No question about it the recession hurts. But women will heal faster from the economic turmoil than men, according to a Bank of America research note.
That’s because women’s earnings are expected to recover more quickly than men’s, said Ethan Harris, head of Developed Markets Economics, and Neil Dutta, U.S. economist. With women controlling the walletshare of most households, a recovery in consumer spending, which makes up about 70% of GDP, will depend on women.
The question is: why are women suffering less than men? For one, women who lost jobs during the recession found new jobs faster than men. Part of the reason is that the economic downfall hit male industries such as construction and manufacturing the hardest. Although women and men had nearly the same unemployment rate going into the recession, wrote Harris and Dutta, today the unemployment rate for women is 8.9% almost two full percentage points below men at 10.6%.
Going forward, women will be positioned to fill jobs in the new knowledge economy. In the next ten years, the Bureau of Labor Statistics believes the top jobs will be focused in the healthcare sector (think registered nurses and home heath aides), which is dominated by women at nearly 80% of the total workforce. Not only that, but nine out of 10 jobs that the Bureau expects to add the most positions over the next eight years are overwhelmingly occupied by women.
Meanwhile, more women are graduating from college than men. For every two men that graduate from college, three women do, wrote Harris and Dutta. One study that they point to found that the increase in earnings from an additional year of schooling is about 6% to 10%. With women earning over 50% of the Bachelor's degrees between 2000 and 2010 women’s earning power is increasing exponentially.
To be sure, the median income of women is still two-thirds that of men. Yet, Harris and Dutta insist that the gap is narrowing and that it will accelerate. Over the last five years, they point out, the real median income for women has risen roughly 1% at an annualized rate. For men, it has contracted 1.5% at an annual rate. It helps that women are waiting longer to get married and make up 56% of single households with no children.
So, how are investors to take advantage of this “long-on-women” theme?
Women’s increased earnings potential will give them stronger purchasing power, which will help to lead the U.S. out of the economic doldrums. Harris and Dutta recommend companies that cater specifically to women and are already seeing a rebound in women-focused businesses and those with discretionary categories that target women, such as Ann Taylor, Lululemon, Target and DWS Shoes.
For those firms that are looking to hop on the women’s market bandwagon, the book The She Spot: Why Women are the Market for Changing the World and How to Reach Them by Lisa Witter and Lisa Chen is the bible for reaching women from two women who have dedicated their lives to doing so.
“In our view, it makes sense to take advantage of this demographic shift,” wrote Harris and Dutta. “Women are better educated, more likely to live on their own, have better job opportunities, and will enjoy a stronger earnings potential relative to men.”