April 2 is Equal Pay Day, which reminds employees everywhere how much progress remains to close the gender pay gap. The day marks how much longer into the new year the average woman must work to make the same as her male peer, relying on the frequently cited statistic that women in the United States earn only roughly 79 to 80 cents for every dollar men earn. Recent studies suggest the pay gap might be even larger, with women earning as little as 49 cents on the dollar.
But it’s not just the pay gap that should concern women. It is also the wealth gap. On average, women in the United States own a mere 32 cents to every dollar owned by men. Wealth of course is accumulated in many ways, so while the pay gap matters here, closing the wealth gap requires more than women negotiating higher salaries and receiving larger paychecks.
Some see the solution in investment. Sallie Krawcheck, former CEO of Merrill Lynch’s global wealth management division, received significant media coverage for co-founding an investment platform called Ellevest, uniquely geared toward women. Krawcheck sees the problem of the wealth gap as one of investing behaviors: Women tend not only to earn less than men but also invest less.
But Krawcheck’s efforts are far from the first attempt to stimulate women’s investment. Over 60 years ago, a nonprofit tried to address the wealth gap by increasing financial literacy among women while shaming corporations into appointing women directors. And while the organization died with its founder, these early efforts unleashed a wave of financial feminism that changed corporate America, even as it has failed to meet the hopes of those who founded it.
Shareholder activist Wilma Soss, a household name in the 1950s, shared many of Krawcheck’s concerns about women’s financial status, and knew investing was an important tool of empowerment. In 1949, she created the nonprofit Federation of Women Shareholders in American Business (FOWSAB). Among other activities, FOWSAB offered women a series of educational events where investment gurus, including Soss herself, provided advice to active and prospective investors. Foreseeing a rapid expansion of women in the paid workforce in mid 20th-century America, Soss urged women to contemplate channeling some of their newfound savings into investing. At the time, the stock market was just beginning to rebound after the devastation wrought by the Depression and its long bear market.
Like Krawcheck, Soss understood the investment implications of women’s tendency to outlive men. Women have to fund a longer retirement, and even if they inherit stock and other types of financial securities from their parents, siblings and spouses, they need to be prepared to handle those investments.
And women actually had an unseen advantage. In 1945, Soss penned a Forbes article showing that, in post-World War II America, female shareholders were more numerous than male shareholders, and that women outnumbered men on the stockholder lists of some iconic corporations.
Yet, there was a catch: The vast majority of these corporations had zero women on their boards of directors. Soss wanted more women in high places in the American business world and believed women should use their shareholder voices to demand change. So she would charge into annual stockholder meetings armed not simply with a generic demand that “a woman” be put on the board but also with a shortlist of women she felt were highly qualified. She then advocated specifically for those women, sometimes for years.
By the time Soss retired from corporate activism in the early 1980s, many major U.S. corporations, though not a majority of them, finally had at least one woman on their boards of directors, some of whom owed their election directly to Soss, as embattled CEOs like Robert Young of the New York Central Railroad publicly attested. Many others were added to preempt efforts by Soss, who as one of the most successful women in the PR field in the 1930s had developed a real knack for generating publicity that could damage a company. She also hosted a weekly radio show on NBC from 1958 to 1980 that she regularly used to berate backward boards.
This is not to say Soss achieved everything she'd hoped. She grew frustrated that FOWSAB did not expand the ranks of women investors directly owning their own stocks. In fact, toward the end of her career, hordes of investors, male and female, were giving up the direct ownership of individual stocks for mutual funds.
And progress toward gender parity — Soss’s goal — has been slower than many had anticipated. The stalled progress toward gender parity in corporate leadership has led many to criticize what Soss saw as progress as mere tokenism. For Krawcheck today, that tokenism has led to less solidarity among women leaders, as they vie for the limited opportunities at the top of the corporate ladder.
But there exists another path: By concentrating female corporate voting power to a degree that Soss never imagined, corporations could be pressured into putting more women in positions of leadership. While Soss encouraged investors to assign proxy (corporate voting) rights to her, she did not run an investment fund and hence never amassed enough votes to elect the board members she wanted. A large investment fund, or a coalition of like-minded funds, by contrast, could credibly threaten to install new female board members.
Krawcheck’s efforts at Ellevest may achieve some of the goals Soss never quite reached. Her for-profit model may prove more effective than Soss’s nonprofit operation by leveraging powerful incentives that Soss could not tap. Regardless of the outcome of this particular initiative, both corporate America and political activists must continue working toward potential solutions to finish the work Soss dedicated her life toward but could never fully attain.