In a 2012 BBC interview with Melinda Gates, financial and investment guru, Warren Buffett said, “Women will save the US Economy.” As much as I would like to believe this will happen due to our genius, the answer lies in the numbers.
Women are now a huge part of the workforce. According to a study performed by the Center for American Progress published in June of 2012, women comprise 47% of the workforce. Compare this with 29.6% in 1950, and one can see that women are making an impact on the economy more than we ever have. To further back Mr. Buffett’s statement, The Center for American Progress forecasts that by 2020 women’s participation rate in the labor force is expected to be greater than that of men due to a 6.9% increase over today.
The statistics above beg the question of, “Why?” A major contributing factor would have to be that more women get their college degrees than men, thus creating a motivated and educated part of the workforce. According to the Census Bureau, 685,000 men and 916,000 women graduated from college in 2009 (the latest year for which statistics have been published). That means 25% fewer men received college degrees than women. President Obama wrote, “This is a great accomplishment—not just for women but for America.”
So ladies, there are more of us in college, more of us in the workforce. Guess what that means? According to a May, 2013 article in the New York Times, “Four in 10 American households with children under age 18 now include a mother who is either the sole or primary earner for her family, according to a Pew Research Center analysis of Census and polling data. This share, the highest on record, has quadrupled since 1960.
There is no doubt we are impacting the economy, but what is truly interesting is that we are impacting the economy (and ourselves) in very positive ways. A recent study shows hedge funds run by women outperformed those run by men. Women’s tendency to be a bit more cautious when it comes to making certain decisions, while sometimes can work against them, more often makes them the member of the team that weighs risk a bit more carefully. Men are more prone than women to suffer from overconfidence in the area of money.
Jeff Sommer described in his 2010 New York Times article how overconfidence leads men to underperform women in the stock market. Men are overconfident in their ability to predict market movements, thus they trade ineffectively, have high costs and end up buying high and selling low. Some studies have found that the average woman produces an annual return up to 3% higher than her male counterpart! Compounded over time, that 3% can mean hundreds of thousands of dollars in higher account values.
Ladies, it is time to change into our Super Girl costumes and save the US Economy! If anyone can do it, it’s us!