Has the Legal System made Women Financially Illiterate?

Not too long ago, a major leader (a man over 60) in my well-known civic organization was encouraging members to make contributions to the foundation of said organization. As part of his pitch, he said something like, “Your wife probably spends more money on shoes than this gift.” The room erupted into laughter and no one batted an eye…except me. His comment furthers the stereotype that the wife’s job is simply to spend money and that she isn’t involved or interested in the household’s financial decisions. He later explained the comment by saying, “I’m a country boy and old school.”

This man wasn’t trying to be offensive or dismissive of women’s financial capacity. His words felt normal and natural to him because they describe a situation that was more or less reality during much of his life. The fact is, for men of his age, it is normal to think that way because that’s what the culture he grew up with established as a standard.

Women have made dramatic gains in terms of workforce participation and earning power over the past half-century or so. That’s easy to forget when we’re focused on the lingering lack of equality in these areas, but look at the progress:

• In 1950, women made up only 29.6% of the workforce vs. 46.3% now.*
• Since 1950, labor force participation has risen for women (33.9% to 57%) but fallen for men (86.4% to 69.1%).*
• The gender waged gap has narrowed too. In 1950, the median hourly wage among full- or part-time workers 16 years or older was $19.42 for men and $12.48 for women. In 2016, it was $19.23 for men and $16 for women.*
• Perhaps most dramatic has been the increase in female breadwinners. In 2014, 40% of households with children had a woman as the primary or only earner. In 1960, that figure was only 11%.

Laws reflect societal norms and vice versa

These changes occurred in part due to a shifting economic landscape, but equally important was pressure from women themselves, who refused to remain in a financially subservient role. There’s one more critical factor in this dramatic evolution, and it started well before 1950: changes to the legal code. While women may have resented the male control of money and finances, there wasn’t a whole lot they could do about it until the law allowed them certain rights:

• 1848 — New York passed The Married Woman’s Property Act, which said a woman was no longer liable for her husband’s debts. She could now enter contracts on her own, was able to collect rents or receive an inheritance in her own right and could file a lawsuit on her own behalf. Most other states passed their own version by 1900.
• 1938 — The Fair Labor Standards Act established a federal minimum wage, eliminating pay differences between men and women for many hourly jobs.
• 1960s — Women got the right to open a bank account without a husband as a cosigner.
• 1974 — The Equal Credit Opportunity Act passed, which barred credit discrimination on the basis of gender. Before it passed, banks often required a woman to get their husband’s signature and completely refused to issue loans to unmarried women.

Laws change when society creates pressure for that change, and society behaves (for the most part) in a way that reflects expectations set by the law. Looking back, it’s no wonder that most women didn’t play a more active financial role over the last few centuries. Our cultural standards discouraged it, and the legal and banking systems supported the ideology that women shouldn’t be involved in the household finances.

We’re slowly unwrapping that norm, but even today culture and law present barriers to full economic equity between the sexes. As an advisor, I’ve heard men say they are proud to be able to support their wife, so she doesn’t have to work. This patriarchal financial culture still permeates parts of the financial services industry as well — just think of the stereotypical Wall Street man. And the Equal Rights Amendment, a straightforward statement of equal legal status, has yet to become law.

The legal code will continue to evolve, based on the way people actually live:

• More women pursuing higher education
• An increase in female-headed and same-sex households
• A higher percentage of women who never marry
• Women’s full integration at every level of the workforce including top leadership

We’re not at true parity yet, but we will continue to get closer in the coming years. If you or your partner still aren’t fully engaged in the household finances, it’s time to pick up the checkbook and start checking in.

*Research from Pew Research Center (March, 2018) using historical data from the Bureau of Labor Statistics historical data (1950–1970) and labor projections (2018–2060).

Meredith Moore is a 20-year veteran of the financial advisory industry who specializes in bringing a customized approach to support the highly personal dynamics that govern her clients’ relationship with money and success. She is the recipient of numerous industry awards and a noted speaker and writer focusing on the intersection of power, money, and gender within relationships. Ms. Moore can be reached at www.artisanfsonline.com. Learn how to take control of your financial life and discover what makes women’s financial planning needs such a unique challenge with our free, white paper: https://www.artisanfsonline.com/.19.htm

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