The Fed wants to limit wage growth. That’s particularly bad for women
By Nicole Goodkind, CNN
The US labor market is remarkably strong — unemployment is sitting at five-decade lows even as the Federal Reserve does all it can to cool the economy in its fight against inflation. Wage growth is also increasing as demand for labor outpaces supply.
But not all workers have benefited equally from wage gains.
A new Wells Fargo report shows that the number of single women in the labor force has grown three times faster than the broader labor pool over the last decade. At the same time, their salaries have failed to keep up with those of their male counterparts.
Those gaps have a profound effect not only on the well being of workers but also on the overall economy and stock market.
What’s happening: Never-married women earned just 92% of what never-married men did last year, according to the Wells Fargo report. Women also reported having 29% less wealth, overall.
It’s not just single women. The overall wage gap between men and women has stagnated over the last 20 years.
In 2022, US women on average earned about 82 cents for every dollar a man earned, according to a new Pew Research Center analysis of median hourly earnings of both full- and part-time workers.
That represents an improvement of just 3 cents since 2002.
Those wage gaps are “persistently disappointing,” ADP’s Chief Economist Nela Richardson told CNN on Thursday. She said the gaps are seen across all age groups, job levels and industries.
They’re also bad for the economy as a whole. On average, women employed in the United States lose a combined $1.6 trillion every year due to the wage gap, according to the National Partnership for Women and Families. That loss of wages means women have less money to support themselves and retire on, as well as to spend in their communities.
Markets suffer: Companies with smaller gender pay gaps tend to be rewarded by their shareholders.
That may be because of the popularity of ESG investing — when traders evaluate companies using environmental, social and governance factors. “The gender pay gap is informing investment strategies,” wrote Refinitiv analysts in a recent report. “Our recent analysis shows that [shares of] companies with no gender pay gap outperform companies with pay gaps between male and female employees,” wrote Refinitiv.
Companies with more women in high-paying, executive positions also tend to be more profitable.
The SHE fund, which was designed to measure the performance of US large cap stocks that are gender diverse, has returned 3.1% so far this year — a full percentage point higher than the S&P 500.
A McKinsey study of 366 companies across the United States and United Kingdom found that companies in the top 25% for gender diversity among their executives were also 25% more likely than their counterparts to achieve above-average profitability.
Jobs, bank stocks and Biden: What Wall Street is watching
Investors have been eagerly anticipating the release of February employment numbers by the Bureau of Labor Statistics for weeks. That’s because January’s report left them stunned when the US economy blew past all expectations and added 517,000 jobs in the first month of the year, bringing unemployment to a 54-year low.
This time around, analysts are expecting a tamer but still strong 205,000 jobs were added last month, according to Refinitiv data.
The persistently tight labor market has spurred concern among Fed officials that there’s an imbalance in wage negotiating that could put upward pressure on inflation. Federal Reserve officials, and Wall Street, will keep a close watch on Friday’s report as policymakers try to cool the economy to rein in high prices.
▸ Bank stocks plunged on Thursday after SVB Financial Group, a bank that lends primarily to tech companies, told investors it had to sell $1.75 billion in shares at a loss to cover rapidly declining customer deposits.
That triggered concern that the Federal Reserve’s interest rate hikes are preventing banks from raising capital. Large US banks inked their worst day in nearly three years as fear overtook Wall Street.
Silicon Valley-based SVB notched the largest decline in the sector, down by more than 60%, as CEO Greg Becker said the bank could be dealing with problems for some time to come.
Shares of JPMorgan Chase dropped by 5.4%, Bank of America fell 6.2%, Wells Fargo was down 6.2% and Citigroup was 4.1% lower.
▸ President Joe Biden released his budget on Thursday which included new proposed taxes on the wealthy and corporations.
The Biden administration proposed a 25% minimum tax on the richest Americans, new taxes on oil and gas companies and a hike in the US corporate tax rate to 28% from 21%.
Biden would cut the deficit “by asking the wealthy and big corporations to begin to pay their fair share and by cutting wasteful spending on Big Pharma, Big Oil and other special interests,” said White House Office of Management and Budget director Shalanda Young.
Biden’s budget proposal is just that — a proposal. But it does give Wall Street a peek into the president’s priorities for the next year.
American whiskey travels the globe
American spirits exports exploded to a new record in 2022: About $2 billion worth of US-made alcohol was shipped abroad last year, up about 30% from 2021.
So have our friends abroad gained a new appreciation for Kentucky bourbon? Maybe, but the boom is more likely due to the temporary halt of European and UK tariffs on American alcohol, according to a new report by the Distilled Spirits Council of the United States.
That makes it cheaper for Brits and other Europeans to purchase hard drinks that come from the states.
When it comes to hard alcohol, Europe is America’s largest export market. About 34% of US spirits were exported to the European Union last year, totaling $703 million in value. That’s a 25% increase compared to 2021.
Dig deeper: Brown-Forman, the company behind Jack Daniel’s, Woodford Reserve and Old Forester Bourbons, among other spirits, missed Wall Street earnings expectations when it reported its corporate results on Wednesday.
The company’s stock is down more than 5% so far this year.
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