Kristi Mitchem joined Wells Fargo Asset Management a little more than a year ago, and among her passion projects since joining the firm has been analyzing the gaps that have emerged in the Millennial generation between the financial literacy and confidence of women compared with men.
As part of this effort, Mitchem and several colleagues revealed new survey data at a press lunch in New York. The survey findings match many of the common themes one hears about the unique footprint of Millennials in the work force—they value flexibility and a sense of purpose at work over base salary or benefits, and they want access to investments that are socially and environmentally conscious. But it also reveals that the youngest generation of workers is not all that different from the older generations, at least in one crucially important way.
“Among all full-time employed Millennials, just as we see with the older generations, women are earning a median personal income that already significantly trails that of men, and they are saving less on a monthly basis,” Mitchem warned. “So it seems that we have to draw the troubling conclusion that, while Millennials are more aware about the gender pay gap issue, a solution is still not forthcoming.”
For men in the survey sample of Millennials, which Mitchem noted does in fact skew more towards the affluent than the general U.S. population, the median income is $63,000 and the median monthly savings for retirement is $500. For women in this generation, the figures are just $43,000 and $200, respectively.
“These figures are striking and they surprise a lot of people who identify the Millennial generation with an idea of being much more socially progressive and concerned with equality,” Mitchem explained. “But what we see clearly is that Millennials are in fact following in the footsteps of previous generations in terms of gender pay equity challenges. It makes sense because these are major, systematic challenges that have existed for some time. This fact has a direct impact on the work we should be doing as an asset manager and retirement plan provider.”
The survey data shows men are “more likely to say they are in their preferred career and are more confident in their financial security than women,” but the picture changes positively for Millennial women who say they have “taken greater action and control around their finances.” Naturally there is some evidence that more affluent Millennial women are more financially engaged and confident in their working future simply as a result of having more money to invest in the first place, but looking across the income levels in the sample, this factor does not explain the whole picture.
“We also see there are important distinctions in confidence and positive investing decisions when we look at women who say they compartmentalize the financial portion of their lives versus those women who say they engage honestly, directly and regularly with their financial challenges,” Mitchem said. “The same is true to a large extent for men as well and across the generations. Success is not always about making the most money—it’s about engaging directly with your finances and being willing to sit down and make a plan.”
Fred Axsater, executive vice president and head of strategic business segments for Wells Fargo Asset Management, echoed many of Mitchem’s arguments during the press meeting, suggesting environmental, social and governance (ESG) programs “are a great pathway to get both young men and women involved and engaged in the retirement savings effort.”
“The percentage of total Millennials who are not investing in the market today is far too large,” he concluded. “We must address this challenge straight on by showing the value of saving and investing for the long-term, both in personal terms and in societal terms. We see the group that is taking action with their money is more likely to be invested appropriately in the market and to say that the stock market is the best place to invest. But even with this group, women trail men in terms of their overall participation. More Millennials, and particularly women, should be in the market with a long-term strategy in place.”