The Gender Gap Costs Us More Than We Think

Jan 26, 2021

The world would add 23 trillion euros to its GDP if the inequality between men and women, which the covid-driven crisis is exacerbating, were eliminated.

They account for 3.85 billion souls out of the 7.7 billion that inhabit the Earth.  Author Nikos Kazantzakis wrote that “all women are the same woman, but with a different face.” A huge mistake. Each one is such an indispensable universe that it is painful to justify with numbers the equity that existence owes her. If the gender gap were to disappear, between 12 and 28 trillion dollars would be added to the world’s GDP in 2025. 9.8 to 22.9 trillion euros. The concluding number is the sum of the wealth of China and the United States. These are Bank of America’s estimates. Nevertheless, the range is as immense as the Chinese Three Gorges Dam. Because for years, there has been no interest in calculating the economic disadvantage of being a woman. Many experts complain about the lack of reliable historical figures. There are enough phrases left to write headlines, and too many come from the dictionary of forgotten words. The World Bank estimates that continuing to maintain this open fracture generates losses of $160 trillion, or that at the current rate, it will take 257 years to stitch the economic wound.

However, numbers assault life and the gender gap may be the latest casualty of the pandemic. In April – one of the most challenging months of the health crisis – 55% of the 20.5 million jobs lost in a very flexible labor market, such as the U.S., were held by women. The fragility is frost, and some economists are already talking about ‘shecession’ (a neologism that mixes she, she, and recession, recession) instead of the ‘mancession’ of the financial crash of 2008. It all sounds as contradictory as drowning in flames or burning in the water. Explanations must be sought. The main reason, reflects Stefania Albanesi, professor of economics at the University of Pittsburgh, is that “efforts to mitigate the effects of covid-19 have reduced many jobs in hospitality, leisure, personal care, and health services, which are occupied, above all, by women”. The key now, stresses Alfonso Arellano, an economist at BBVA Research, “is whether this blow will be sustained over time.” The crisis has widened the gap. Moreover, women cannot feel like the bone that the planter throws into the dunghill.

Because inequality against women is also a pandemic, in Israel, for example, women are a minority in the workforce, but 56% have lost their jobs since the crisis began. “covid-19 has had a massive impact on inequality within countries and, even more so, in rich and developing economies. It has also produced a massive reversal in gender inequality, which is evidence that much greater social change is needed,” warns Kenneth Rogoff, former IMF Chief Economist and economics professor at Harvard University.

There is an electric current circulating the world that conveys the feeling that women have lost a decade compared to what they have achieved. Furthermore, the reports published by investment banks, brokerage firms, and consulting firms are read with the Old Testament’s historical reliability. McKinsey estimates the value of the “women’s economy” at 30 trillion dollars (more significant than any country in the world); The Boston Consulting Group (BCG) believes that if men and women had the same level of entrepreneurship, the economy of this blue sphere would grow between 2.5 and 5 trillion, and PwC says that closing the wage gap could add two trillion. Who believes this algebra today? Perhaps we should turn to physics rather than mathematics.


Two forces, one struggle:

Centripetal and centrifugal forces struggle. They are felt. “On the one hand, in many countries, including Spain, women suffered more from job losses during the pandemic, partly because of the jobs they had, and because of increased childcare responsibilities during school closures. In the short term, gender equality in the workplace has suffered a setback,” recounts Matthias Doepke, professor of economics at Northwestern University, who in August published an essay on this topic. “At the other extreme, the healthcare crisis has increased workplace flexibility and the ability to work from home when necessary.” This should help with work-life balance and co-responsibility for tasks—another mistake. “The sun rises, and then sets, and hastens to return to the place where it rises,” they say.

Everything returns to the same place. Econometrics is unnecessary: one need only look at other lives. “For a woman, children have a brutal impact in terms of lost wages and hours worked,” says Margarita Torre Fernández, professor of Sociology at the Carlos III University of Madrid. Or family or career?

A preliminary study by the Complutense University of Madrid found that before the pandemic, women researchers dedicated 6.2 hours a week working on their publications (where academic prestige is earned), but during the crisis, this dropped to 1.6 hours. In contrast, men’s time increased from 7 to 8.1 hours. Who is taking care of the home while sidelining their working future?

The answer is easy. The problem wounds the fragile. “In the U.S., job losses were concentrated among low-wage employees, women, and minorities,” recalls Kristen Broady, dean of the Dillard University (New Orleans) School of Business. In any situation. Even last November-when restrictions were somewhat lifted-unemployment among black women stood at 9%, 2.3% higher than the national average for that month. “But the inequity does not end with unemployment,” the teacher warns. “The socio-economic situation of black women in this country is impossible to contextualize without keeping in mind the marginalization of their racial identities within a minority that has historically fought oppression and subjugation when we talk about employment, homeownership, education, political representation, and income.” The median wealth of single white men under age 35 ($22,640) is 224.2 times that of single black women ($101).

In geological terms, women live on a fault line and at any moment can plunge a thousand fissures. Goldman Sachs acknowledges that “they have not been able to find a relationship between more women in a company and a higher ROE (return on equity). Nor a lower ROE. Identical fate reached by a paper entitled Does board gender diversity to improve company performance, published in 2017 by the Wharton School of Business. This sum yields zero or nonexistent. Some analysts doubt the quality of the historical series used. Others are looking for a discourse that changes Excel over the course of days.

“Since 2009, we see that the share price of those companies with more women on their boards has had a higher appreciation relative to those in the low gender parity band on management bodies,” reflects Sharon Bell, senior strategist at Goldman Sachs. She adds: “The return was quite significant: between two or three percentage points per year.” Although these companies, she admits, did not have higher profitability, earnings per share, or sales growth. However, neither was it lower. Saving the queen is a matter of urgency. In 2005, 9% of the directors of the Stoxx 600 index were women, last year 31%. Many companies have not yet internalized that not closing the loophole leads to a drop in GDP, less innovation, skewed demographics, and, above all, losing that half of the sky. “And with it, their creativity, their sensitivity, their strong social conscience in matters such as the environment, the ability to work in teams (with less ego than men) or the ease of communicating and creating highly committed workforces,” details a senior executive. “It is not a question of deciding who is better at management, but of remembering that men and women bring different points of view to the table,” says Ana Fernández, a partner in charge of diversity at KPMG in Spain. However, the women’s perspective must be reinforced.

Several European countries have laws or quotas on their boards. France implemented them in 2011 and now has a 40% presence of women; in the United States, Schroders analyzes, “the slow progress is particularly striking. The percentage of female directors joining boards has increased by only 3.2% since 2012,” while, in Spain, 31% of the decisive members of the Ibex 35 are “them.” “I do not believe in mandatory quotas, I believe in merit,” defended – in a lunch without journalists – the president of one of the five largest companies in Spain before the pandemic. This idea is buried in many masculinized boards, which need a renewal of age and thinking. “At 18, convictions are mountains from which we view life; at 45, caves in which we hide,” taught F. Scott Fitzgerald. “Men protect each other in companies, and women do not survive in male organizations,” warns Margarita Torre Fernández.

However, there are demographic patterns that offer hope. In 2000, Spanish women between 55 and 64 years old who worked were very few: barely 22%. A percentage,” says Goldman Sachs, “that had remained almost unchanged over the last three decades. Now, the participation rate is 53%. Higher retirement age and anti-discrimination legislation justify this entry. However (there is always an adverb that subtracts what has been conquered), being a “mother still penalizes.” A report by the Institute for Fiscal Studies (IFS) shows that in the 12 years after having her first child, a woman’s pay falls by 33% per hour compared to men. Moreover, returning to the same position she left after the pandemic is catching a mirage.

In the third decade of the 21st century, there is still a black powder, like that which stuck to the miners’ skin when they came out of the shaft, in the mentality of men. When a worker accepts a traditionally female job,” says sociologist Torre Fernández, “he is more likely to return to a male job as soon as he can. Why? “We have to consider non-economic incentives,” says Paula England, professor of sociology at New York University. “Men often feel stigmatized for performing any role or job associated with women. This is a part of sexism that often goes unrecognized. Sexism is not just males keeping women out of men’s work. It is also a cultural devaluation of anything associated with them, and a cultural idea that men are worthless if they take on any role associated with women.”

Although if we compare the health crisis to a horror movie, there are always scenes in which the screenwriter gives the viewer a break. During the confinement, in two-parent households with mothers working full-time, the situation was that men became much more involved in childcare, and the time mothers had to devote to their children decreased. This idea – summarized – would collide with the experience of the days lived if it did not come from Claudia Goldin (New York, 74 years old), a pioneer in the analysis of the gender gap, the first woman to become a permanent member of the Harvard Economics Department and a regular candidate for the Nobel Prize. “But there is reason to believe that equity will not be maintained,” she laments.

 Back to the office:

“As workplaces open and the rules of confinement are lifted, the question is who will go back to the office, back to business, back to construction, especially if schools open fully. In the U.S., schools have opened, closed, reopened, and closed again. Who will take over household chores? We do not have much information, but the information we have indicates that it is more the mother than the father. The lack of equity is not entirely due to social norms. It is also due to who brings in the higher income in return to the office, business, construction. In this way, past inequalities can produce future inequalities.”

Goldin always says that she did not discover the wage gap, “it was already in the Old Testament. Perhaps in the Book of Isaiah: “We all wither like a leaf, and our iniquities, like the wind, sweep us away.” In the OECD, women earn on average 15% less than their male counterparts. This figure is refined by Mónica Guardado, managing partner of AFI Escuela de Finanzas, “to 13% in Spain”. Percentages that have hardly changed in a decade. If women’s labor market participation were to reduce their absence by 25% during 2025 – as agreed by the G-20 – it could add one percentage point to the OECD’s GDP growth between 2013 and 2025. However, they are trapped. They perform at least 2.5 times more unpaid care and household-related work than men.

Moreover, the future fades to black. “The pandemic is likely to widen the gender wage gap in Western societies in the months and years ahead,” predicts Caitlyn Collins, professor of sociology and gender at Washington University in St. Louis. The causes? The “usual” ones. Who is taking care of the family?

Nevertheless, 69% of the wage gap in Europe, according to Eurostat, remains unexplained. It is not for lack of time. The idea of equal pay dates back to 1919 when it was incorporated into the Treaty of Versailles. That was a century ago.

However, women continue to be that murmur of litter that the wind blows along the boulevards; they have yet to justify their “worth” with figures. In the next 40 years, they will inherit two-thirds of the largest transfer in history ($30 trillion), and during 2025 they will possess a financial wealth of $110 trillion. Now -according to BCG- they control 32% of the world’s wealth, some 72 trillion dollars (58.7 trillion euros). Investment banks, asset managers, and consulting firms have found a new promised land for capital. The FemTech (women-targeted technology) universe alone is a space valued at $50 billion (€40.6 billion). “Last year, we think it moved $670 million [still have to adjust estimates because of the pandemic] and during 2024 it will exceed $1 billion,” predicts Siddharth Shah, a healthcare transformation expert at consultancy Frost & Sullivan.

 Financial gap:

However, that land is shifting sands in finance. Women account for only 15% of executive positions in banking, only 10% of fund managers’ heads, and barely manage between 1% and 3.5% of the world’s assets under management.

“Women are more likely to keep their money in cash and take a medium to low risk in their investments. In a world of low-interest rates for quite some time, they will be at a disadvantage if they do not have enough stocks in their portfolio,” describes Nannette Hechler-Fayd’herbe, global head of Economics and Research at Credit Suisse. Another gap, the investment gap.

Despite the geology to the contrary, its time has come. As of March 2017, some 70 countries had a woman as head of state or government. Feminism is perhaps the most critical social transformation of recent decades, and young girls (and boys) have in Greta Thunberg (climate change activist), Malala Yousafzai (Nobel Peace Prize winner and promoter of female education), Kamala Harris (Vice President of the United States), Jacinda Ardern (Prime Minister of New Zealand) or Ursula von der Leyen (President of the European Commission) images with which to line high school folders. Women hold not only half the sky but almost all of our future.


Miguel Angel de la Vega

El Pais, January 2021.