New York () — The US job market is extraordinarily strong, with unemployment at a five-decade low, even as the Federal Reserve does its best to cool the economy in its fight against inflation. Wage growth is also picking up, as demand for labor outstrips supply.
But not all workers have benefited equally from the wage increases.
A new Wells Fargo report shows that the number of single women in the workforce has grown three times faster than the overall workforce in the past decade. At the same time, their salaries have not matched those of their male peers.
These differences have a profound effect not only on the well-being of workers, but also on the broader economy and the stock market.
What is happening?
According to the Wells Fargo report, unmarried women earned 92% of what never-married men earned last year. Women also reported having 29% less wealth, overall.
It’s not just about single women. The overall pay gap between men and women has stagnated over the last 20 years.
In 2022, American women earned on average about 82 cents for every dollar a man earned, according to a new analysis from the Pew Research Center of the median hourly earnings of full-time and part-time workers.
This represents an improvement of just 3 cents since 2002.
These wage differences are “persistently disappointing,” Nela Richardson, chief economist at ADP, told on Thursday. Differences are seen across all age groups, employment levels, and industries.
They are also bad for the economy as a whole. On average, employed women in the United States lose $1.6 trillion each year due to the pay gap, according to the National Partnership for Women and Families. That wage loss means women have less money to support themselves and retire, as well as spend in their communities.
Markets suffer: Companies with smaller pay gaps between men and women tend to be rewarded by their shareholders.
This may be due to the popularity of socially responsible stock investing, in which traders evaluate companies based on environmental, social and governance factors. “The gender pay gap is influencing investment strategies,” Refinitiv analysts write in a recent report.
“Our recent analysis shows that stocks of companies with no gender pay gap outperform companies with a gender pay gap,” Refinitiv wrote.
Companies with more women in high-paying executive positions also tend to be more profitable.
The SHE fund, designed to measure the performance of gender-diverse large-cap US stocks, has returned 3.1% so far this year, one percentage point higher than the S&P 500.
A McKinsey & Company study survey of 366 companies in the US and UK revealed that companies with the most gender diversity among their executives were also 25% more likely than their peers to achieve above-average profitability.
