The Pink Tax on Education, Finances and the Road to Equality

The female leadership of the NYC Department of Consumer Affairs stands with the Fearless Girl statue in the face of the Charging Bull.

By Lorelei Salas

Forty-five years ago, Congress declared today Women’s Equality Day. Since then, women have made tremendous strides towards equality and opportunities to further our education and participate in the workforce have grown substantially. According to the U.S. Department of Labor, women now make up nearly half of the U.S. workforce and the number of us with college degrees has almost quadrupled since 1970. This has only reinforced the adage that so many of us grew up with — that higher education will lead to a better job — and a better, more financially stable life.

I am truly grateful for these milestones and thank the many women who have fought for change — I know they paved the way for my success. But as a woman — and as woman of color — I know there’s still a long way to go on the road to equality…and, more specifically, financial equality.

Many of us have heard the troubling statistic that women make about 80 cents for every dollar that men earn. In order to make the same amount that a man makes in one year, a woman needs to work several months longer. And the gender pay gap is even more troubling for women of color. For example, on average, it takes Black women 20 months to earn what men do in one year. It’s even worse for Latinas, who must work 23 months to earn what men earn in one year.

Recent research has also found that, despite higher rates of participation in the workforce, the wage gap for Black women in New York City is even higher than the New York State and U.S. averages — with Black women in the city making only 57 cents for every dollar that a white man earns.

In an effort to overcome these statistics and increase our earning potential, many of us are turning to education. In fact, women now account for just over half of students enrolled in college. But the unfortunate outcome has been that we now owe nearly two- thirds of the outstanding student debt — almost $900 billion! I know I personally contributed to about $130,000 of that total.

This debt, which can have devastating impacts if you default, is compounded by our lower earning potential, which means we spend even longer paying down the debt while it continues to accrue more interest. Ironically, that student loan that we took out to pay for school, so we can make a better life for ourselves and our families, is keeping us back and making our road to financial security that much bumpier.

If women are ever to achieve equality, we must address the student loan crisis and financial inequality in general. But how?

There are plenty of changes our local — and ideally federal — government can make to level the playing field when it comes to student loans — a number of which we will be outlining in an upcoming policy report. To ensure women — and all New Yorkers — have accurate information and are equipped with the tools they need to take control of their financial lives, we are also raising awareness about the student loan debt crisis, developing resources for those with student loans, expanding access to free financial counseling (which is also available in other cities across the country), and exploring other ways to help those struggling with student loan debt.

There are also many things that we as individuals can do. The biggest thing we need to do is to break the stigma associated with money — particularly for women but for society as a whole too. Money is emotional and scary — a recent report found that 61 percent of women would rather talk about their own death than money.

Whether due to traditional gender roles about money or our own fear, women consistently score lower on financial literacy measures. We must be more open to learning and talking about money, especially with our families. Financial education — which is available for free at our Financial Empowerment Centers — is key to building our confidence about money so we can learn about budgeting, pay down debts, and start to save. Years ago when I was living paycheck to paycheck as a single mom — and long before I even thought about working at the NYC Department of Consumer Affairs — I visited one of the NYC Financial Empowerment Centers and my counselor instilled a sense of confidence in me about money that I never thought possible, all while helping me create a realistic budget.

With knowledge, women can also serve as role models to younger generations so we can break this cycle. Anyone with children in their lives, especially girls, can teach them about money and credit, budgeting and good spending habits, the difference between needs and wants, and how to save. Everyday errands like stopping at the ATM or shopping at the supermarket can be opportunities to teach the children in your lives about money. It’s also very important to have open and honest conversations when it comes to financing your kids’ educations.

And I’d be remiss if I didn’t mention two other major players who can help to level the playing field and help us dig out of and prevent future student loan debt — educational providers and employers.

Financial aid is notoriously confusing and much can be done to simplify the process and help ensure students are making smart financial choices. More schools can also explore options to provide need-blind tuition and eliminate loans from financial aid packages.

A growing but small number employers are also now starting to provide financial education opportunities, assistance with education costs, and assistance with repayment of loans. With more than half of employees stressed about their finances and 28 percent saying that their financial problems distract them at work, this is proving to be a valuable benefit. With only about four percent of employers offering these types of programs, I urge more employers to follow suit.

Together, we can overcome this roadblock and continue on the road to equality.

Lorelei Salas is the Commissioner of the NYC Department of Consumer Affairs, which houses the City’s Office of Financial Empowerment. Learn more at nyc.gov/dca.