Last week we addressed a few ways that you might level-up a key piece of your Financial Foundation— your Income. Specifically, we talked about using market research in order to compare what you’re earning against the going rate for your industry, location and experience, as well as some negotiating how-to’s in order to increase your pay!
Now, before we completely sign-off on “the burden is completely on you as the earner”, “pull yourself up by your bootstraps”, etc., Capitalistic mentality, it’s important to acknowledge the well-documented barriers to building wealth. Systematic financial inequities perpetually exist, which are completely outside of our control, and the impacts are substantial.
Inequality of Wealth in the United States:
With our Capitalism focus, and our hesitancy towards and underfunding of, Social Services, the United States leads the pack in national financial inequality. When compared to the other WEIRD nations (Western, Educated, Industrialized, Rich, Democratic) we reliably show up with the largest disparities between the wealthiest, and everyone else.
The US is nearly dead last when ranked on Income Equality as well, amongst all other nations. The top 5% of households have over 70% of the financial wealth of the nation, while the bottom 80% hold only 5%.(Personal Finance, Garman).
Where Can We Find Systemic Barriers to Wealth Building?
This being Black History Month is another reminder and opportunity to check the status of the Racial Wealth Gap, as well as recognize the perpetuation of unethical, racially targeted, financial practices occurring today.
As recently as 2022, National Net Worth’s (assets – liabilities, ie: what you own minus what you owe) reflected that for every $100 a white household held, a black household held $15. “Redlining” was a popularly used lending tool in the first half of the 20th Century that was used in order to keep black populations from equal access to homeownership by denial of mortgages based on racial demographics of neighborhoods.
What’s being called “Reverse Redlining” exists today which is where consumers of certain marginalized demographics are uber-targeted with unethical lending solutions like Payday Loan businesses and BNPL (Buy Now, Pay Later) programs.
BNPL, which can downgrade your credit score quickly by allowing you to make a purchase beyond your means, with interest and fees that can accrue well beyond typical credit cards. Forbes reported that black consumers are 63% more likely to use BNPL than white consumers and are much more heavily targeted as users.
Where Else are We Lagging Behind in Financial Inequality?
Another area is gender. Next month, being Women’s History Month, reminds of that we might want to check on the Gender Pay Gap. According to the Pew Research Center, in 2022, women earned about 82% for every 100% that a man earned. We know these stats get far more devastating when broken down into women of color vs. white women.
One issue on the rise, specifically setting women back, is the ability for parents to pay for childcare—otherwise known as the “Motherhood Wage Penalty” for women. The burden overwhelming falls to women in the household to either reduce hours when childcare cannot be met, or leave the work-force entirely.
There are volumes of data in the area of how women were impacted in this way during the Pandemic. The US Bureau of Labor reports that since the start of the Pandemic, women have left their jobs at 4x the rate of men. One study shows that childcare costs are up 13% compared to 2022. It’s been calculated that families currently spend between 23-47% of their household income solely on childcare, depending on the cost of living in their area.
Some of our elected leaders are trying to move the needle on childcare costs, and opportunities for the costs to be more affordable. The Build Back Better package, for example, was passed by the House in 2021, which included a $400B investment in childcare over 10 years. It was estimated to have the ability to reduce a woman’s “Motherhood Wage Penalty” by 1/3.
Ultimately, the bill would not pass the Senate, but be re-packaged as the Inflation Reduction Act, which passed both the House and Senate and was signed by Biden into law in 2022; all childcare cost provisions had been scrapped.
Some Hope!
Here in Washington State, we recently ranked #1 in the nation when it comes to meeting the financial-needs of those needing assistance in order to pay for college or career training. We have generous grants like the Washington College Grant, which is available to those who qualify, which the state has identified as about half of all households in WA. This grant specifically provides funds for education beyond high school. Most of the time, grants are available in limited quantities, but what makes this grant special is that it is available for anyone who meets the criteria.
The systems we have in place yield the results we currently experience, including growing financial disparities and groups of people being further away from attaining their financial goals–to no fault their own. If you’d like to see changes in these areas, write your representatives and let them know what you’d like them to focus on. They work for you, after all. We can do better.
Unlocking Abundance 