Washington, D.C. – Economists have been analyzing the disparity in lifetime wealth accumulation outcomes for men and women in different countries, shedding light on the impact of caregiving responsibilities and gender pay gaps on retirement savings. According to the U.S. Department of Labor, women who take time off to care for children or loved ones end up with an average lifetime wealth accumulation of $295,000 less than men in similar roles, further widening for women of color due to lower wages and systemic bias hindering their wealth accumulation efforts.
It is not just women who are affected, as economists emphasize that nations are less competitive when women take time off for caregiving. They argue that economic output, workplace productivity, and diversity improve when women are retained in the labor market. Additionally, addressing gender gaps in earnings, employment, and hours worked could potentially add $1.7 trillion annually to the gross domestic product in the United States, as estimated by the researchers at the Federal Reserve Bank of St. Louis.
Furthermore, the disparity in lifetime wealth accumulation is exacerbated by social and cultural factors, impacting women’s pay inequality well into their retirement years. This is especially true for women performing unpaid caregiving, as they face the “motherhood penalty” that diverts them into lower-paying roles or career paths.
Internationally, countries like South Korea and Spain are leading in lifetime wealth accumulation ratio for women, with Spain experiencing smaller wealth gaps between women who had children and those who did not. This is attributed to the country’s education and family leave policies, as well as cultural attitudes toward education and child rearing.
The comparisons between the United States and Spain shed light on how economic policies, educational priorities, and cultural factors impact the lifetime wealth accumulation for women, with Spain offering more supportive benefits related to education, child care, and maternity leave compared to the United States.
In the United States, the lack of paid parental leave and high costs of child care create financial challenges for parents, particularly women. On the other hand, Spain provides paid leave for parents, free public day care for young children, and employment protections for parents to accommodate child-care needs.
The findings from the comparison between the two countries highlight the impact of social and cultural factors on women’s lifetime wealth accumulation, as well as the need for supportive policies and benefits to address gender disparities in earnings and caregiving responsibilities.