2023 Nobel Laureate in Economics Dr. Claudia Goldin's decades of ground-breaking research pioneered the concept of the “Earnings Gap.”

Goldin understood that overt discrimination accounted for much of the wage inequality. She also observed that over the lifetime of workers, a gender earnings gap exists even when accounting for a reduced wage gap in a given career.

The earnings gap could also be explained partially by women choosing career fields where women are overrepresented and underpaid, like health care, social work and education.

These career choices also are flexible for women in need of ‘work-life balance’ from being the household's primary caregiver. This may be keeping women from asking for better compensation.

The ILLUSTRATION (above) shows the earnings gap and presents some explanations of key facts:

1️⃣ Much of the wage gap has been narrowed regarding early career—largely thanks to BIRTH CONTROL.

2️⃣ As women start having children, the need to act as primary caregivers PLUS our structural and cultural barriers slow their ability to advance in their careers and limit their earning potential for life!

3️⃣ Statistically, women will live much LONGER than men, yet have significantly less retirement savings!

HOW CAN A FINANCIAL ADVISOR HELP?

Financial advice and financial planning CANNOT correct for this structural inequality! At best, it can keep women from making costly mistakes and experiencing further setbacks.

As a good advisor...

1️⃣ We should encourage spouses to seek better compensation. We can model potential outcomes that may occur given current compensation versus a higher potential compensation.

2️⃣ We can help more couples to make more equitable spending decisions. 50-50, pro-rata, full-integrated spending; it doesn’t matter. Your spending decisions HAVE TO REFLECT OUR REALITY.

3️⃣ Women. Live. Longer. We need to prepare women for longer retirement and given they are less paid, they must proportionally save more!