Big Gaps and Big Finance—An American Narrative

Last week, we covered the Generation Gap, disparities between the financial attitudes and outlook of baby boomers, Gen-X’ers, and Millennials. This week we focus on the Gender Gap, something we’ve written about at length:

The Gender Gap

The Gender Gap

In reviewing some of the past analyses, we find that the gap spans both ends of the economic spectrum. Unquestionably, those at the bottom rung are in a much more precarious situation:

So the issue is one of scale as well as degree. When politicians, economists and sociologists speak of the gender gap, they muddy the dialogue with different assumptions, different responsibilities and different audiences in mind. Overall, the “gap” refers to the gender-based disparity of access at whichever level, one predicated on available resources and opportunities and their respective distribution and protection.

The Micro Gap

Putting our finance thinking caps on, can we point to a specific “fundamental” that allows women’s participation, growth and outcomes to be discounted in our global economy?

In discussing the gender gap, we commonly talk about certain limitations:

  • The average woman generally earns less money than her male counterpart
  • Women generally live longer than men
  • Women generally have higher health care costs and may have to take time off to raise children

Are these symptoms or commingling and/or correlating factors? Could the underlying structure of the gap be something much, much bigger?

Financial literacy is a frequent suspect:

  • A recent report on the gender gap pointed to basic money management habits and behaviors as the biggest gender-related gap.1

The Macro Gap

Still, let’s cast an even wider net: In a recent, controversial Salon article2, the authors argue that economists have overtly asserted their authority, thereby marginalizing other disciplines and approaches in addressing complex economic issues. Moreover, they claim that the information—“Econ 101”—they pass along to policymakers is “dumbed-down” and stripped of complexities.

While the first claim was on a micro level — normative household financial literacy between men and women — the Salon article illuminates another gender gap: Leadership at the very top.

Consider the facts:

  • Of total policymakers (113th Congress), 101 are women.  Although boasting a record number of women, this comprises only 18.7% of total membership. Even though they make up more than roughly 50 percent of the electorate, women hold only 20 percent of total Senate seats (20).3
  • Former Treasury Secretaries Robert Rubin and Larry Summers opposed the call of chairwoman of the Commodity Futures Trading Commission Brooksley Born for the regulation of derivatives. Summers disputed Christina Romer, economic adviser to President Obama, in her recommendation for a larger stimulus. More recently, former Treasury Secretary Timothy Geithner quarreled with Sheila Bair, chairwoman of the FDIC, and with Elizabeth Warren, Mass. Senator and previously chairwoman of the Congressional bailout panel.4 Consider too the current battle between the Fed Vice Chairman Janet Yellen and Larry Summers to replace Ben Bernanke as Chairman of the Federal Reserve.
  • Even of state-level actors, the number of women in state legislatures is less than a quarter (24%) of the total.5

Common Denominator in Micro and Macro Gaps

What could be the common denominator in both the micro and macro discussions?

To put it bluntly: the financial industry. More specifically, big finance.  As another recent Salon article6 phrased it: “Big finance is strangling innovation.” To place this argument into context, look at the graph below. It’s from the World Economic Forum’s Global Gender Gap Index 2012.7 It shows a relationship between a nation’s competitiveness and their relative gender parity. As the line suggests, at the very least there is some correlative link between the two.


Many would agree that innovation is vital to US competitiveness. It’s telling then that the Information Technology & Innovation Foundation ranked the US #4 in innovation behind Finland, Sweden and Singapore, and second to last in terms of progress made over the last ten years.8 Similar analysis from the Organization for Economic Cooperation and Development (OECD) concurs with this trend. Could this trend compound the gender gap on micro and macro levels? And is big finance really to blame?

While innovation in Silicon Valley ushered us into the 21st century, Wall Street may be creating a valley-sized gap in growth. As the Salon author contends9, “a giant financial sector [is] sucking money, vampire-like, out of the productive sector, where the goods, technologies and services that we want are created.” To phrase it less inflammatorily, Wall Street has been more focused on taking money out of the economy than investing in it.

  • Paul Volcker stated that the ATM was the only useful financial innovation in the last two decades.
  • “Jan Kregel and Leonardo Burlamaqui examined how as the financial sector has grown larger, the U.S. has ceased to be a center for developing new knowledge.”10
  • Damon Silvers: Financial bubbles result from a failure to “productively invest capital,” including the government’s declining R&D efforts.

So what does this have to do with the gender gap? Bursting bubbles and a decline in innovation lead to less available resources and opportunities and more income inequality. This outcome covers the gap in both a micro and macro sense. Let’s revisit our definition of the gap from earlier:

The “gap” refers to the gender-based disparity of access at whichever level, one predicated on available resources and opportunities and their respective distribution and protection.”

Does this sound familiar?

The first and hardest hit by a drain of resources, jobs and opportunities are often minorities, women and younger generations. Is this a self-perpetuating cycle?

Whatever the cause, we should make innovation a priority, and not just the innovation of products and services, but also the innovation of ideas:

  • Women workers should make the same wage as their male counterparts;
  • More than a fraction of Forbes’ top 500 should have female CEOs;
  • More than 18 percent of Congress should be representing more than 50 percent of the US electorate.

And most importantly, that our competitiveness and prosperity as a nation be seen as dependent on closing these sorts of gaps, whether generational, gendered, or racial.

Wipfli Financial Advisors, LLC (“Wipfli Financial”) is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC); however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Wipfli Financial is a proud affiliate of Wipfli LLP, a national accounting and consulting firm. Information pertaining to Wipfli Financial’s management, operations, services, fees and conflicts of interest is set forth in Wipfli Financial’s current Form ADV Part 2A brochure and Form CRS, copies of which are available from Wipfli Financial upon request at no cost or at Wipfli Financial does not provide tax, accounting or legal services. The views expressed by the author are the author’s alone and do not necessarily represent the views of Wipfli Financial or its affiliates. The information contained in any third-party resource cited herein is not owned or controlled by Wipfli Financial, and Wipfli Financial does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Wipfli Financial of the third party or any of its content or use of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner, investment advisor, attorney or other professional.
Nima Tolooi

Founder, Former Editor in Chief

Nima Tolooi is the founder, web developer and former editor-in-chief of OneBite. He was formerly the Interactive Marketing Manager for Wipfli Financial Advisors, based in Chicago, IL.

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Big Gaps and Big Finance—An American Narrative

time to read: 5 min