With greater educational opportunities yielding better jobs for women than ever before, female spending power has become a central engine of the economy—and is changing the world for the better.
While male incomes have remained rather flat over the past 30 years, adjusted for inflation, women’s incomes have grown exponentially. Much of this increase, of course, is a factor of women’s participation in the workforce, generally, but it nonetheless has large implications for the economy. A 2007 Goldman Sachs report says: “Closing the gap between male and female employment rates would have huge implications for the global economy, boosting U.S. GDP by as much as 9%, Eurozone GDP by 13%, and Japanese GDP by 16%.”
The inverse is also true. The United Nations Economic and Social Commission for Asia and the Pacific Countries reports that restricting job opportunities for women costs the region between $42 billion and $46 billion a year in GDP growth. A gap of 30 to 40 percentage points between men’s and women’s workforce participation rates is common in the Asia-Pacific region. The gap in women’s education limits their participation in the workforce, causing a further loss of $16 billion to $30 billion to the region’s economic output.
Gaps in the workforce aside, women have become the major drivers of the consumption economy in the United States, says Maddy Dychtwald, author of “Influence: How Women’s Soaring Economic Power Will Transform Our World for the Better.” She says that women today influence 83% of all dollars spent on consumer purchases, including:
And as women have gained more economic might, they have also wielded this power differently than men, says Dychtwald. In developing countries, it has been documented that women reinvest 90% of their income in their families and communities, compared to men who reinvest only 30% to 40% of their income—with the remainder going to extravagances such as alcohol and cigarettes, says Dychtwald. “Even in the United States, what we notice is that women have a tendency to spend their money more on their family and more on education, on health and on things that really make life for families a little bit better.”
For Dychtwald, this increased purchasing power has its roots in trends begun by the Baby Boomer generation—and especially in the increase in education of women. “Today, for the very first time, we see a critical mass of women entering the workforce with that education and gaining earning power,” she tells Big Think. The change also has its origins in an evolving economic base. “We went from an economy that was industrial, manufacturing-based, where brawn really defined your role and gave you the power to really earn income, to a more knowledge-based economy, where the skill set was more education-based,” she says. “So women got that education at exactly the right moment in history that allowed them success in the workplace.”
Some marketers have begun to take note of women’s purchasing might, says Dychtwald. Catering to female economic clout, Citigroup began a program called Women & Co. targeting female banking consumers. Yet others have been slow to respond, despite a spate of examples and books on the potential boon in advertising to women. The automobile industry, where women buy 62% of all new car purchases, is one example. “They are notorious for doing a horrible job of speaking out to women,” says Dychtwald. “If anything they give just kind of lip service or what we call ‘pink marketing’ to women.”
As the U.S. economy realigns for the 21st Century, this increased economic power among women will be central to whether gains made in the twentieth century by the middle class, from political preferences to social trends, are sustained or cede ground. “The only reason we have anyone in the middle class today is really because of women in the workforce,” says Dychtwald. “Instead of just having one income to be middle class, today we need two and that is a huge transformation that puts a strain on all kinds of families,” she says. “That is the direction we’re going to be moving. We need to be aware of it and we need to really recognize the contribution that women have made to families.”
—Goldman Sachs Global Economics Paper 164, “Women Hold Up Half the Sky“
—Ernst & Young, “Groundbreakers: Using the strength of women to rebuild the world economy.”