women power

WOMEN POWER
Their growing clout — as entrepreneurs, executives and
consumers — is changing how companies do business and
spurring economic growth around the world. By C.J. Prince
T
HE FIRST WOMAN TO HOLD A SEAT on the New York Stock Exchange,
Muriel “Mickie” Siebert, passed away in August 2013, leading many to
look at how far women have come since she took her place at the Wall
Street “table.”
The economic gains are impressive: 21 women now lead Fortune 500
companies, with millions more women buying the products and services
those companies produce. Perhaps one of the biggest breakthroughs for
women’s influence came in January 2014, when Janet Yellen became the first woman to be
chair of the Federal Reserve Board, which made her not only the first woman to hold the
position of gatekeeper of our economy, setting monetary policy for the U.S. government,
but also one of the most powerful people, man or woman, in the world economy.
It’s becoming evident that the world is in the midst of a sea change in the fortunes of women.
Where 30 years ago “Close the wage gap!” was the feminist rallying cry, today one notable
thing about the wage gap is that it’s increasingly something that men experience. The titles
of two best-sellers — The End of Men and the Rise of Women and Lean In: Women, Work, and the
Will to Lead — suggest how far the conversation has evolved.
The numbers informing that conversation
are hard to ignore. Boston Consulting Group
has predicted that within 15 years, women
as a group will be earning more than men.
Already, the number of U.S. women with
six-figure incomes is rising at more than
three times the rate of men who earn that
much, according to the Census Bureau.
The wage gap still persists, particularly for
women of color and older women who have
moved in and out of the workforce during
their careers. But increasingly young
women, earning more than their mothers
ever dreamed of, are entering upper
management, with all of the power and
responsibility that entails. In developing
nations, meanwhile, women’s earned
income has been growing at a rate of 8.1%,
compared with 5.8% for men, according to
Deloitte’s The Gender Dividend.
This is a shift that every investor should
be aware of, says Mary Ann Bartels, chief
investment officer of Portfolio Solutions
at Merrill Lynch Wealth Management.
“Women’s growing economic power
has international implications, and in
the coming years there will be many
avenues for pursuing the opportunities
it represents.”
Women’s success
lifts all boats
As women have entered the workforce in
increasing numbers, entire economies have
benefited. In the four decades from 1970
through 2009, for example, women went
from having only 37% of all U.S. jobs to
almost a 48% share. That put an additional
38 million women in the workforce,
according to McKinsey & Co. — and without
that growth in the labor force, McKinsey
estimates that the U.S. economy would be
25% smaller than it is today.
Global industry consultant Strategy&
estimates that if the female employment
rate in the United States matched the rate
for men, it could boost U.S. gross domestic
product by 5%. The potential gains are
even higher in places where women’s
current underrepresentation may be more
pronounced. In Japan, for example, women’s
equal participation in the workforce could
expand the economy by 9%, and in some
developing nations, having equal numbers
of male and female workers could add as
much as a third to economic output.
Nearly 1 billion women will enter the
global economy during the next decade,
according to Strategy&. “Globally, as
female labor participation rates rise there
is a direct correlation to a rise in growth,”
says Chris Hyzy, chief investment officer
at U.S. Trust. “This not only leads to
changes in demographics and social
norms around the world — it also leads
to investment opportunities.”
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Primed for today’s
job opportunities
Here in the United States, advanced
schooling is helping drive women’s
professional achievement. “These women
are more educated than ever and primed
for the kinds of jobs that are being
created in today’s economy,” says Jackie
VanderBrug, senior vice president in
the Portfolio Analytics, Consulting and
Institutional Group at U.S. Trust. Indeed,
women in the United States have earned
9 million more college degrees than men
have since 1982, according to the U.S.
Department of Education, and now receive
57% of bachelor’s degrees, 60% of master’s
degrees and 51% of doctoral degrees.
That’s a remarkable change in a country
in which, just a few decades ago, many
top universities still didn’t even admit
women. When Supreme Court Justice
Sonia Sotomayor graduated from
Princeton University in 1976, her class
was only the fourth to include women.
And in an increasingly know­ledge-based
economy, those credentials and the skills
that they entail are becoming
prerequisites for success.
Reinvesting in
their communities
As owners of small and medium
enterprises, women are having a dramatic
impact not only on the world of work but
THE NUMBER OF U.S. WOMEN WITH
SIX-FIGURE INCOMES IS RISING
MORE THAN THREE TIMES THE RATE
OF MEN WHO EARN THAT MUCH.
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Beyond the investment opportunities,
the rise in dual incomes has personal
implications as well. For many families
during the most recent recession, the wave
of unemployment hit men much harder
than it did women — leading to talk of
a “mancession.” Often, it was Mom’s
paycheck that kept those families afloat.
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also on the societies in which their
companies operate. That’s especially true
in developing countries, in part because
of how women spend what they earn.
“In emerging markets, women reinvest
80% of their income back into human
resources — into their families, healthcare,
education, nutrition,” VanderBrug says.
“That number is double what it is for men,
and it’s a huge reinvestment that leads to
a virtuous cycle.”
has come massive financial clout. Women
in the United States, for instance, now have
roughly $5 trillion in purchasing power.
Today, 43% of the wealthiest people in the
United States are women, and, because
women typically live longer than men, it’s
estimated that nine out of 10 women will
eventually take charge of their families’
wealth. “Over 50% of the wealth in America
will be in the hands of women by 2030,”
notes Bartels. “That is huge.”
Consider the mother in Ghana who brings
home income from the solar energy business
she started to help electrify her village.
Her children’s horizons are suddenly much
wider — they go to school and emerge with
the skills and motivation to follow their
mother’s example, finding other ways
to provide what their community needs.
“You have what happens to economies
when people put money into human
resources — all of a sudden, there is a
burgeoning talent pool,” VanderBrug says.
These days, too, women are the primary
household breadwinners more often than in
years past, and they have more of their own
money to spend. Against that backdrop, and
with women in the United States already
making almost three out of four purchasing
decisions in the home, companies would do
well to keep women top of mind at the level
of product design.
Financial power
With their increasing workforce
participation and entrepreneurial activity
126
million
Number of women globally
who started or were running
new businesses in 2012*
INVESTING IN
LEADERSHIP
Women are transforming
corporate governance — and performance.
As more and more women occupy
higher-level positions in corporate
America and on the global stage,
their presence appears to be having
a distinct impact on company
performance and financial returns.
According to The Bottom Line:
Corporate Performance and Women’s
Representation on Boards, a 2011
report by the research organization
Catalyst, companies with the most
ustrust.com/women
“This is not about cupholders or pink
laptops or pink pens,” VanderBrug says. “If
we don’t use gender as a tool of analysis in
finance, we completely miss opportunities.”
As an example, she notes that it wasn’t until
2010 that carmakers began testing female
crash dummies in driver’s seats. A company
that had taken the initiative to do that
earlier could have differentiated itself
by showing a concern for women’s safety.
“Companies need to integrate gender into
the initial discovery process and all the
way through to include how a product
is positioned and sold,” she says.
“Women control consumer spending
decisions to a larger degree than we had
ever realized,” adds VanderBrug. “And they
look at those decisions differently. Women
are significantly more likely to want to
understand the corporate responsibility
of the brands that they buy than men are.”
The dramatic impact of women’s increased
power and involvement on the social,
political and economic fronts is being felt
around the world. “There is a major
transformation happening,” says Bartels.
“How do we empower corporate America
to benefit from it? How do we empower
investors to benefit from it? There is
something big coming. We’re just now
starting, really starting, to embark on
understanding, interpreting and deciding
how to act upon these enormous changes.”
Amount by which the overall
gross domestic product
would rise if the female
employment
rate in the
U.S. matched
the rate
for males*
5
%
women on their boards earned
a 26% higher return on invested
capital than did the companies
with the fewest women.
The figures are even more dramatic
when comparing companies
with three or more women board
members vs. companies with the
least women directors — the former
clearly outperform the latter by 84%
for return on sales, by 60% for return
on invested capital and by 46% for
return on equity.
“Companies that have a higher
percentage of women on their boards
clearly do better on a number of levels
than some of their competitors,” says
Mary Ann Bartels, chief investment
officer of Portfolio Solutions at
Merrill Lynch Wealth Management.
“If women are going to be the major
spenders in the household and are
going to be the major holders of
wealth, why wouldn’t you want to
have their input at the board level?”
Other research suggests that
companies with more women
on their boards tend to be better
corporate citizens than their peers.
That ultimately could translate into
value for shareholders, notes Jackie
VanderBrug, senior vice president
in the Portfolio Analytics, Consulting
and Institutional Group at U.S. Trust.
40
%
Percentage of American
households with children
under age 18 where the
mother is either the sole
or primary source of
income for her family*
VanderBrug suggests that investors
think of the “gender lens” — the
notion of filtering data about
company performance based on
the involvement of women — not
as a rigid set of rules but rather
as a viewfinder for opportunity.
“Gender lens investing is about
making investment decisions that
support gender equality while
seeking a financial return,” she
says. “We call this socially innovative
investing. You might call it smart.”
*Sources: Ernst & Young’s High Achievers and
Women Make All the Difference in the World
reports; National Association for Women
Business Owners.
To learn more about women’s rising economic power — and other trends transforming our world — visit us online.
IMPORTANT INFORMATION
Some of the featured participants are not employees of U.S. Trust. The opinions and conclusions expressed are not necessarily those
of U.S. Trust or its personnel.
U.S. Trust operates through Bank of America, N.A., and other subsidiaries of Bank of America Corporation (“BofA Corp.”).
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Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith
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