Redlining
Redlining was the Home Owners Loan Corporation (HOLC) system of maps that rated neighborhoods on their perceived risk and stability. On the maps, green areas, rated A, were “homogeneous and white” while red neighborhoods, rated D, were predominantly Black. Neighborhoods with African Americans or Latinos were automatically rated D (red) and were ineligible for mortgages. The FHA used these maps for their own lending process.
Mehrsa acknowledges that the HOLC and FHA “were not creating these preferences, but reflecting the reality that white Americans preferred to live in segregated communities.”16 That said, “The FHA was unwilling to use the strength of the government and its leverage in the credit market to challenge racism.”
Redlining was just one of the many Jim Crow laws17 (a collection of state and local statutes that legalized racial segregation). Despite this history, Mehrsa believes that change is possible and that there is a lot of room for optimism around closing the gap. At the same time, many of the events mentioned were in response to progress, so she says we need to be “a little wary of celebrating before we're done.”
The Gender Wealth Gap
Then there's the gender wealth gap. Women own $0.32 for every $1.00 a white man owns. This gap is far greater for women of color. Black women and Latinas own $0.02 and $0.01, respectively, for the white man's dollar. $0.01!
The Gender and Racial Wealth Gap
Source: Data from Women and Wealth—Insights for Grantmakers. Asset Funders Network, 2015.
Where does this come from? Our personal finances are all interconnected. Each area of our money lives impacts each of the other areas. The wage gap combined with the pink tax (see Chapter 5) requires women to take out more debt. Even when women have the same credit profile as men, they pay higher interest rates (discrimination). This all leads to women investing less and buying less real estate (and the mortgages cost more for women when they do).
Then there's intersectionality, a term coined by lawyer and civil rights activist Kimberlé Crenshaw. Women of color, LGBTQ+, people with disabilities, and mothers experience these gaps in a compounding way. Kimberlé describes intersectionality as “a prism, for seeing the way in which various forms of inequality often operate together and exacerbate each other.”18 Yes, there is inequality based on gender identity, race/ethnicity, class, and sexual orientation, but many people are subject to some or all of these inequalities, not just one, and there's a cumulative effect.
Wait, you might be wondering why I included motherhood. A large part of the pay gap is due to motherhood. What? Mothers earn less for the same work than fathers do, experience workplace discrimination, and are pushed out of the workforce due to the lack of childcare and corporate support of parents, and this not only impacts their lifetime income but also their ability to invest, their access to retirement accounts, and their need to take on debt.
Not to mention, women live longer, which means they need more money in order to retire. It's enough to make you scream.
Another Gap That Has a History
In addition to all the current factors that play into the gender wealth gap, the world of money has historically been less accessible to women. The personal finance sector was created for and by men, leaving women out until very recently. These systemic barriers have set the stage for the gender wealth gap.
The Equal Credit Opportunity Act (ECOA) of 1974
Until 1974 when the ECOA passed, a woman couldn't take out a credit card in her own name without a male co-signer, like her husband or father. That's recent history. The act also granted women the ability to take out their own mortgage. Before then, many women seeking their own loans were laughed out of banks.
Women's wages were discounted by as much as 50% during the loan process when lenders decided how much they could borrow. You can imagine how that impacted what homes they could afford. Here's a hint – homes worth much less than those of their male counterparts.
The Equal Pay Act of 1963 and the Pregnancy Discrimination Act of 1978
At work things were similarly bleak. There was no requirement for equal pay until 1963 (still a big problem) and women could be legally fired for being pregnant until 1978 (it still happens illegally).
In addition, investing culture was dominated by white men. There wasn't one woman on the New York Stock Exchange until Muriel “Mickey” Siebert purchased a seat in 1967. Years earlier, women tried to make a stock exchange of their own in order to get a piece of the action.
The Double X Economy
Inequality has a real cost. Linda Scott, a professor emeritus at the University of Oxford and author of The Double X Economy, coined the phrase “Double X Economy” to address the systemic exclusion of women from the financial order (all over the world). Linda says “gender inequality causes poverty” – so it's not only the missed economic opportunity; “there's hunger that's attributable to this, there's war, there's disease. There's all types of terrible things.”19
I had the incredible opportunity to interview Linda for this book and she talked about the cost of not focusing on women, and gave the specific recent example of the pandemic Shecession of 2020.
DEFINITION: The Shecession (from the Skimm) is the economic downturn that disproportionately affected women. Especially women of color. Not only are women more likely to work in hard-hit industries like hospitality and leisure, but many left their jobs due to lack of childcare.
From Linda:
From an economic perspective, those who run the world's economies are chasing growth (they want the economies to grow). Right now governments are trying to recover from the economic impact of the pandemic and for the most part they've ignored the special needs of women. It has been manifestly evident throughout the pandemic that women are suffering to a different degree and for different reasons than men, and obviously will need different solutions. And rather than deal with those needs, they are being pooh-poohed and set aside.
It's pretty ridiculous because on average, in the global economy, women contribute just under 40% of GDP and in the United States they contribute at least 40% of the GDP20 and make up more than half the workforce. In 41% of families, women are the primary breadwinner. And if women decided to form their own country, they'd