Our current economic crisis has shone a light on long-standing economic, racial, and gender inequities that have led to the gender wealth gap that profoundly impacts Americans’ financial security. In honor of Women’s History Month, we are highlighting the specific areas that we believe are promising to address the gender wealth gap.

The gender wealth gap, accounting for all disparities, amounts to women having only 32 cents for every dollar a man has. A Black woman’s median net worth is 100 times less than a white man’s median net worth. One of the underlying reasons for these gaps is disparities in income: for every dollar a man makes, the average woman makes 81 cents. The reality is worse for Black women, who earn 61 cents compared with white men, and for Latinx women, who earn 52 cents compared with white men. Historic systemic public policies and practices by financial institutions that discriminated based on gender have also contributed to these inequities. For example, before the Equal Credit Opportunity Act of 1974, credit card companies would not give a woman a credit card without a man’s signature. Some inequities continue: research shows that women are less likely to be approved for loans than men with the same income level.

There is mounting evidence that the current economic recession is a shecession—a recession that disproportionately impacts women. Therefore, initiatives to address short-term economic hardships and longer-term wealth building need to be designed specifically for the needs of lower-income women and the households they lead.

Commonwealth recently published a Wealth Building Blueprint that lays out our vision for creating a new generation of wealth-building tools and pathways that can begin to close the gender wealth gap. The blueprint identifies seven areas of focus for our work: credit building, shared ownership, stock market investing, employee stock ownership, microbusiness, data, and cryptocurrency. Across these seven areas, we aim to: reduce barriers to entry for all pathways to wealth; improve traditional pathways to wealth; and develop new 21st century pathways to wealth.

Here are two examples of pathways that provide a significant opportunity to address the gender wealth gap.

Credit Building

Credit is foundational to every American’s financial journey and central to building wealth. At its core, credit makes purchasing assets (that support wealth building) possible. Women have less access to credit.

An analysis of Federal Reserve data found that on average, single females have lower credit scores than comparable single males. They are less likely to be approved for a loan, they receive lower loan amounts, and have to pay higher interest rates. These unfavorable loan terms lead to a greater prevalence of delinquency and bankruptcies.

Several studies show that these inequities exist even when women and men make the same income. Current credit regulations in the United States do not allow credit decisions to be based on gender, and yet these disparities remain. Innovative approaches to improving women’s access to credit could reduce a barrier to many paths to wealth.

One area for innovation is access to credit for women entrepreneurs. In countries across the world, women earn less than men in revenue from micro and small businesses. Women-led businesses are less profitable than those led by their male counterparts, have fewer employees, and are less likely to grow. These disparities exist in part because women-owned enterprises have less access to credit and are often in industries, like child care, that can be perceived by investors as lacking growth potential and value. Innovative new models of business valuation have the potential to increase access to credit for women.

Data

Commonwealth sees an opportunity for individuals to build wealth by realizing the economic value of the personal data they generate. The power of unconscious bias is well documented; when unchecked, it has the potential to perpetuate the same systemic inequities in data monetization as traditional paths to wealth.

Male and female internet usage is similar. In 2019, women’s internet usage was at 91% compared with 90% for men. Because women are generating similar amounts of data, there is an opportunity to build products and policies that ensure that women can monetize and build wealth from this data in the same ways that men can.

This opportunity requires focused intentional effort because of the factors that are working against gender-equitable data monetization.

• Financial decisions on data business models are male-dominated—only 2.7% of venture capital went to startups founded by women;
• Less than one-third of leadership positions of the five largest tech companies are held by women;
• Technology developers are more likely to be men. Women hold only 26% of computing-related positions, and only 3% of these positions are occupied by Black women; and
• Over the past 20years, there has been only a 2% increase of female software engineers hired.

In an environment where ownership, value, regulations, and business models have yet to be determined, there is an opportunity to ensure that equity for all is built into the DNA of data ownership and monetization.

The gender wealth gap is not insurmountable. We are in a unique moment where the inequities that drive this gap are being seen—some for the first time—by business and policy leaders. Innovative and collaborative approaches that address the root causes of gender inequities, while providing sustainable business opportunities, now have the potential to take root and make a lasting impact.