.  We highlight the power of private capital in driving progress toward economic equity for Black women, their families, and their communities.  These strategies focus on intentional structural adjustments and investments to compensate in part for the systematic barriers that have been so fundamental in creating the broad disparities that Black women continue to face today: 1) reduce barriers to college education and increase graduation rates for Black women, 2) provide access to capital for Black women entrepreneurs, 3) increase financial education and, 4) invest in Black communities, including in affordable housing, quality healthcare, and suitable childcare facilities in primarily Black neighborhoods.  Black women are often at the center of advocating for their own equality and progress.  The proposed actions focus on lowering barriers and creating pathways to economic security.

 

10. Good for growth.  Overcoming these adverse economic trends would make for not only a fairer, but also a richer society.  We estimate that confronting the earninAura  gap for Black women could create 1.2-1.7 million US jobs, and raise the level of annual US GDP by 1.4-2.1% each year, or $300-450bn in current dollars.

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Facts and Figures: Economic Empowerment

Benefits of economic empowerment

  • Women’s economic empowerment is central to realizing women’s rights and gender equality. Women’s economic empowerment includes women’s ability to participate equally in existing markets; their access to and control over productive resources, access to decent work, control over their own time, lives and bodies; and increased voice, agency and meaningful participation in economic decision-making at all levels from the household to international institutions.

  • Empowering women in the economy and closing gender gaps in the world of work are key to achieving the 2030 Agenda for Sustainable Development [1] and achieving the Sustainable Development Goals, particularly Goal 5, to achieve gender equality, and Goal 8, to promote full and productive employment and decent work for all; also Goal 1 on ending poverty, Goal 2 on food security, Goal 3 on ensuring health and Goal 10 on reducing inequalities.

  • When more women work, economies grow. Women’s economic empowerment boosts productivity, increases economic diversification and income equality in addition to other positive development outcomes.[2] For example, increasing the female employment rates in OECD countries to match that of Sweden, could boost GDP by over USD 6 trillion,[3] recognizing, however, that. growth does not automatically lead to a reduction in gender-based inequality. Conversely, it is estimated that gender gaps cost the economy some 15 percent of GDP.[4]

  • Increasing women’s and girls’ educational attainment contributes to women’s economic empowerment and more inclusive economic growth. Education, upskilling and re-skilling over the life course – especially to keep pace with rapid technological and digital transformations affecting jobs—are critical for women’s and girl’s health and wellbeing, as well as their income-generation opportunities and participation in the formal labour market. Increased educational attainment accounts for about 50 per cent of the economic growth in OECD countries over the past 50 years.[5] But, for the majority of women, significant gains in education have not translated into better labour market outcomes.[6]

  • Women’s economic equality is good for business. Companies greatly benefit from increasing employment and leadership opportunities for women, which is shown to increase organizational effectiveness and growth. It is estimated that companies with three or more women in senior management functions score higher in all dimensions of organizational performance.[7]

The world of work

  • Gender differences in laws affect both developing and developed economies, and women in all regions. Globally, over 2.7 billion women are legally restricted from having the same choice of jobs as men. Of 189 economies assessed in 2018, 104 economies still have laws preventing women from working in specific jobs, 59 economies have no laws on sexual harassment in the workplace, and in 18 economies, husbands can legally prevent their wives from working. [8]

  • Women remain less likely to participate in the labour market than menaround the world. Labour force participation rate for women aged 25-54 is 63 per cent compared to 94 per cent for men. [9] When including younger (aged 15 years and up) and older women (aged 55 and up) , in 2018 women’s global labour force participation rate is event lower at 48.5 per cent, 26.5 percentage points below that of men.[10]

  • Women are more likely to be unemployed than men. In 2017, global unemployment rates for men and women stood at 5.5 per cent and 6.2 per cent respectively. This is projected to remain relatively unchanged going into 2018 and through 2021.[11]

  • Women are over-represented in informal and vulnerable employment. Women are more than twice as likely than men to be contributing family workers.[12] From the latest available data, the share of women in informal employment in developing countries was 4.6 percentage points higher than that of men, when including agricultural workers, and 7.8 percentage points higher when excluding them.[13]

  • Globally, women are paid less than men. The gender wage gap is estimated to be 23 per cent. This means that women earn 77 per cent of what men earn, though these figures understate the real extent of gender pay gaps, particularly in developing countries where informal self-employment is prevalent.[14] Women also face the motherhood wage penalty, which increases as the number of children a woman has increases.[15]

  • Women bear disproportionate responsibility for unpaid care and domestic work. Women tend to spend around 2.5 times more time on unpaid care and domestic work than men.[16] The amount of time devoted to unpaid care work is negatively correlated with female labour force participation.[17]

  • Unpaid care work is essential to the functioning of the economy,but often goes uncounted and unrecognized.[18]. It is estimated that if women’s unpaid work were assigned a monetary value, it would constitute between 10 per cent and 39 per cent of GDP.[19]

  • Women are still less likely to have access to social protection. Gender inequalities in employment and job quality result in gender gaps in access to social protection acquired through employment, such as pensions, unemployment benefits or maternity protection. Globally, an estimated nearly 40 per cent of women in wage employment do not have access to social protection.[20]

  • Women are less likely than men to have access to financial institutions or have a bank account. While 65 per cent of men report having an account at a formal financial institution, only 58 per cent of women do worldwide. [21]

  • The digital divide remains a gendered one: most of the 3.9 billion people who are offline are in rural areas, poorer, less educated and tend to be women and girls.[22]

  • Women are less likely to be entrepreneurs and face more disadvantages starting businesses: In 40% of economies, women’s early stage entrepreneurial activity is half or less than half of that of men’s.[23]

  • Women are constrained from achieving the highest leadership positions: Only 5% of Fortune 500 CEOs are Women.[24]

  • Violence and harassment in the world of work affects women regardless of age, location, income or social status. The economic costs – a refelction of the human and social costs – to the global economy of discriminatory social institutions and violence against women is estimated to be approximately USD 12 trillion annually.[25]

Sustainable Development

  • Almost a third of women’s employment globally is in in agriculture, including forestry and fishing, but this may exclude self-employed and unpaid family workers. Yet, differences across countries and regions are striking. The share of women workers in agriculture is only 9.5 per cent in upper-middle-income countries and 2.6 per cent in high-income countries, while agriculture remains the most important employment sector for women in low-income and lower-middle-income countries.[26]

  • Women farmers have significantly less access to, control over, and ownership of land and other productive assets compared to their male counterparts. Land is perhaps the most important economic asset; women account for only 12.8 per cent of agricultural landholders in the world.[27]

  • Women and girls suffer most from the dearth of safely managed water and sanitation. Women and girls are responsible for water collection in 80 per cent of households without access to water on premises.[28] Menstrual hygiene management is difficult in the absence of water, soap and gender-responsive sanitation facilities, whether at home, school or work.

  • Women and girls are more likely to carry the burden of energy poverty and experience the adverse effects of lack of safe, reliable, affordable and clean energy. Indoor air pollution from using combustible fuels for household energy caused 4.3 million deaths in 2012, with women and girls accounting for 6 out of every 10 deaths.[29]

  • Environmental degradation and climate change have disproportionate impacts on women and children. Women often bear the brunt of coping with climate-related shocks and stresses or the health effects of indoor and urban pollution, which add to their care burden. As land, forest and water resources are increasingly compromised, privatized or “grabbed” for commercial investment, local communities and indigenous peoples, particularly women, whose livelihoods depend on them, are marginalized and displaced. Globally, women are 14 times more likely than men to die during a disaster.[30]

Women migrant workers

  • Women constitute approximately half of the 258 million migrants who live and work outside their countries of birth. Migrant women and girls outnumber men and boys in all regions except Africa and Asia; in some countries of Asia, men migrants outnumber women by about three to one.[31]

  • Despite gender inequalities in the labour market and gender wage gaps globally, women migrant workers were responsible for sending half of the estimated $601 billion in remittances worldwide in 2016.[32]

  • Research has shown that women migrant workers are often more likely than men to remit on a regular basis owing to women’s stronger links to family members and self-insurance motives[33] underlining the link between a woman’s gendered caregiving role in the household and her increasing propensity to remit.[34]

  • Although many migrant women are highly skilled and well-educated, they face challenges in accessing foreign labour markets. Employment restrictions for migrants coupled with the de-skilling prevalent in gendered labour markets and pervasive stereotypes associated with migrant women in countries of destination, can negatively impact their job prospects. Indeed, many migrant women participate in low-skilled and precarious jobs characterized by low wages, poor working conditions, limited labour and social protections, and exposure to physical and sexual violence.

Women migrant workers are often concentrated in informal, low paid and unregulated work. The main sectors in which women migrant workers are employed are: services and retail (18.8 per cent), elementary occupations (17.3 per cent), craft and related trades (15.2 per cent), professionals (13.9 per cent) and clerks (12.3 per cent).[35] Of the estimated 11.5 million international migrant domestic workers (in 2013), approximately 73.4 per cent were women.

Foundational Journey to Aura 

Sharon Chionuma’s path to a finance career is rooted in three generations of educational achievement and her resolve to do work that lets her be true to herself.

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