Will women continue to drive the economy?

Women are a force in the labour market like never before, which is serving them well during their earning years and into retirement.

Canada can point to a dramatic increase in women’s participation in the labour market over the past four decades as creating the conditions in which economic equality is finally in sight. Women are a force in the labour market like never before, giving them a new financial independence that’s serving them well during their earning years and into retirement. A recent RBC/IPSOS survey said 70 percent of women over the age of 45 are looking forward to a comfortable retirement.

While many financial gaps for women persist, we’ve chosen to highlight the financial gains Canadian women have made.

They include:

Women earn 42 percent of total Canadian household income, up from 25 percent in 1976
Those income gains mean Canadian women collectively control C$240 billion more each year than if their income share hadn’t increased
Growth in women’s retirement savings prevented more than 1 million senior women from falling into poverty
Working-age women boast a collective net worth of $3.4 trillion, 46 percent of the Canadian total

Women’s economic clout helps drive the consumer economy; they make the majority of household purchases, including food, necessities and healthcare. More surprisingly, single working women now boast larger private pension assets than their male counterparts, reflecting their strong presence in sectors where defined-benefit pensions are more prevalent. Women are also a growing force in the housing market and in charitable giving.

Closing in on half of the income pie

Two important factors behind women’s increased share of total income are an increase in their labour-force participation rate, and the move from jobs to careers.

Since 1976, the participation rate of prime-age women (age 25-54) has increased from 51 percent to 83 percent. For older women (age 55+), the increase has been even more dramatic, nearly doubling from 17 percent to 32 percent. While women continue to face higher career costs for having children, their stronger and longer attachment to the workforce (relative to the 1970s) has helped even out their share of the income pie over time. This has happened in spite of the persistence of a wage gap that sees them earn just 88 cents for each dollar a man earns.

In 1976, women’s earnings accounted for 25 percent of the total income earned in the economy. Today, it’s 42 percent, underscoring the massive rebalancing of earnings of men and women. The extra share of total income amounts to $240 billion more for Canadian women, each year.

From jobs to careers

Women aren’t only holding down more jobs; they’re occupying different jobs, largely because of education. In 1991, 15 percent of women had a university certificate, diploma or degree. It’s now 35 percent. Over the same period, men only increased their educational attainment from 19 percent to 30 percent. Relative to 30 years ago, women are also much more likely to be managers or in professional occupations that usually require a university degree such as physicians, secondary school teachers, or lawyers. The shift to careers—higher-earning positions with longer tenures—has paid significant financial dividends.

Accumulating wealth

Women between the ages of 18 and 64 now control a net-worth of about $3.4 trillion today. That’s 46 percent of the Canadian total for the working age population, according to data from Statistics Canada. Single women without children outpace single men without children, with a net worth of $250,000 vs $230,000 for men. Another notable development has been the rise in net worth of single mothers from an average $89,000 in 1999 to $240,000 (in 2016 constant dollars) in 2016.

Part of these gains reflect women accumulating their own workplace pensions—savings pools that were less available to them when they were either in short-term low-paying jobs, or not working outside of the home. Increased access and improved maternity leave benefits, which in 2000 effectively increased total leave benefits from six months to one year, have helped link Canadian women more permanently to long-term employment relationships.

Golden years are more golden

A lifetime in the labour force has allowed women to tap into programs that are strongly tied to past employment. In 1976, women’s income from CPP/QPP came to half of what men earned from those retirement plans. Today, their share of CPP/QPP earnings is almost the equal to men’s. When we include all retirement income (both private and public), women went from earning 40 percent of what men did to 80 percent today.

Their improved financial security couldn’t have come at a better time. By 2030, one in eight people in Canada will be a woman over the age of 65. Thanks to their workplace gains, women are now more than ever in a position to enjoy the fruits of their labour.

For more information, or to arrange a complimentary consultation, please contact us today.

Devin St. Louis, CFP, FCSI, BBA, CIM, FMA
Vice-President & Portfolio Manager
St. Louis Private Wealth Management of RBC Dominion Securities
403-299-7074 | devin.stlouis@rbc.com | www.stlouiswealth.com
1400 – 333 7th Ave. SW, Calgary, AB T2P 2Z1

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