C-suite roles,” he said. “The gap is wider at the very top, especially in highly competitive roles. It could be because these roles “penalise” care work and career interruptions, which overwhelmingly impact women. It is usually women who take maternity leave, give up paid work to stay home with children, or take care of elderly parents.” He believes that there are also
social and structural issues here which make it difficult for many women to contemplate a C-suite position. “Our society is not structured
in a way that promotes family formation,” he says. “Anxiety over taking maternity leave and wondering about the future of your job and career progression because you have a child is a symptom of a much deeper societal issue.”
ERODING EARNING POTENTIAL One of the biggest issues that goes unnoticed is that women are far less likely to negotiate a competitive salary. This so-called “negotiation gap” can erode women’s lifetime earnings potential, especially considering that average salary increases in the US are between 3% and 4% annually. For example, a position with a salary range of $100,000 to $120,000 USD can
lead to very different financial outcomes for someone who took the lower end of the range than someone who negotiated the very top payout. Yet with women contributing only
slightly less than men (6.2% versus 6.6%) towards retirement, the really significant figure is the compounding effect of even small annual differences in retirement savings. “Even the smallest differences compound over a 40-year career and create large discrepancies during retirement,” Sam Bourgi says. “Although this difference only amounts to a few hundred dollars per year, it can dramatically reduce future wealth. However, the biggest disadvantage women face is taking mid-career breaks. For example, even a two to three year break from work could mean hundreds of thousands of dollars less in retirement due to missed compounded investment growth.” Since retirement contributions
in 401(k)s and IRAs (in the US) are a fixed percentage of wages, women’s lower earnings and more frequent career interruptions translate into lower retirement savings over time, he says.
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HOW HIGHER EDUCATION COULD SHIFT THE BALANCE The positive news is that women are now over-represented in college and postgraduate studies (women outnumber men in college enrolments and graduation rates in the US currently). Despite the recent issues college graduates face in finding commensurate employment, the research suggests that workers with a Bachelor’s degree or Master’s degree have significantly higher lifetime earnings than those who only complete high school. However, in order to help women
secure a more financially secure retirement, government intervention may be necessary. Some potential policy fixes are government matching or top-ups for low-income earners, universal retirement accounts that allow for government and employer contributions during unpaid leave, and caregiver credits that acknowledge unpaid labour. However, it bears mentioning that these programmes can be controversial in the US, especially with such a large fiscal imbalance. “Career interruptions directly impact women’s lifetime earnings
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