Is the gender pay gap closing?

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Joyce Chang: Hello, I'm Joyce Chang, Chair of Global Research, and you're listening to J.P. Morgan's Making Sense. Today, we're discussing our eighth annual report on the progress towards achieving gender balance. We've published this report since 2018, featuring analysts from around the globe, where we assess the overall state of global gender parity. This year, we've taken a closer look at what's driving the female labor force participation rate, which is hitting record highs for advanced economies at an all-time record high of 77.8% in the United States. But there's huge variance, and the gap remains wide, particularly for emerging markets, a 26 percentage point gap for women compared to men in the labor force, with women just at 46%. So we look at what's driving the female labor force participation rate, but we also take a look at the policies that support women staying in the labor force over the longer term, and we take a look at women on boards and women in leadership roles, and the state of the gender pay gap. We've expanded our analysis this year to also take a look at the investment strategies that are taken by men versus women. So today, I'm very pleased to kick off our series featuring J.P. Morgan leaders who are going to dive into the current state of gender balance. And I'm excited to kick off this conversation with Sam Saperstein, head of Women on the Move across the entire JPMorganChase platform, to discuss the progress on women on boards, in the C-suite, as well as the gender pay gap. I am also so pleased to have Chi Mac, Senior Researcher at the JPMorganChase Institute with us today for this podcast. The JPMorganChase Institute is a global think tank dedicated to delivering data rich analysis and expert insights for the public good. Chi will discuss her research on the Child Tax Credit, and I've also asked her to discuss the Institute's work on how investment strategies of men and women differ and the implications for long-term wealth accumulation. Sam and Chi, it's just wonderful to have you with us today.

Sam Saperstein: Hi, Joyce. Thanks so much for having me today.

Chi Mac: Hi, Joyce. Thank you so much for including me today.

Joyce Chang: So, let me turn to Sam. How has the representation of women on U.S. boards changed over the last few years? What trends are we currently seeing?

Sam Saperstein: Well, Joyce, thank you so much for having me. It is a pleasure always to work with you on this every year, and we really appreciate the time together. So, when I look at boards and I look at them over the world and in different regions, I would say we have to look at the long-term and then more the short-term. So over the long-term, we've definitely made so much progress. You know, if you take a look at, in the United States from 1995 to now, we've made a ton of progress going from 10% of women represented on boards to over 30 percent, depending on how you're looking at the markets and public companies. But there was a period of time in there where things plateaued, so between 2005 and about 2015, that number plateaued for the U.S. in terms of women on boards. And then it started to rise again after 2016. And you look at the reasons why, and one fundamental reason was we saw a lot more advocacy come into the market, more organizations really training women to get on boards, talking about the importance of this, talking about how diverse boards really bring better results for those companies. And so between that advocacy and, frankly, the fact that more positions were just opening up on the boards themselves that women were taking, we saw that start to rise. We are seeing that plateau though now in the U.S., but the bright spot here I think is Europe, because Europe still has a number of different mandates for getting certain targets for women on boards, and I really look to that region to continue to put that pressure on so we can see that rise. And so some European countries are already in the 40 percentage points in terms of percentage of women on their boards, and so I really hope that bright spot continues, and we can learn from that around the world.

Joyce Chang: Well, it's great to see the initiatives that have really been effective in increasing the representation of women on boards, but what's the status been in the C-suite? How are we doing with respect to improvements for women in C-suite roles, women in key positions in CEO, COO and the CFO, what are you seeing as some of the challenges that women are facing in these roles, and what can we do to overcome them? And how is J.P. Morgan trying to address this issue to ensure that more women get to top executive positions?

Sam Saperstein: So, this is also a mixed picture, I would say. The CEO roles still are very few in terms of what's going to women, about 10% of CEO roles in Fortune 1000 companies. And for women of color, that's far less. So we know that there's a problem there that we still have to address. There are other C-suite roles, however, that are doing much better, CFO roles, CMO roles, so the chief marketing officer, over half being women. And of course, traditional roles like the chief human resources officer, which are predominantly women, about 73%. So the C-suite as a whole is getting more diverse, but these are functional areas largely where women are making those in roads, not those P&L driven roles which of course are so important to ultimately lead these different companies. And so we do see that the problem I think with women getting into companies in general and rising are what I would say twofold, you gotta get them in, and you have to keep them. And I think we can debunk some myths about the supply of women and their ambition. The supply is there, we know the supply is there. So women are graduating from universities around the world at 50% or higher, depending on the region. So it's not that women aren't coming in or getting trained at those levels. But to make that jump between getting those degrees and going into the workforce, they aren't coming in at over 50% of entry level positions, so already we start to see that drop. And so when you lose women off the bat in terms of coming in, you're already set back. Then we see two problems, I think, for women as they rise through their careers. One is at the moment where they attain that first manager role, and we've seen in data from McKinsey, for example, that this, quote "broken rung" exists where women do not get that first manager role on par with what men get. And the second is really around parental leave and when women choose to have families. That is another falling off point for women, and that especially is around the world. I think you referred to this in your stats. When women have child care issues and expectations that they will be the primary caregiver, it is very hard to retain them at the same rate of progression that they had before they had children. And so we look at these two areas and we say, well, what can we do about that? And what J.P. Morgan has done over the past few years is really look at how do we get women once they're in the door, particularly at that mid-career point, like a vice president level, and how do we make sure they stay? And so we spend a lot of time talking to them about what to look out for, talking to them about how to build their skillsets, whether that's a mindset, a growth mindset, their skills themselves, negotiation skills on how to navigate their change in trajectory. And we also spend a lotta time with men. Men are part of all of our programs, they not only take the programs but they counsel women, for sure. And so we see both men and women coming to the table to really address this together, and we have seen more women stay at that vice president level and increase to more senior levels. So when we get that pipeline fatter and we stay with it longer, it actually is doing more to get them to the top.

Joyce Chang: Thanks so much, Sam. Those were great insights on it's not a supply problem, but we still have a gender pyramid that we need to address. I wanna turn to gender pay and what the gap is, because that's really seen by many as the most significant issue in achieving true gender parity. So we s- had seen years of improvement for quite a while, but is this something also where we're plateauing? Can you go through some of the trends that you're seeing with respect to the gender pay gap?

Sam Saperstein: Yes. So the trends are plateauing. I think just like we saw in representation in boards, you have these periods of acceleration and then we sort of flat line. When it comes to the pay equity, there's really two ways to look at it. One is in jobs that are like jobs, are men and women getting paid similar amounts? And by and large, in many companies, and certainly for J.P. Morgan, they are. So women and men are being paid the same amount for similar jobs. I think the problem and the persistency of the problem comes when you look at average or median pay gaps across all occupations, and that's where you see that gap really widening and staying wide. Why is that? Because women tend to be more predominant in lower paying jobs and sectors and occupations, and men in higher paid. So think about healthcare or retail or places where, restaurants and those kind of services business, you will see a lot more women there in those lower paying sectors. Men are in more STEM and higher paying sectors like technology and the STEM and STEAM related sectors. Until we close that gap, I don't think we're gonna see much of that come down a little bit. And so it goes back to the pipeline issue. We know women are in those STEM majors in a growing capacity, but again, they are not leaving the STEM majors and coming into the STEM workforce in the numbers we would like. We have to get them there. And I think that goes back to really showcasing women they can be in those jobs, they are trained for those jobs, and we have supportive companies and industries that want them there.

Joyce Chang: Those are great points, women in higher paying jobs and in the STEM sector. But I wanna take this outside of large corporations and really talk about entrepreneurs and bring Chi into the discussion. So Chi, when we think about the gender pay gap, we usually think about labor force participation as having a job in a small business or a company with a wage or a salary, but what about entrepreneurs? What about working for yourself? Is this a way to get around the gender pay gap?

Chi Mac: Yes, self-employment is definitely an alternative way of participating in the labor force. This can range from sole proprietors to entrepreneurs who hire employees. However, we see the gender revenue gap in nearly every industry, where female owned firms generate lower revenues than similar male owned firms. Now, one hypothesis for this gender revenue gap is that women are more likely to become entrepreneurs out of necessity, such as after being unemployed, so they are not as likely to be pursuing business growth opportunities. However, our research shows that this is not the case. The gender revenue gap persists among both necessity and opportunity entrepreneurs. And as Sam was saying, women entrepreneurs are just as ambitious. They want to succeed and grow.

Joyce Chang: Yeah. So, I mean, the gender gap, I mean, whether you're an individual or whether you're the big company or starting your own business, it just seems like it's something that we've not overcome. So Chi, I wanna go back to a point that Sam discussed earlier that the burden of child care as far as staying in the labor force, and parental leave is one point, but we've taken a look in our report at some of the policies that are most effective, and what we've actually found is that the child care subsidies and tax credits are more meaningful than the extended parental leave in keeping women and sustaining women in the labor force over the longer term. We've seen that the heavier burden falls on women for child care tax credits, and we could see this immediate impact when the advanced child care tax credits were rolled back, that actually had a direct effect on the female labor force participation rate in the United States. But can you tell us a little bit more about the research that you've done on how did the Child Tax Credit payments impact the financial behaviors for households that were led by women compared to those that were led by men, particularly when you think about spending and saving and the lessons that we can learn as we think about public policy initiatives?

Chi Mac: Yeah, so the institute research on advanced CTC, or Child Tax Credit payments, was really important because what those advanced payments did was spread out those child tax care payments. Initially, those payments were done at tax time maybe when you would file for your refund and all that credit was given at one time. With the advanced Child Tax Credits, these were, payments were given monthly. And what we saw was that the spending response to those advanced CTC payments, uh, was especially stronger in low liquidity households, so those that didn't have as much cash on hand compared to the higher liquidity households. And what we know from other research is that women, and particularly women in single adult households, have less cash liquidity. The recipients with the lowest CTC, with the lowest liquidity spent 73% of their July Child Tax Credit payments in the first week compared to 19% of the highest liquidity recipients. And most of that spending goes towards non-durable goods, which accounts for more than three quarters of the total spending. What this tells us is that the timing of payments can be very important. So getting the payments monthly instead of in a lump sum at tax time can make a difference for the liquidity constrained. And those are the payments that you need to make very month, which includes things like childcare.

Joyce Chang: Those are some great points to make, that the way that we design these payments can make a huge difference, particularly for those that have lower incomes. So I wanna just stay on this topic and ask what role policies like the advance Child Tax Credit payments play in supporting women's economic participation, and how do you think this could influence gender parity in the workforce?

Chi Mac: Yeah. So like you're saying, the design of these payments, having the payments come when they're needed, especially for those low liquidity households that need cash and cash to pay those monthly expenses like childcare, can really support economic participation. So for women who are in households with children that do need childcare in order to participate in the labor force, these are payments that because of the way they're structured can really contribute to being able to participate in the labor force.

Joyce Chang: Thank you so much for those insights on the childcare tax credit, because this is an issue we've delved more into in looking at the range of public policies that are available and what's most effective. Now, I really wanna turn and talk now about financial investment behavior, because 2024 was a year that was all about the stock market and the stock market returns. So Chi, I wanna talk about whether men and women have different investment strategies and tolerance for risk. So the institute research indicates from the work that you've done that women's investment portfolios tend to hold less market risk compared to men's. What factors do you think contribute to this difference in risk tolerance between genders?

Chi Mac: Yes, our research does suggest that women may be more risk-adverse investors than men, and we're not the only researchers that find this, it's consistent with other research out there. Some of the economic factors contributing to this could be women's greater vulnerability to poverty, lower lifetime earnings, career breaks due to caregiving, less wealth, and also longer life spans, which necessitate higher savings.

Joyce Chang: Well, the one thing I also wanna ask you about are just how are you looking at the implications of this for long-term wealth accumulation? Sometimes in research, investors will ask me, "Do you buy the dip?" I mean, are you seeing any differences in how men and women react to these kinds of strategies?

Chi Mac: We do see that women's portfolios have lower beta, they're more aligned to a market benchmark, and they're lower in idiosyncratic risk. That suggests more investment in index funds, less volatile investments. In contrast, we see that men's portfolios tend to be higher in market risk and less aligned to the market benchmark, and with higher idiosyncratic risk. And that suggests more concentration in single stock equities and less diversification. Now, during episodes of elevated volatility, women are less likely to add money to their investment accounts, and we see more of this dip buying among men. There's no single strategy that's best for all situations, but often diversification is important for that long-term wealth accumulation.

Joyce Chang: And I'd like to wrap up this podcast with a final question that really looks at how policy makers in financial institutions can support equitable access to capital markets for women. Chi, what initiatives could help bridge the gender gap in investment participation?

Chi Mac: Yes, so we do see that women tend to have lower liquidity, lower wealth, so lower barriers for investing such as self-directed brokerage accounts or lower minimum investments, that could increase participation. We also think that financial literacy is really crucial so that investors understand the risks that they're taking with both the potential upsides and downsides to their choices.

Joyce Chang: Thank you so much for that, Chi. And thank you, Sam. A lot to think about and process here. So we're seeing trends that had improvements but are reaching a plateau. We don't have a supply problem, but we still have an ascendancy problem in leadership. In looking at the mix of policies that have been most effective, child care actually does stand out as helping women to stay in the workforce longer. And there's still more that can be done to increase access to capital, and we're seeing that the gender pay gap remains with us irrespective of whether you're an entrepreneur at a small business or at a large corporation. So a lot to digest on the state of women in 2025. So Sam, Chi, thank you so much for joining us today to discuss this very important topic during Women's History Month.

Sam Saperstein: Thank you so much for including me in this conversation.

Chi Mac: Thank you so much for including me today.

Joyce Chang: Stay tuned for more episodes of J.P. Morgan's Making Sense podcast series, as we explore the key macro and market trends that are impacting financial markets today. Thank you to all of our listeners for joining today.

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