September 21, 2019

Pay Gap Is Only the Start of Financial Inequality for Women

Pay Gap Is Only the Start of Financial Inequality for Women

New research in consultation with a Yale researcher reveals that women are more likely than men to run out of money before payday and more likely to be refused a loan

More than half (56%) of working American women are stressed about their personal finances, compared to only 41% of men, according to a new study conducted by financial wellness solutions provider Salary Finance. The survey of 10,486 U.S. employees revealed that women struggle more than men in almost every area of their financial wellness – from meeting day-to-day expenses to saving enough for retirement – and are more likely to perceive finances as a “scary” topic.

Based on the survey’s data, women are paid – on average – one-third less annually than men ($58,027 v. $79,517). Given this gulf between salaries for women and men, it’s unsurprising that women are also more likely to run out of money before payday than men (34% v. 25%); 41% of women report having less than $500 in their checking / savings accounts, compared to only 18% of men. Women are also more likely than men to state that they do not earn enough to save (63% v. 51%).

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Other key findings in the research include:

  • Men are happier and more financially fit than women. On average, men are 24% happier and 37% more financially fit than women. When adjusted for income, these numbers drop to 16% and 12%, respectively, indicating how wide pay disparity is between men and women, and the effect this has on one’s financial wellness.
  • Women are at a disadvantage in regard to debt and loan availability. Female employees are a third more likely to be refused a loan than men (40% v. 30%) and have higher rates of student loan debt (33% v. 27%) and medical debt (35% v. 29%).
  • Maternity leave can leave a lasting, negative impact on a woman’s finances. Sixty-three percent (63%) of female workers report taking maternity leave; 59% of those said that it impacted their ability to pay bills and 53% had to take on additional debt to make ends meet while taking leave to care for a newborn child.
  • The impact of financial stress on women is substantial. Women are 1.3 times more likely than men to suffer from sleepless nights, anxiety and panic attacks due to financial stress. Interestingly, men take more days off from work (1 v. 0.8 days) to deal with personal financial issues even though they are significantly less stressed about their finances than women. Women are a third more likely to be planning to resign from their job than men (13% v. 10%).
  • Saving is an uphill battle for many women. Nearly 70% of women feel they do not have enough money for retirement (v. 50% of men). When it comes to 401k plans:
    • 66% of women report understanding how a 401k works (v. 76% of men)
    • 56% of women have a 401k plan (v. 62% of men)
  • Women are more likely than men to choose saving over spending. Despite the limitations in their financial lives, many women are trying to work toward a bright financial future. Thirty-seven percent of women report that they choose to save rather than spend, compare to 32% of men.

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“Running out of money before pay day is a stressful event, and if you have very little savings and can’t get a loan, that’s only going to make matters worse,” said Salary Finance CEO and co-founder Asesh Sarkar. “Cash flow shortages are an even bigger problem for women, who make less money than men, yet have more debt and fewer options for relief. This financial stress has significant effects on mental health that impact all aspects of one’s life, including work performance.”

Despite the distraction that personal finances can create at work, the Salary Finance study found that 68% of employees feel that their employers care about their financial wellness and 79% trust their employer to keep personal financial information private. This information indicates that there is a powerful role for employers to play in improving the financial wellness of their employees, particularly women.

“Equal pay is just the tip of the iceberg,” continued Sarkar. “To achieve true financial equality, we need to provide women with support in their financial lives. It’s imperative that employers take notice of the role they can play in making financial tools and education more accessible for women and examine their approach towards financial wellness benefits.”

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