Just over half of American women twenty-five and older report that they do not consider themselves financially secure and are concerned and worried about their retirement. Financial struggles due to the gender pay gap, motherhood penalty, and systemic bias over time can lead to additional stress and potentially impact mental health. In fact, women, Gen Xers and lower earners are more likely to say that lack of money has a negative impact on their mental health. The result is a low level of self-esteem that affects productivity, career decisions, life satisfaction, and income.
A new study by Paradigm for Parity takes a close look at how these financial burdens specifically impact Black women in the workplace. Paradigm for Parity® coalition supports companies around the world in achieving their commitment to gender parity including racial equity in corporate leadership. The report, funded by the Black Women Impact grant through the Goldman Sachs One Million Black Women Initiative, is a first-of-its-kind report on the impact of personal financial stress on Black women (ages 18-65) in the workplace. It reflects the broader systemic issue of the financial burdens facing Black women today, not just in their day-to-day lives and mental health, but in their long-term career trajectories and financial well-being.
Findings show that lower wages add to the financial stress which hinder Black women’s ability to focus at work, affect their overall performance and limit opportunities for professional development and career advancement, thus keeping them in lower paying jobs which further perpetuates the cycle of financial stress.
According to Sandra Quince, current co-chair and board member and the former CEO of Paradigm for Parity, “for the U.S. economy as a whole, the larger wage gap facing Black women compared to their White female counterparts represents a substantial loss of earning potential for a significant portion of the workforce, reduction overall economic growth and contributing to wealth inequality.” She continues, “From a society perspective, it reflects deep-seated biases that continue to undermine the widespread efforts in addressing barriers to gender and racial parity.”
Sandra Quince
How financial stress hinders career advancement
The women who participated in this survey self-identified as being highly motivated and hardworking, with aspirations for advancement. However, many shared “that their financial stress is an impediment to promotions and advancement opportunities.”
According to the report, the respondents are frustrated by a lack of mobility and feel stuck in their roles, undervalued, underdeveloped and unequally compensated. An overwhelming number of women cited financial stress as a significant motivator in seeking new employment.
Racial bias in promotions limits Black women’s career growth and access to high paying jobs. Quince adds, “This compounds the financial burdens facing Black women, including student loan debt, caregiving, and responsibilities not just managing their finances, but those of their families. It impacts their ability to focus and perform to their full potential at work, reducing their chances of being considered for promotions. The financial stress impacts their self-esteem and riddles their thoughts with self-doubt.
There is a correlation between self-esteem with career success. “Individuals with high self-esteem engage in actions oriented at proficiency, thus resulting in higher job productivity, higher career decision-making self-efficacy, life satisfaction, and better psychological outcomes.” Low self-esteem and self-doubt prevent individuals from seeking career advancement, positioning themselves for promotion, making sound career decisions.
Respondents also reported experiencing physical and mental health challenges stemming from financial stress, including migraines, anxiety, depression, elevated blood pressure, and even hospitalization. Some respondents cited having to take medical leave due to being overwhelmed by financial stressors.
What can companies do?
To retain this large talent pool, companies must personalize the support offered to their Black female employees based on their unique challenges.
Quince offers recommendations, guided by policies in place at Paradigm for Parity’s coalition members:
· Address the wage gap by developing transparent and equitable payment policies, so the issue can be acknowledged at its core.
· Establish an inclusive culture where employees feel comfortable having critical conversations that evoke trust and allow for transparency. Eighty-three percent of the respondents said that their employer was not aware of their financial burdens. It’s important for employers to proactively check in with employees to ensure full awareness of personal struggles.
· Develop programs, including resources on student loan repayment and financial planning, that support the financial well-being of employees. More than half of respondents (51%) said they wanted support on building wealth to prepare for retirement and leave a solid financial legacy for their children. This action not only addresses the financial challenges facing employees but increases economic inclusivity for generations to come.
· Provide ongoing training for all employees to increase understanding of Black women’s unique financial burdens.
Another recommendation in the report is that employers implement several strategies and access to EAPs (Employee Assistance Programs) that offer counseling and support for personal and work-related issues, including financial stress to help alleviate the financial stress of Black women in the workplace.
Quince shares that “Despite widespread efforts from a variety of organizations to achieve gender and racial parity in the workplace, there is a persistent and critical need to shed light on how these unique challenges impact Black women.” Quince continues, “By recognizing these issues and looking critically at steps to address them, employers can help combat systemic barriers prohibiting Black women from achieving financial security and professional development.”
Bonnie Marcus, M.ED, is the author of Not Done Yet! How Women Over 50 Regain Their Confidence and Claim Workplace Power and The Politics of Promotion: How High Achieving Women Get Ahead and Stay Ahead. An executive coach and speaker, Bonnie is also host of the podcast, Badass Women At Any Age.