If you’re searching for the key to the current economic resilience, look no further than the increasingly powerful influence of women, according to a new report from Bank of America.
The report, titled ‘What’s the power of a woman’s wallet?’, reveals that women are playing a pivotal role in the economy, as their spending and annual income growth accelerates well beyond that of their male counterparts.
Women’s discretionary spending outpaces men
The report, which also highlighted positive trends heading into 2025, noted that women are increasing their labor force participation with higher numbers of graduates.
BofA’s America Institute economist Taylor Bowley discovered that for the past five out of six years, women’s median discretionary spending growth has surpassed that of men.
Bowley writes in the report that:
Continued strength in discretionary spending, especially as prices across some items within this category have fallen, suggests women have increased potential to drive economic growth.
Employment growth driven by “women-intensive” sectors
The increase in women’s spending power is tied to their employment growth, which continues to outpace the national average.
For the past two years, women’s employment growth has surpassed the overall average, despite the fact that this pace slowed somewhat in 2024 as compared to 2019.
This employment surge is largely attributed to growth in “women-intensive” sectors such as social services, personal services, health services, educational services, and apparel stores.
Payroll data collected by BofA from small businesses reveals that payroll growth in these industries significantly outpaced all other sectors in 2023, before falling more closely in line in 2024.
However, even in September 2024, payrolls in these “women-intensive” industries were still growing at a rate of 5.5%.
Increased workforce participation and educational gains
This increased rate of payroll indicates that women are participating more actively in the economy, and education data suggests this trend will continue.
Citing the Bureau of Labor Statistics (BLS), BofA reveals that among prime-age workers (those aged 25 to 54), women’s labor force participation grew twice as quickly as men’s compared to a year prior.
Looking ahead, data on school enrollments by gender show that men and women are now nearly on par, with male enrollments growing by approximately 1% and female enrollments growing at approximately 0.9%.
Women still lag behind in pay, but trends are shifting
While women are outpacing men in terms of spending growth and labor force participation, their earnings still remain lower than that of their male counterparts.
According to BLS statistics from 2023 (the most recent available data), women in full-time salaried roles earned $1,005 per week, which is 83.6% of the $1,202 median average for men working in similar roles.
However, data from BofA’s internal customer account data, as revealed by Bowley, shows that women’s median annual income has been rising faster than men’s for the past few years. When indexed against 2019 data, by August 2024, women’s median annual income was approximately 132.5, whereas the index for men was only 128.
The power of job change: closing the gender pay gap
Bowley explained this shift by stating that “For women who have changed jobs, the associated rise in pay has been relatively strong.
Though the overall percentage raise associated with a job-to-job change has been slowing, the raises women have received from a job change have been higher than men since 2019, per Bank of America internal data.”
This is further reinforced by the fact that the positive difference between pay increases from job changes for women compared to men, was almost 2% as of September 2024.
“This rising, positive difference in pay increases for women changing jobs suggests women are narrowing the gender pay gap, likely due in part to more opportunities for higher-paying work as well as accelerated wage growth in lower-paying sectors in female-dominated professions,” Bowley added, underscoring the potential for real change in the future.
Unleashing further economic potential through increased support
Bowley concludes that women “are playing an increasingly important role in US economic growth” due to their heightened workforce participation, often in critical service sectors, and their consistent spending.
Despite this, she also recognizes that “there remains untapped potential, which would unequivocally benefit the economy,” and further notes that:
Women’s employment growth has slowed from the beginning of last year, and in our view, it could be that lower pay means that women are hit harder by high inflation. This highlights that it’s increasingly important that women need not only to sustain economic gains but to improve them through efforts that support continuing education and acceleration in women’s labor market participation.
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