illustration of four ethnically diverse women

By: RBC Economics

Canada can point to a dramatic increase in women’s participation in the labour market over the past four decades as creating the conditions in which economic equality is finally in sight. Women are a force in the labour market like never before, giving them a new financial independence that’s serving them well during their earning years and into retirement. A recent RBC/IPSOS survey said 70 percent of women over the age of 45 are looking forward to a comfortable retirement.

In our previous IWD reports, we focused on the gaps that women face, in terms of pay or because they take a hit to earnings when they have a baby. While these gaps persist, this year we’ve chosen to highlight the financial gains Canadian women have made.

They include:

  • Women earn 42 percent of total Canadian household income, up from 25 percent in 1976
  • Those income gains mean Canadian women collectively control C$240 billion more each year than if their income share hadn’t increased
  • Growth in women’s retirement savings prevented more than 1 million senior women from falling into poverty
  • Working-age women boast a collective net worth of $3.4 trillion, 46 percent of the Canadian total

Women’s economic clout helps drive the consumer economy; they make the majority of household purchases, including food, necessities and healthcare. More surprisingly, single working women now boast larger private pension assets than their male counterparts, reflecting their strong presence in sectors where defined-benefit pensions are more prevalent. Women are also a growing force in the housing market and in charitable giving.

Closing in on half of the income pie

Two important factors behind women’s increased share of total income are an increase in their labour-force participation rate, and the move from jobs to careers.

Since 1976, the participation rate of prime-age women (age 25-54) has increased from 51 percent to 83 percent. For older women (age 55+), the increase has been even more dramatic, nearly doubling from 17 percent to 32 percent. While women continue to face higher career costs for having children, their stronger and longer attachment to the workforce (relative to the 1970s) has helped even out their share of the income pie over time. This has happened in spite of the persistence of a wage gap that sees them earn just 88 cents for each dollar a man earns.

In 1976, women’s earnings accounted for 25 percent of the total income earned in the economy. Today, it’s 42 percent, underscoring the massive rebalancing of earnings of men and women. The extra share of total income amounts to $240 billion more for Canadian women, each year.

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From jobs to careers

Women aren’t only holding down more jobs; they’re occupying different jobs, largely because of education. In 1991, 15 percent of women had a university certificate, diploma or degree. It’s now 35 percent. Over the same period, men only increased their educational attainment from 19 percent to 30 percent. Relative to 30 years ago, women are also much more likely to be managers or in professional occupations that usually require a university degree such as physicians, secondary school teachers, or lawyers. The shift to careers—higher-earning positions with longer tenures—has paid significant financial dividends.

Accumulating wealth

Women between the ages of 18 and 64 now control a net-worth of about $3.4 trillion today. That’s 46 percent of the Canadian total for the working age population, according to data from Statistics Canada. Single women without children outpace single men without children, with a net worth of $250,000 vs $230,000 for men. Another notable development has been the rise in net worth of single mothers from an average $89,000 in 1999 to $240,000 (in 2016 constant dollars) in 2016.

Part of these gains reflect women accumulating their own workplace pensions—savings pools that were less available to them when they were either in short-term low-paying jobs, or not working outside of the home. Increased access and improved maternity leave benefits, which in 2000 effectively increased total leave benefits from six months to one year, have helped link Canadian women more permanently to long-term employment relationships.

Now, with women employed in record numbers in the social services, healthcare, and education—professions that tend to also come with retirement plans—they’re building their own nest eggs. Two-thirds of women said they, and not their spouse or partner, were primarily responsible for their own retirement savings, according to the RBC Insurance/IPSOS poll. Nearly 60 percent said they had a defined benefit pension or matching program at work.

Deploying wealth

Home-ownership rates among women and men in Ontario, British Columbia and Nova Scotia are virtually equal. Single women with no children have a higher rate of home ownership than single males (40.2 percent versus 38.4 percent). However, a large gap still exists between the home ownership rates of single mothers relative to that of single fathers (38.2 percent versus 62.0 percent).

Women are also increasingly responsible for paying rent, mortgages, taxes, and electricity bills within the household. In 1981, the share of women aged 25-64 identifying as the primary household maintainer was 9.3 percent. Today, nearly 25 percent of women identify that way.

As women’s share of household income catches up to men’s, so too is women’s share of total household spending. Married women on average were responsible for 47 percent of household spending over the last two years, according to RBC internal data. Women spend more on average than males on groceries, health expenditures and at specialty retail and department stores.

Finally, women are sharing their newfound wealth. The percentage of charitable donors that are women has grown from 42 percent to 48 percent over the past 20 years.

Golden years are more golden

A lifetime in the labour force has allowed women to tap into programs that are strongly tied to past employment. In 1976, women’s income from CPP/QPP came to half of what men earned from those retirement plans. Today, their share of CPP/QPP earnings is almost the equal to men’s. When we include all retirement income (both private and public), women went from earning 40 percent of what men did to 80 percent today.

As a result, the fraction of women seniors who live alone and are considered low income has fallen dramatically. In 1985, 42 percent of elderly women living alone were considered low income, compared with 29 percent of elderly men living alone. Today, this gap has essentially closed, meaning there are 1.1 million fewer elderly women living in poverty.

Their improved financial security couldn’t have come at a better time. The proportion of women aged 65 and over has increased rapidly since the 1970s, doubling from under five percent of the population in 1971 to nearly ten percent today.

By 2030, one in eight people in Canada will be a woman over the age of 65. Thanks to their workplace gains, women are now more than ever in a position to enjoy the fruits of their labour.

This report was originally published by RBC Thought Leadership

RBC Economics provides RBC and its clients with timely economic forecasts and analysis.

This report was authored by Vice President & Deputy Chief Economist, Dawn Desjardins, Senior Economist, Andrew Agopsowicz, and Economist, Carrie Freestone.

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