Gender Equity Investing

For Gender Lens Investors, Equal Pay Day Is a Reminder That Women Have Not Caught Up Yet

Equal Pay Day marks the extra time it takes women to match men’s earnings for the previous year. In 2021, Equal Pay Day falls on March 24, indicating that women have to work close to 15 months to make as much money as men make in a year. Organizers of the annual observance hope to publicize the fact that women earn 82 cents on average for each dollar earned by men.

Although the pay gap defies easy solutions, there are several approaches that gender lens investors can take to confront the underlying factors.

Women Face Segregation to Lower-Paying Occupations

The female workforce has historically been dominated by roles viewed as stereotypically feminine, such as nursing and customer service. Often, these are also lower-paying positions. Women’s representation in science and engineering has improved, but even within male-dominated fields women may still be steered toward lower-paying support jobs.

There is also the danger that gender-based systemic biases will not disappear but simply shift to align with the changing composition of some industries. For example, computer programming was once considered a feminine job and teaching a male profession. Yet when men became the majority of programmers and women entered teaching in large numbers, the prestige and pay associated with these positions reversed.

Gender lens investors can help women access a wider range of opportunities by supporting educational initiatives that teach girls about STEM, backing mentorship programs that support women in leadership or entrepreneurial endeavors, advocating for pay transparency, and calling attention to gender disparities both across and within professions.

Barriers to Participation Hold Women Back

Women continue to shoulder much of the burden of unpaid labor outside of the formal workforce through duties such as caregiving, child-rearing children, and housework. American women perform an average of four hours a day of unpaid labor compared with men’s two and a half. That gap puts the United States behind Canada, France, Germany, and most Nordic nations. If American women were paid the US minimum wage for that work, their earnings for it would have totaled $1.5 trillion in 2019.

The outsize demands on their time can hinder women from investing in their careers under normal circumstances. When a crisis hits, women may feel pressure to step away from their jobs and help their families weather the storm. During the COVID-19 pandemic, 400,000 more women than men have exited the labor market; studies predict that women’s employment may not bounce back until 2024. Time away from the paid workforce makes it harder to find a new job and can depress a woman’s earnings for years to come.

Investors can help address this challenge by backing initiatives to provide affordable childcare, encouraging employers to support flexible work options, offering paid parental and caregiving leave, and establishing reentry programs and “returnships” to help women resume their careers.

Addressing gender disparities alone cannot bring equal pay within reach of all women.

A Dearth of Legislation Leaves Gender Equity Up to Employers

Compared with several other economically developed countries, the US lacks robust policies targeting pay discrimination. Policies mandating parental leave, boosting penalties for pay discrimination, requiring equal pay for work of equal value, and requiring companies to publish data on gender pay gaps have been implemented in some countries. Advocates argue that the US needs a stronger legislative response to pay inequities. However, debate continues over which policies effectively close gender wage gaps.

In the absence of major action from lawmakers, gender lens investors may wish to join shareholder engagement efforts pressing companies to both report on pay gaps and to voluntarily adopt plans for achieving pay equity. For example, Arjuna Capital has successfully petitioned Citigroup, Mastercard, Starbucks, and Adobe to reveal more information on their pay gaps by gender and race.

The Glass Ceiling Still Curbs Progress

Pay gaps grow as women climb the corporate ladder. Women at the 95th percentile of wage earners make 74 cents for each dollar their male peers earn, while at the 10th percentile women make 92 cents for each dollar earned by men. Research shows that promotions tend to occur at the early stages of women’s careers before declining sharply once they have moved up through a few positions. At the sixth level of management, only 15% of executives are women.

Some gender lens investors support women in leadership through strategies that back companies owned or led by women or that have women in a significant share of management roles. Investors can also pursue shareholder advocacy to bring more women directors into boardrooms.


To learn more about gender lens investing, read Gender Lens Investing in Public Markets: It’s More Than Women at the Top.


Discrimination Is Compounded for Women of Color

Addressing gender disparities alone cannot bring equal pay within reach of all women, because racial inequities compound the pay gap for women of color. Black women earn just 62 cents for every dollar white, non-Hispanic men make. Worse, that gap has not seen progress in the past 25 years. Black women must also contend with discrimination in hiring that results in longer job searches, and their employment is concentrated in frontline industries that put them at greater risk of exposure to COVID-19 and service jobs that have been disproportionately cut during the pandemic.

Native American women earn 60 cents for every dollar earned by white men, a gap that begins to show as early as the teenage years. In fact, a Native American woman who holds a bachelor’s degree does not earn much more on average than a white male high school graduate.

To respond to the intersectional nature of these gaps, gender lens investors may incorporate racial equity into their investing considerations or back place-based initiatives that center on communities of color.

Adjusted Pay Gaps Do Not Tell the Whole Story

Often, analyses of the gender pay gap attempt to control for factors such as education, years of experience, and job titles. Researchers typically aim to compare men and women with similar qualifications to test whether they receive the same pay for the same work.

Yet adjusted measures have come under fire for their potential to minimize the challenges women face in their careers. Because adjusted gaps study men and women who have reached similar levels of achievement, they do not account for differences in opportunity that may prevent women from attaining the same degrees or receiving the same promotions as their male counterparts. Due to these concerns, some gender lens investors are increasingly focused on unadjusted median pay gaps, which they believe to be a better gauge of equity.

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