Women & Money - We're facing death by a thousand paper cuts

As a woman I know all too well about the many financial penalties we face. The list is long ranging from the gender pay gap (we earn $0.87 for every dollar a man earns), and the extra responsibility for children and family care (we spend an average of 3.9 hours per day on unpaid work, 1.5 hours more than men) to the pink tax where women routinely pay more than men for a variety of items ranging from mortgages to car repairs.

What I had not done was put this information together. I had never really thought about the collective impact of all these disadvantages.

That is until, I had the privilege of talking to Kristine Beese, founder of Untangle Money.

Kristine told me about how women get paid less than men (female dominated industries that pay less than male dominated industries and within each, women get paid less). At the lower end of the financial spectrum, this has significant implications on the health and wellness of women. It threatens quality of life, limits investments in enablers of success like education, and significantly increases risks for dependency. I have seen this first hand – my mother worked as a seamstress in a factory and was financially dependent on my father who was abusive.

At the higher end of the financial spectrum, it has significant financial implications. After reading Robyn Doolittle’s Globe and Mail article on the wage gap between female equity partners at top law firms, Kristine did some math. The article found that men at the equity partner level made an average of $371,596 more each year than women at that tier (a 25% pay gap). If the gap exists for 10 years and the money is invested at 4.5%, then it is worth $4.7M dollars.

Kristine discussed how women’s salaries peak around 40 and men’s peak around 55 , creating many decades of higher salaries for men. She talked about how women hit middle management and struggle to get beyond, how women struggle with fitting in the networking and social activities that often lead to greater opportunities, how more wealth is passed down to men, how men make more financial decisions and how women spend less time in the workforce due to child and family care, receiving less in pensions and the list goes on….

When you put all of this together, women have a higher risk for financial struggles. The 2019 Canadian Financial Capability Survey revealed that women make up 60% of those Canadians who are struggling to manage their day-to-day finances.

So, the question becomes, how do we fix this.

From an individual perspective, we women need to step up and take ownership over our finances. We need to understand that this is happening to us. We have to take time to both figure out how and then push towards addressing it in our own lives. So that means everything from problem solving how to increase our incomes to actively managing our money and planning for retirement. Untangle Money can provide support on the latter and also shares great insights and perspective via social media and financial book clubs.

From a systemic perspective, we need to collectively address this. This is not an isolated issue and it is not the sole responsibility of under resourced women to build a fair and equal system for everyone. We need our political, public, private and not for profit sector leaders to recognize the financial resiliency of women as a key issue and dedicate meaningful resources to addressing it. Yes, that means budget increases to provide equal salaries and investments in pensions, collective investments in childcare, and financial capacity building. It also means a shift to intentionality. We can build a fair and equal society by deeming it important and intentionally prioritizing our resources to make it happen.




Sources:

1. Gender pay gap: https://canadianwomen.org/the-facts/womens-poverty/

2. Unpaid work: https://www.theglobeandmail.com/canada/article-power-gap-backstory/

https://www150.statcan.gc.ca/n1/pub/89-503-x/2015001/article/54931-eng.htm

3. Pinktax: https://www.chatelaine.com/living/10-things-canadian-women-pay-more-for/

4. Gender pay gap at legal firm: https://www.theglobeandmail.com/canada/article-wage-gap-between-male-female-equity-partners-at-top-law-firm-averages/
5. Women's higher risk for financial struggles: https://canadianwomen.org/the-facts/womens-poverty/

Aspiring to thrive: Building a shift to a new political economy

Written with John Stapleton of Open Policy Ontario

For a brief moment at the beginning of the COVID19 crisis, our principal political and economic paradigms converged. Without any significant controversy, the government moved to provide new benefits that quickly became the largest income security intervention in Canada’s history.

Every region in the world today struggles to emerge from the pandemic crisis. At the same time, there is broadening awareness that we live in an era of entrenched and increasing economic inequality. In this pandemic time, many have also awoken to the ugly ways that racism operates in our society.

There is a collective recognition that we need to create a new normal. Although Canada is frequently ranked as one of the best places to live, poverty and inequality are deeply woven into our country’s fabric. The trend has been growing for more than a generation.

Is this the moment when we start to reverse that trend for a new generation?

The paradigms

In living memory, two political and economic paradigms have dominated our discourse about how best to ensure the public good. Although each embodies a range of theories and belief systems, for our limited purposes let’s call them the alpha paradigms — ‘right’ and ‘left’. 

One favours market forces and smaller government to create fertile ground in which individuals can strive and thrive.  The other calls on government to tax, regulate, and invest in people and infrastructure — thus countering some of the undesirable consequences of the market approach.

But a new paradigm – let’s call it ‘the beta paradigm’, or ‘populism’– has sadly emerged in our times.

As economic inequality grows, a political and economic  system can evolve to the point where those without resources spend all their time struggling to survive. Meanwhile, those with resources get more and more focused on inhabiting and advancing their personal lives. The system keeps refining itself to the advantage of those with resources and power.

A discussion paper for the International Monetary Fund puts it this way:

“Individuals have an incentive to divert their efforts toward securing favored treatment and protection, resulting in resource misallocation, corruption, and nepotism, with attendant adverse social and economic consequences. In particular, citizens can lose confidence in institutions, eroding social cohesion and confidence in the future.”

Internationally and in particular south of the border, frustration and anger has built in those who have been working hard to be successful in a system that is not designed to reward them. There is an urgency to “fix it” that is resulting in a lack of empathy for the perspectives of others and a fierce advocacy for poorly thought-out solutions. People with very little power are becoming so frustrated that they are even willing to trade their own self-interest for an illusion of power and control.

Enter a demagogue. A right-wing demagogue? A left-wing demagogue? Doesn’t matter. When inequality gets really bad, demagogues get traction. The idea of the general public good becomes grossly distorted. Damage gets done and takes decades, and billions, to repair.

In Canada, we have increasingly entrenched paradigms on the right and the left, but we have not yet lost ownership of our collective future. In fact, we have experienced a moment of convergence in the face of a common crisis.

Is there more that we can do with this moment?

Through the lens of ‘possibility’

We tend to oscillate in favour of one or the other of the two alpha paradigms and their competing visions of how to achieve growth and prosperity. This back and forth is costly. We waste money when we lurch from one approach to the next, doing and undoing, and lose valuable time while the problems keep piling up opening us up to increasing frustration and anger.  We cannot afford to do this anymore.

We need an understanding that neither paradigm is perfect, neither will win. A democratic system ensures, and requires for its own health, that political leadership change from time to time. But we believe that much of the oscillation inpolicy should end, in favour of a shared vision of what it means to thrive.

To thrive is to flourish, grow, and prosper. This is a broadly valued outcome for all Canadians, embraced by both the right and left paradigms. It means individuals and families have the ability and opportunity to progress towards personal, community, and national goals. To thrive is not just to survive. It is to be resilient.

We need to focus on how best to get where we all want to be. What would a system designed to encourage a thriving Canada look like? To figure this out, we need to stop the ideological back and forth and focus on outcomes. It means taking an approach that:

  1. Holds a collective threshold of success as a desired outcome

  2. Enables accessible pathways to desired outcomes

  3. Eliminates systemic barriers to outcome achievement

  4. Thinks in generational timeframes.

Such an approach requires that we shift our focus away from the interests of particular groups and issues. Instead, we need to clarify and advance what’s needed for all Canadians to thrive.

Such an approach requires a sharp eye for the places where people are striving to thrive against sullen, rooted, systemic barriers to equality – as opposed to the healthy frictions of social and commercial competition.  It also requires mechanisms that create positive feedback loops toward our collective threshold of success.

An example: Inequality and wages

There is a growing consensus among thinkers who adhere to both the right and the left alpha paradigms that extreme inequality is incongruent with a healthy economy and a healthy society. Thinkers on the right are more inclined to believe that inequality is in the natural order of things. But a more nuanced discussion is quite possible around the point at which inequality begins to be detrimental. It is logical from a business perspective to agree that at some level, inequality becomes a deterrent to advancing a thriving Canada.

If we can agree to that, then we can agree that wages are an important intervention point. Average wages have stagnated for the last 40 years. Precarious employment has increased by 50% over the last twenty years. Current minimum wage levels result in an annual salary of $25,000 or a monthly salary of just over $2,000. With today’s housing and living costs, this is insufficient to enable the average Canadian to survive — much less thrive.[1]

There are numerous proposed approaches to this problem, including:

  • A guaranteed basic income

  • A commitment to living wages

  • Tax incentives and penalties related to employee wage levels, perhaps taking into account the ratio between CEO pay and the lowest paid employee.

  • Mechanisms to curb the disproportionate allocation of resources to management and capital gains.

  • A thorough look at what is needed to make employment within a ‘gig’ economy more equitable.

Thinkers on the left and right differ on the need for reducing wage inequality and the appropriate policy approaches. For example, many advocates on the left argue for increases to the minimum wage. Market champions argue that this is not an effective poverty reduction strategy and in fact has negative, unintended consequences for the working poor.

Our proposed approach avoids trying to resolve any of the core beliefs of the two dominant paradigms. We are in favour of focusing on collaboration to achieve mutually desirable outcomes. That means developing a comprehensive strategy that takes into consideration the benefits, challenges and ability of each policy mechanism to contribute to a collectively desired set of outcomes.

Moving forward

This approach contrasts drastically  with what is happening today. First, there is no shared understanding of a threshold of success — what it would mean, for example, in terms of wages and income, for members of Canadian society to thrive.

Second, the lack of collective commitment to a desired outcome encourages stakeholders to invest all of their time and resources in advocating for one particular policy option. This limits our advancement, as we need a variety of mechanisms to curb inequality and to achieve our desired threshold of success.   

A collective focus on desired outcomes, enabling accessible pathways, and eliminating systemic barriers will work to avoid the social, economic, and political upheaval caused by growing inequality. That in turn will help us to avert the threat and impact of populist non-solutions.

Is lack of commitment driving our snail’s pace progress on sustainable procurement?

Surprise.  Last night I went into our daughter’s room for our goodnight story and found an explosion of beads and other craft materials.  We have asked her to make sure stuff is put away and off the floor before bed many, many, many times.  As I stood there about to have the same discussion, I realized she is not committed to a clean room.  Sure, we get occasional compliance, and we could even get consistent compliance if we established a clear standard and ecosystem for accountability (regular room inspections and some form of reward system) but that seems a bit military and we could do that on one thing but not on the many things we would like to happen in our family. 

 

What we really want is for her to do it on her own – we want her to have ownership and commitment over making it happen.  

 

I see a lot of similarities as I look at our progress on social and environmental issues.  We have commitment gaps.  Let’s take for example sustainable procurement.  In the last couple of years, I have developed and worked on a number of projects to help advance sustainable procurement at scale.  For background, sustainable procurement can be seen as an important intervention point given a number of factors including its size (procurement makes up over 13% of Canada’s GDP[1]), it’s potential for financial efficiency (you are using existing buying power to drive forward existing policy objectives), and its potential to catalyze change in the market (it works to incent integration of sustainability into supplier offerings and operations).

 

Recognizing this potential, on the environmental side the federal government first started making commitments to advancing green procurement over 25 years ago.  In 1992 it committed “to ensuring that environmental considerations would be integrated into government purchasing and policies”[2].  This was followed by a number of subsequent commitments including international commitments on green procurement at the World Summit on Sustainable Development in 2002 and the commitment to implement a green procurement policy in 2005.  Most recently, the government made a commitment to reduce the government’s own emissions to 40% below 2005 levels by 2030 and established the Centre for Greening of Government at the Treasury Board that is responsible for advancing this goal, including actions related to procurement[3].

 

Fast forward to 2020.  With the generous support of HP, and in collaboration with Professor Charles Cho and Megan Foley, we recently completed an assessment of the degree of sustainability integration into public sector procurement.  We looked at 50 public sector RFPs in the IT, construction and large services category.  We found superficial and narrow integration of sustainability into the RFPs.  Despite the number of environmental and social issues we have, only 12% of RFPs incorporated sustainability as an independent consideration in the evaluation and no RFPs meaningfully included sustainability as an independent consideration in combination with mechanisms for accountability.  In addition, only 20% of RFPs included mention of 3 or more environmental and social considerations.   

 

Why is it that over a 28-year period with various commitments to advancing green procurement, we have made such little progress?  I will compare this to the less than 5 years it took from the Task Force on Marijuana Legalization and Regulation’s report to legalization and the less than 18 months it took to move cannabis from illegal substance to essential service. 

 

Like any complex issue, the answer is not simple.  There are a number of challenges and the Office of the Auditor General’s 2005 Report of the Commissioner of the Environment and Sustainable Development provides good perspective on a number of these ranging from lack of dedicated staff and limited cross-departmental collaboration to exclusion from key guidance documents and limited use of performance indicators to measure and report on progress.

 

I believe that at the root of these challenges is a core barrier that is common to a breadth of social and environmental issues; a lack of commitment to holistically driving a desired change, or in this case of advancing sustainable procurement at scale.  Now to be clear, I see that there are in fact many commitments to some level of change or to particular components of change.  But, at a macro level, I believe we lack commitment to the full scale of change we want.  We want change, but we also want to continue to enjoy the benefits from the current state that are in many cases incongruent with the desired change.  Or alternatively, we believe we do not have or find the resources we need to drive that level of change. 

 

In this example, I believe we are seeing commitments to particular initiatives that advance sustainable procurement but not to advancing sustainable procurement at scale.  This is evidenced by a lack of allocated human and financial resources that prevent sustainable procurement from rising to a level of priority sufficient to enable cross sector collaboration, a comprehensive macro level strategy that is owned, managed, resourced and implemented. 

 

I know that this is a strong statement and I do not make it lightly.  I make it after spending significant time and effort digging to understand the root of our snail’s pace on progress.  I make it because I have learned over the years and firmly believe that real meaningful progress on any change effort requires understanding and addressing the root challenges to the desired change. 

 

I welcome any challenges to this.  If it is not commitment, what is at the root of our meager and inadequate progress? 

 

 


[1] Clean Energy Canada. The Power of Procurement, Cutting the Federal Government’s Carbon Emissions. 2018. Available online: https://cleanenergycanada.org/report/procurement-federal-emissions/ (accessed on 8 July 2020).

[2] Office of the Auditor General of Canada. 2005 September Report of the Commissioner of the Environment and Sustainable Development. 2005. Available online: http://www.oag-bvg.gc.ca/internet/English/parl_cesd_200509_06_e_14953.html#ch6hd3a (accessed on 8 July 2020).

[3] Clean Energy Canada. The Power of Procurement, Cutting the Federal Government’s Carbon Emissions. 2018. Available online: https://cleanenergycanada.org/report/procurement-federal-emissions/ (accessed on 8 July 2020).