Ask Our Economists

Welcome to the Wells Fargo, Ask Our Economist podcast series, where we explore what's on our clients minds. Provide timely commentary on what's happening in the markets and discuss our outlook for the ever-changing investment landscape. Our economists provide their views on the latest domestic and global trends, insights on the demographics, social issues and challenges that impact our world, all which help you manage risk and capture opportunities. Join us as we take you down the road of navigating today's economic climate with confidence.

>> Jay Bryson:

Hi, I'm Jay Bryson, chief economist for Wells Fargo Corporate and Investment Bank. And you're listening to the Ask Our Economists podcast series. Joining us today is senior economist Sarah House and Shannon Seery, also an economist with our group. And we're going to be talking about a report they just published entitled Party of One: How Single Women Stack Up in the US Economy.

>> Jay Bryson:

So, Sarah, let me ask you first, what motivated you to focus here on single women?

>> Sarah House:

Well, it was really two-fold. So first, we like to take Women's History Month to take a moment to kind of maybe step back from sort of the shorter-term cyclical fluctuations in the economy we're looking at. And just a little bit deeper dive on certain segments of the population. And last year, we focused on the childcare industry. So why it was struggling so much to bring back workers and how the lack of childcare workers was amplifying the labor shortage, particularly for women and just why the industry challenges were a persistent headwind to women's labor supply. But childcare is disproportionately, although not entirely, a married women's issue. So this year we thought it would be nice to take a deeper look at some of the economic trends amongst single women. So, it's a rapidly growing group and we wanted to better understand how single women are interacting with the labor market and what that means for their financial well-being and their economic prowess ahead.

>> Jay Bryson:

Okay, great. So, Shannon, Sarah just mentioned it's a rapidly growing group. So can you tell us about kind of the growth rate of single women and what's really driving it as it divorces are going up or married men are dying earlier or what's going on here?

>> Shannon Seery:

Sure. So we've seen the share of single women really only grow. Over half of women in the US are now single, which is equivalent to just over a quarter of the total US population. So, it’s a decent chunk of the country. Now we're thinking about single women. You have those who are previously married and are now separated, divorced or widowed, and those who have simply never married. And it's this never married segment that has accounted for all of the growth in single women over the past decade. So, this population has grown about 20%, which outpaces the increase in never married men and is about two times faster than total population growth in the United States. So, the reason we're seeing this group rise so quickly, is because women are marrying later, but also more women are simply not marrying at all. So, there is a larger portion of older women today that have never married compared to historically. And we haven't seen much growth in the previously married single segment. But as you can imagine, the largest share of older single women are still those who are widowed.

>> Jay Bryson:

Thanks Shannon. So, Sarah, let's talk a little bit about labor force participation. So historically, men have had a higher labor force participation rate than women. And right now, the rate among men is about 68%. It's roughly 11 percentage points higher than the comparable rate for women. And historically, the lower rate for women reflected the fact that many married women they took on unpaid work at home and didn't go into a, you know, a full time job. So, does this increase in single women, does it have implications for the overall labor force participation rate?

>> Sarah House:

Yes. So, and I think that's one of the most exciting implications of the report, is that the rise in single women is helping the economy grow faster by boosting the overall labor supply. So, except for widows, the vast majority of which are beyond their working years, never married, women, divorced, separated. They have higher participation rates than married women. Now, participation among previously married women has declined over the past decade. But a lot of that has to do with just this group getting older and moving to years that are more likely to be retired. But if you look at the total contribution of single women to the labor force over the past decade, they've added about a percentage point to women's total participation rate. So, in contrast, single men have actually detracted from the male participation rate, and that increase can be entirely traced to never married women. So, it's not just that this group is growing faster, but they also have the highest participation rate out of any marital group of women. And in addition, just getting bigger in size, they've actually seen the biggest increase in their participation rates over the past decade. And a lot of this can be tied to just the behavioral changes of this group growing labor force attachment even more than what we've seen between never married men. So overall, this group is contributing to growing labor supply.

>> Jay Bryson:

Okay. Well, thank you, Sarah. So, Shannon, let's turn to you and talk about the so-called quote, ‘mommy penalty.’ And what that refers to is women generally get paid less than many men, even for the same jobs. A number of reasons behind that. But one of the reasons may be because women with children may not be able to gain as much job experience as men, because, let's face it, women are still the primary caregivers in our society. And many women may decide to stay home to raise their children and can't get that job experience. But, you know, this increase in single women, many who are probably childless, means that they're able to stay in the workforce continuously. So, what does that mean for the wage gap? Are we seeing the wage gap between men and women narrow?

>> Shannon Seery:

Well, not exactly Jay, which was also a fairly interesting finding. So never married women still earn just about 92% of what never married men earn. And while the wage gap is narrower for single women than married women, it's been little changed over the past decade. So, in other words, it's moved within a narrow range. And there hasn't been much improvement since. This group, as you said, tends to be more likely to be childless. I think this therefore suggests there is much more to this argument than just this ‘mommy penalty’ that you mentioned. Right. So, there's also things like the tendency of women dominated jobs to pay less and the continuation of unconscious biases that cause this gap to persist.

>> Jay Bryson:

All right. Shannon. So Sarah, let’s take that we just talked about in terms of lower income among women than men, So does that also translate into lower wealth among women than men?

>> Sarah House:

Yes. So, it's really an uphill battle for single women to build wealth considering that they have lower income to the start. So, their expenses are largely the same. You still need a place to live, food, eat, health care. And we look at singles as a population as a whole. So, their median wealth is about $51,000, versus couples have a median wealth of $230,000. This is back in 2019. And couple's wealth is so much larger, in part because you have the benefits of married men's income. So, they have the highest income out of any marital group. And then also just the economies of scale of the two-person household. But if you look at single men versus single women, so single women in 2019, their median wealth was about 18% or $10,000 less than single men. And so, they're not really a huge factor here. So, women are about four times more likely to be single parents and those childcare costs and obligations can limit what jobs they can take, the hours they can work. And when you look at single mothers, their median wealth in 2019 was $7,000 versus about $65,000 for women with no dependent children. Now, that group skews a little bit older because they define children as financially dependent children. But even when we control for characteristics significant for wealth, like age, education, for example, the presence of children. So, the St. Louis Fed found that never married women's wealth is lower than never married men by about 29%. So, it’s the biggest wealth penalty amongst any marital group. So still pretty striking that you do have this lower wealth amongst these single women, particularly never married.

>> Jay Bryson:

Okay, so, in summary, single women have lower income than their male counterparts as well as lower wealth. So, Shannon, what sort of implications does that have for spending among unmarried women?

>> Shannon Seery:

Right. Jay. Well, with these lower dynamics for income and wealth, I think it's little surprise that single women also tend to spend less compared to single men or even the average U.S. household. So, they have seen comparable growth in spending over the past decade. So, the rate of single women spending growth has kept pace with broader spending trends. But I'd say that women tend to devote a higher share of spending towards necessities like housing and health care than their male counterparts. So, we've also seen an increase in terms of single women spending on education and food away from home specifically. So, we've seen their spending there grow even faster than men over the past decade. So, I think overall, while the higher share of single women in the United States isn't necessarily yet translating to outsized growth in spending, I still think that, you know, single women are a growing consumer segment, and we may see specific spending categories like education, food away from home, health care, potentially benefit from the continued rise in this population going forward.

>> Jay Bryson:

So, Sarah, let's end with thinking about the long term here. You know, up to this point, it's been more or less short-term, near-term sorts of things. What some of the longer-term effects of a growing share of single women in the economy.

>> Sarah House:

So, I think right now in terms of that greater propensity for single women to work, and particularly that growth in never married women. So that's great for labor force growth now, but the delay of marriage or forgoing it altogether, that's also associated with eventually having fewer children or lower fertility. And so, while we might be getting a near-term boost to labor force growth from single women, it does create challenges down the road in terms of that future labor supply growth. And perhaps on a more positive note, well, it hasn't translated to a narrower earnings gap yet. I think there's still the prospect that maybe we can see that gap narrower ahead as women's work experience more closely mirrors that of men. So, we've seen a gradual rise in the never married share of labor force through about 2010, but it's been more explosive since then. So, it might just be that it's still taking perhaps just a few years to see the payoff. So, you do have women's educational attainment growing faster. Corporations, I think are doing a lot to address what unconscious bias or unintended pay gaps exist. So, I think that could take time to show up in the data. But I think it will also depend on what happens to the relative earnings of women versus men dominated industries, which Shannon eluded to, is part of the reason that we're still seeing a pay gap between women and men of the same marital status. I think for now we have to bear in mind that the growing share of the population is generally in a more precarious financial position, though, so that can limit their spending. And even as this group is growing, it makes it hard to outpace other groups, even as they are getting more labor market experiences. And, that's going to have implications for businesses that have a large customer base of single women. It's great for their growing population, but it could be even a more powerful consumer segment if we did see some relative inroads in terms of income and wealth gaps.

>> Jay Bryson:

Well, thank you, sir, and thank you, Shannon. And thank you all for joining us today for our first installment of our Ask Our Economists podcast series, I'm Jay Bryson, and thank you very much.

>>Outro:

That’s all for this episode of the Ask Our Economists podcast and we thank you for joining us. If you enjoyed today’s episode, please share with colleagues, family, friends, and anyone who listens to podcasts. If you have any economic related questions or topics you would like to hear about in an upcoming episode, please email us at askoureconomists@wellsfargo.com. Ask our Economists is produced by Wells Fargo.

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