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HerMoney Podcast Episode 188: How To Close The Gender Pay Gap Once And For All 

Kathryn Tuggle  |  November 20, 2019

Tune in for a how-to on closing the gender pay gap for good — for women (and the men who love them!)

What are you doing in the year 2119? That’s the year the American Association of University Women predicts that the gender pay gap will finally close, unless we take steps to bridge the gap sooner.

On average, white women earn 79 cents on the dollar compared to white men, black women make 63 cents, and Latina women make just 54 cents. Latina Equal Pay Day was recently observed on Nov. 20 to bring awareness to how this gap adds up: Latina women may lose up to $1 million over the course of their working lives, or around $26,000 annually due to the gap.

This week’s guest, Katica Roy, is here to tell us all how we can work together to speed change and get the gap closed sooner than projected. Katica is a gender economist and CEO of software company Pipeline that helps employers manage everything from the hiring process to employee reviews. As a gender economist, Katica looks at the economy through the lens of gender to see where it’s working and where it isn’t, and today she shares how we can level the playing field for ourselves and our fellow women.

Listen in as Katica shares some fascinating (and infuriating) facts about how often women are underpaid, and what corporations can do to help speed change. Katica details research from her company that spanned 4,000 companies and 29 countries, showing that for every 10% increase in gender equity, there is a 1% to 2% increase in revenue to a company’s bottom line. She also talks about the sea change she’s leading to shift the conversation and get more people thinking about gender equity as an economic opportunity rather than a social issue.

Katica shares her tips for getting paid more (along with a personal story!) as well as tips on how to negotiate, and details on how the gender wage gap impacts women of color and non-binary womxn. She and Jean also discuss how women are being adversely impacted by the pink tax. “When we talk about the gender pay gap, we talk about money coming into women’s wallets, but the pink tax means more money is coming out of our wallets when we pay for everyday items,” she says, explaining how women pay an average of 7% more than men for things like razors and shampoo.

Lastly, in Mailbag, Jean tackles questions about dating and debt, what to do with old retirement accounts, and how to manage asset allocation if you’re part of the FIRE movement. In Thrive, Jean dives into the expense of campus visits and what to do with your teen to ensure you aren’t spending too much on college before you’ve even paid your first tuition bill.

This podcast is proudly supported by Fidelity Investments. You work too hard for what you earn to let it sit on the sidelines. Let Fidelity show you how to demand more from your money. Learn more at Fidelity.com/HerMoney. Fidelity Brokerage Services LLC Member NYSE, SIPC.

Editor’s note: We maintain a strict editorial policy and a judgment-free zone for our community, and we also strive to remain transparent in everything we do. Posts may contain references and links to products from our partners. Learn more about how we make money.

Transcript

Jean Chatzky: (00:06)
HerMoney is sponsored by Fidelity Investments. We want you to feel confident about investing so that you can make your money work just as hard as you do. Learn the ropes without the jargon at fidelity.com/demandmore. HerMoney comes to you through PRX. Hey everybody, it’s Jean Chatzky. Welcome to HerMoney. I want to start this show by asking you a few any questions that may actually make you a little uncomfortable, but stick with me. Alright. Question number one, are you happy with how much you’re earning? Number two, how much do you think you’re worth? Number three, are you confident advocating for yourself at work? Okay, maybe you already guessed it, but there are no good or correct answers to these questions. There’s really only one thing that we can all do to bridge the gap, and that’s exactly what we do in every episode of this podcast. We talk about it. The more transparent we can all be about these issues, the more we share with our colleagues, our family, our friends, the better off we’re all going to be. And so I’m thrilled today to be able to shed a little light on this topic with Katica Roy. Katica is a gender economist. She’s the CEO of Pipeline, which is a software company that helps employers manage everything from the hiring process to performance reviews. And she’s in the studio with me from her home in Denver. Katica, thanks so much for coming on the show.

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Katica Roy: (01:50)
Thank you for having me.

Jean Chatzky: (01:52)
I have to start with what’s a gender economist?

Katica Roy: (01:56)
A gender economist is someone who looks at the economy through the lens of gender. So for instance, the jobs report will be coming out this Friday, we would look at the jobs report through the lens of gender. So how many women are participating in the labor force? We know that number has increased year over year. We know that right now there are more women with higher education in the labor force. So really looking at it through the lens of gender and understanding how the economy is working or not working for everyone.

Jean Chatzky: (02:25)
For everyone, but with an emphasis on women?

Jean Chatzky: (02:29)
And men.

Katica Roy: (02:30)
And men. Oh, okay.

Katica Roy: (02:31)
And when you look at the economy through the lens of gender, then you can really understand one, is it working for everyone, but also take a data driven approach to gender equity and fundamentally it’s about equity for all.

Jean Chatzky: (02:43)
Gotcha. How did you decide to become a gender economist?

Katica Roy: (02:47)
It was probably a long road. My undergraduate degree is in political science with a legal studies emphasis. So first was introduced to economics, obviously through my political science degree and always very data-driven. And I think most of my career was in sales. And so really was very forward facing in terms of investments in the business and returns and really flipping that equation from something being a social issue such as gender equity to actually a better investment.

Jean Chatzky: (03:18)
When you started Pipeline, what was the mission?

Katica Roy: (03:21)
So I was actually on a radio show for a game changing women. And the topic was negotiation and pay. And the host asked us if we ever thought that the pay gap would be closed in our lifetime. And I said, well, not until we make it an economic issue. And then I thought, I think I can solve that. So that was really the idea that if we move away from gender equity being about the right thing to do or a social issue, but fundamentally an economic opportunity that we could actually shift that conversation.

Jean Chatzky: (03:50)
The American Association of University Women predicts that the gender pay gap will not be closed until the year 2119. What do you think of that?

Katica Roy: (04:00)
It’s true.

Jean Chatzky: (04:01)
It is?

Katica Roy: (04:01)
Yeah. And we have 208 years in in the USA before we reached gender equity. Pay is part of that. But things like equal representation in Congress, CEO’s, et cetera.

Jean Chatzky: (04:13)
Why is it taking so long?

Katica Roy: (04:16)
That’s a great question.

Jean Chatzky: (04:18)
I mean, I looked at that study, so I just, I just wrote a book called women with money and it found a lot of great research about the amount of money that is flowing into the hands of women because of trends in education, in not just undergrad, but graduate school, in inheritances, the fact that we’ll live longer. So we’ll inherit from our husbands as well as from our parents. And then I saw that number and I thought these two things don’t seem like they line up to me.

Katica Roy: (04:50)
Yeah. So I think you have to, there’s a couple things that make a difference, right? So we saw in the last election that we increased the representation of women in Congress by four points. And that’s great. We still have 27 points left to go if we’re actually going to get to gender equity in political representation. And of course we’ve never had a female president in the United States.

Jean Chatzky: (05:13)
I know.

Katica Roy: (05:14)
And that actually interplays very much with closing the gender equity gap including in economic representation because women, when women have an input into policies that actually ties to increased participation of women in the economy. And of course, part of that is wages and then you can solve things like wealth inequality.

Jean Chatzky: (05:39)
Can you talk a little bit more about that? When women have input into policy, how does it change the landscape?

Katica Roy: (05:46)
It does. Yeah, I can. So 1992 was the first election that I could vote in. It was also the first Year of the Woman, so we called 2018 the year of the woman, but 1992 was the first Year of the Woman. And that was actually when we elected the most number of women to the United States Senate, which was six, which seems like a pretty small number now. But one of the things that we saw was that as there was increased representation of women in Congress things like the FMLA, the medical leave act was passed. That was really the first time in the United States that we had any sort of protections. I mean it was unpaid, but at least we had protections for leave. We have seen, for instance, just on the House side in this last Congress, things like the paycheck fairness act has passed the House. So that bars, for instance, employers from asking about previous salary it begins to take some of the inequities out of the system that is actually ultimately holding women back, but ultimately holding everyone back. And a lot of that happens from lived experience. You know, so probably the most recent example of that was in the first presidential debate with Kamala Harris talking about busing and what made her statement so powerful was not only around the implications but the fact that it actually impacted her. That’s the lived experience that women bring went to elected office and it informs the decisions that they make and how they write policies. And because of that they write more inclusive policies that ultimately lead to more people, women in particular, participating in the labor force.

Jean Chatzky: (07:33)
So what exactly does your company do and how does it help companies lean in, for lack of a better word, to this landscape of fairness?

Katica Roy: (07:43)
Yeah, so what we found was a couple of things, we found this trend. One was that there is an increasing number of companies that are committed to gender equity. Typically through a public pledge, we hand counted them. There’s 3,800 of them. And we also saw a trend of 78% of CEOs saying that gender equity was in their top 10 priorities. And then on the flip side of that, only 22% of employees actually seeing it regularly shared and measured. So sort of this question of, I’m committed to this, but how do I operationalize that commitment? And so what we actually do is it’s the company’s data and our algorithms. So we essentially attach to their systems and when they are going to make a decision, and there’s essentially five buckets of decisions that you make about your talent: so hiring, pay, performance, potential, and promotion. So you post a job requisition, you write a performance review. That actually then goes through the pipeline platform and we debias those four companies.

Jean Chatzky: (08:44)
So you debias, those before you might debias a performance review before it goes to the employee?

Katica Roy: (08:50)
Exactly.

Jean Chatzky: (08:52)
What do you take out?

Katica Roy: (08:53)
So we do two things. The performance review module one is we actually use natural language processing to read through the performance reviews. So we call out biased phrases and then we make recommendations to change them. And then the second piece is we calibrate the ratings themselves. And essentially what that means is to make sure that all of the performance reviews are applied equitably because what we’ve found through our implementations is that on average, women are underrated for similar performance 4% of the time.

Jean Chatzky: (09:25)
That’s unbelievable. I guess it’s not unbelievable. I mean, I guess, I guess it’s not at all unbelievable, but it’s just, it’s a shame.

Katica Roy: (09:33)
It is a shame. And it’s also, we’re losing money. So we actually came from, when we started Pipeline, we actually did a research study across 4,000 companies in 29 countries. And what we found was that for every 10% increase in gender equity toward parity, toward 50/50, and we measure that across different key indicators, there’s a 1% to 2% increase in revenue. So this idea that if you’re the fiduciary of your company, you’re a CEO, you’re supposed to maximize shareholder value. This is a really key lever that you can pull to make that happen.

Jean Chatzky: (10:06)
Talk to me about the pay module. What are you looking at in the pay module and how are you helping companies level that playing field?

Katica Roy: (10:14)
Yeah, so what’s really interesting is that we have found through our implementations is that if you want to close the gender pay gap, you can’t start with pay.

Speaker 3: (10:22)
So where do you start?

Katica Roy: (10:23)
You start with performance.

Jean Chatzky: (10:24)
Okay.

Katica Roy: (10:24)
So pay is the quantitative value that you place on your talent. In other words, it’s the symptom, not the disease. The value decisions that you make about your talent before that typically in performance and potential then are inputs into essentially calculating how much you’re going to pay somebody and how you’re going to promote them.

Jean Chatzky: (10:45)
One of the pieces of research that I looked at for the book was looking at male and female founders who were trying to raise money for their companies and women are judged, I’m going to get this wrong, but women are judged on what they’ve done and men are given a lot more credit for potential.

Katica Roy: (11:07)
That’s right. Yeah. We judge women. And that happens. That’s a phenomenon that also happens in performance reviews which also then feeds into the next decision, which is potential. That is we judge women based on their past performance and we judge men based on their future potential.

Jean Chatzky: (11:23)
So all of this is infuriating and fascinating, but I want to dig into, as a woman who may work for a company that doesn’t have Pipeline, at its back.

Katica Roy: (11:36)
At least not yet.

Jean Chatzky: (11:38)
Or a small company that doesn’t even have an HR department, how do we, as women, help other women rise? But also how do we advocate for ourselves? But before we do that, I just want to remind everyone that this fascinating conversation is brought to you like all of HerMoney by Fidelity Investments. And you don’t have to know all the answers when it comes to your financial future, but a really important question to ask yourself is, what do you want from your money? What are your financial goals? No matter where we’re meeting you on your financial journey, Fidelity is here to help you reach those goals faster and it all starts with a financial checkup and an understanding of what you own and what you owe. From there, the folks at Fidelity can work with you to evaluate your investment options and ways to grow your savings, discuss your goals, see where you stand, get help. Taking the next step at fidelity.com/demandmore. We are talking gender economics with the CEO of Pipeline, Katica Roy. Okay, so let’s help people here.

Katica Roy: (12:47)
Sure.

Jean Chatzky: (12:48)
You’re a woman. Maybe you’re a guy and we know we have guys listening to this show because occasionally they write us and they say, Hey, I’m a guy. What do we do in order to level the playing field for ourselves?

Katica Roy: (13:02)
Well, first realize that it’s not level, but it would be the first thing. I think that’s actually one of the ways that we mislead young women and girls is that we tell them half the story that is we tell them they can be anything they want to be, but we don’t give them the tools to understand the system that they’re stepping into.

Jean Chatzky: (13:20)
So what should we be telling them instead?

Katica Roy: (13:22)
We should be telling them that for instance, you may be evaluated based on your past performance, not your future potential. Here are ways to help people see you in that future role.

Jean Chatzky: (13:35)
Give me a few.

Katica Roy: (13:36)
So for instance, one of the things, so be very data-driven, like in terms of document everything that you’ve done and you’ve accomplished and what the value of that is to the company that you work for.

Jean Chatzky: (13:47)
Isn’t that also backwards looking?

Katica Roy: (13:50)
Well, it is, but then you can also attach it to, what’s the future? Where is the company going?

Jean Chatzky: (13:59)
It’s like a how much will my savings be worth calculator. I’ve already done this for you, but if you just look out six months and a year and two years into the future, this is going to be worth so much money.

Katica Roy: (14:11)
So how can your past performance attached to the future of the company?

Jean Chatzky: (14:16)
All right, what else?

Katica Roy: (14:18)
Well, I mean I would say negotiate, but we know that women negotiate as much as men. They just don’t win as much, so.

Jean Chatzky: (14:25)
And why is that? Because I’ve read a lot of studies that say that women don’t negotiate.

Katica Roy: (14:32)
I’ve seen those and I’ve seen the ones that say that women negotiate as much, we just win half as often in two thirds of the time, there’s a negative perception of us as pushy. Like we’re stepping outside of our traditional gender role.

Jean Chatzky: (14:46)
So how do you advise women negotiate?

Katica Roy: (14:52)
So I typically work on flipping the system so that it actually values women, right, equally to men. But what I can tell you is from my own experience, a lot of my negotiation has been around trying to put the other person on the same side of the table as me. And putting whatever issue it is, whether it’s a salary or whatever, an opportunity on the other side of the table, that we are together in this rather than it’s a win win situation versus a win lose situation.

Jean Chatzky: (15:23)
There are other inequities in the system, too, big ones, based on race. Can you talk about that?

(15:29)
Yes, I can. So we’re gender first, not gender only. And anytime you attach gender to any other type of diverse demographic, whether that’s race and ethnicity or even age, so women over the age of 45…

Jean Chatzky: (15:46)
Hello.

Katica Roy: (15:46)
Likewise. Those women are typically farther behind and I think that’s something we don’t talk about enough. So for instance, right now we haven’t even recognized in 2019 Latinas equal payday. They have to work almost an extra year versus white women. It’s later in April. It’s not equal payday, but because they make up so much of the denominator, essentially the cohort, they are closer to April. And black women’s equal payday is typically in August. So it’s, they’re even farther behind in terms of economic opportunity and and economic equality. And I think that’s one of the criticisms also that has been levied against gender equity in the gender equity movement or conversation is that it’s often, if you don’t explicitly talk about race and ethnicity, then it becomes about white women, not about inclusion of all women.

Jean Chatzky: (16:51)
How about inclusion of people who identify as non-binary?

Katica Roy: (16:56)
And that’s definitely something we are seeing increased. So for instance, the generation that’s just coming into the workforce, gen Z, my kids are gen Z, it’s not the majority, but it’s a large proportion of that generation that actually identifies as non-binary or knows someone who identifies as non-binary. So there’s actually a huge push now for governments. So for instance, on driver’s licenses to have non-binary, the EEOC yesterday just gathered demographic data and so it was male, female, non-binary. And so we’re starting to see more of those trends come to pass.

Jean Chatzky: (17:32)
How does that impact salary and fairness within the workforce?

Katica Roy: (17:37)
You know, that’s a good question. And I don’t know that overall we have enough data yet to evaluate that. To be perfectly honest, non-binary is something that we include in our platform, but we simply haven’t seen enough of a cohort of it to be, of non-binary folks to actually be able to evaluate it accurately. We know that for instance, lesbian women are tend to be farther behind straight women. So we know that there is some data there to say that if you’re sort of more than one step out of kind of the common archetype, you’re farther behind.

Jean Chatzky: (18:12)
One of the things that we talk about a lot in our office, on our website, also on this show is the wisdom of sharing numbers, sharing salaries, sharing how much you’ve got in your 401(k). Where do you shake out on this kind of transparency?

Katica Roy: (18:29)
Sharing it?

Jean Chatzky: (18:32)
Yeah. Do you think, I mean we know more young people will share, at least in their early years in the workforce. Is this a good thing? Is it not a good thing? Does it help companies? Does it hurt?

Katica Roy: (18:43)
It’s actually a good thing. September 30th was the first time in us history when the EEOC actually gathered data pay by gender and race and ethnicity on their EEO one form, so it was component two, and unfortunately they’re not planning on releasing any of that data, not even at an aggregate level, which is unfortunate because since 1966, they have shared the demographic data that they have gathered.

Jean Chatzky: (19:11)
So why are they not releasing it?

Katica Roy: (19:12)
They haven’t stated why.

Jean Chatzky: (19:14)
Wow.

Katica Roy: (19:14)
And we don’t know why.

Jean Chatzky: (19:15)
But they have it?

Katica Roy: (19:16)
They have it. Yeah, they have it. So it’s 60,000 employers in the U S that have reported this information that fall under this rule and we won’t be able to see it. And, and what’s interesting about the way that the EEOC gathered that data is, it’s in 10 occupational categories and each occupational category has 12 salary ranges. So when you’re talking about being able to analyze the data, there’s a lot of really interesting, even at an aggregate level, that you could look at.

Jean Chatzky: (19:44)
On an individual level. Why do you say it’s a good thing? And I’m with you, by the way. I do think, I think it’s an uncomfortable thing sometimes. But I think having information is largely good.

Katica Roy: (19:57)
Yeah, it is. And it also tends to demystify it. So I wrote an article last year about, I think the title was something like, Want Gender Equity, Pay Transparency is the First Step. Something like that. Like whole foods, whole foods is an example of a company where they had paid transparent. So we know for instance, there was a cohort of Google employees that started pay transparency and when we, and Buffer is a company that has complete pay transparency and when we actually are transparent about salaries then it actually is a first step toward making them more equitable because you’re demystifying it. To some extent, interestingly enough, you’ve seen in some situations where the pay gap may not be as bad as we think it is. So that’s good. Right? So that’s actually a positive. And then two, you actually see a collective of advocating for more equitable pay that when people know this, they will rally around together for more equitable pay for everyone. So it’s also better for companies. I think there’s often this false narrative of sort of the employee versus the employer. That narrative tends to get thrown around quite a bit, but in actual fact, if you look at it through the economic lens, it’s actually just, it’s better for everyone, including employers. So here’s a story. I was a poly-sci major undergrad, legal studies emphasis, and I was an intern in D.C. in college and I worked for the California State University Office of Federal Relations. I spent a lot of time up on the Hill and as a poly-sci major, it was really the first time that I learned about women’s rights. I didn’t learn much about that in high school. A little bit about the suffrage movement, nothing else. But then I started to really untangle what all this meant. And then graduated and went into the workforce in D.C. And thought, well, I’m not really sure if all this applies to me today. Right? So this was in the mid-nineties, and thought, you know, I don’t know, I mean I loved Gloria Steinem, I got to meet her, but I thought, you know, I had her books. I just thought, I don’t know, I don’t really see this. And then I was on maternity leave with my daughter and my boss was optimized, which is a fancy word for fired. And I was managing a team and I came back and they, a day after I came back, they asked me to take over another team and I thought, well, this is perfect. I’m now the breadwinner for a family of four. My husband is a stay at home dad. And then two weeks later they asked me to take over a third team.

Jean Chatzky: (22:21)
Wow.

Katica Roy: (22:21)
And I was like, okay, this is great, but you gotta pay me.

Jean Chatzky: (22:24)
Yeah.

Katica Roy: (22:26)
And my male colleague was asked to take on one additional team and he also received additional compensation for that team. So he was a pay grade higher than I was and I knew that because our titles were different and he received an additional compensation. So people ask me, how do you know? And I said, I just assumed they were paying him more. So I asked him and he told me. And so I went to HR and I said, Hey, you know, I’m very excited about this opportunity. How do you want to make me whole on my pay grade and on my pay? Nothing. Like crickets for two months. And I figured out that they were just trying to hope that I would go away. At least, I assume that’s what it was. And so because I had been in D.C. And I had been a litigation paralegal, so I knew I had to do research. I thought there has got to be a law that makes this illegal and I’m going to go find it. So I did a bunch of legal research and I found the Lilly Ledbetter Fair Pay Act. And so I called HR and said, this is a Lilly Ledbetter issue. Every time you pay me, the statute of limitations starts over. What do you want to do about it? And they changed my pay grade, changed my pay, and gave me back pay. But it was the first time for me that really explicitly, I mean I had experienced other things, but really explicitly that I had experienced that sense of like I had worked hard. I had graduated at the top of my class in my master’s degrees. I had won awards. I had, you know, I had, I was a top performer. I was chosen for this role and they didn’t want to pay me. And I thought, Oh my gosh, I wonder if I’m alone in this, that was truly my thought. And I think also being a breadwinner mom sort of, there’s just not a lot of people, women to talk to.

Jean Chatzky: (24:03)
Right.

Katica Roy: (24:04)
And her book came out right after that and I read her book cover to cover and I thought, Oh my gosh, I am not alone. This is a massive problem. And that was really the first time that I realized how big of a problem it was. Plus I had also inherited two other teams. I made sure that my people were always paid equitably. I inherited all of the inequities of the other teams. And so I said about, you know, with a commitment that if you worked for me, I was going to do whatever I could to make sure that you got paid equitably.

Jean Chatzky: (24:34)
Amazing.

Katica Roy: (24:34)
So for me, she was like, it was like this realization…

Jean Chatzky: (24:38)
This beacon…

Katica Roy: (24:38)
That like, Oh my gosh, this is happening every, and it’s like, you know, I was like a mid level manager and accompany and huge company. Right. I was very much like, I am not alone and I need to do something about this.

Jean Chatzky: (24:51)
And how smart of you to, you know, to do the research, to realize this is what it is and to just put it out there. Because I’m sure you put it out there exactly the same way you just said it to me.

Katica Roy: (25:00)
I did.

Jean Chatzky: (25:00)
This is a Lily Ledbetter issue and every time you pay me the clock resets. Done. Right. No threat, no nastiness, no nothing. Just fact.

Katica Roy: (25:12)
Yeah. And I didn’t have to go through a lawsuit, which was helpful. I mean, you know, I just was a matter, I mean that would’ve been a lot more expensive.

Jean Chatzky: (25:20)
I wanna wrap up with the Pink Tax. I heard an interview with you if you weeks ago where you said women specifically were being adversely affected by tariffs that we have right now in the U.S. Can you tell us a little bit more about tariffs and import taxes as they’re often called and the Pink Tax specifically and what that does to us?

(25:41)
Yeah, of course. So often when we talk about, just to preface it, often when we talk about the pay gap, we’re talking about money coming in to women’s wallets. That’s one leg of the three legged stool. There are two others. Student loans is one because women hold the majority of student loans, and the other is the Pink Tax. That is, there’s more money coming out of our wallets. So the Pink Tax is essentially women paying more for everyday items. So we know that 50% of the time women pay 7% more for items. So that could be razors, shaving cream, dry cleaning, anything that has a gender to it.

Jean Chatzky: (26:19)
Please, my shampoo is beyond expensive.

Katica Roy: (26:21)
That’s right. Yeah, exactly right. So that’s an example. But part of the Pink Tax is actually import taxes. And of course that has been a fairly hot topic because of the tariff war right now. But in American families, 75% of the tariff burden that hits U.S. Households is actually for apparel and footwear and women bear 65% of that tariff burden. And it’s not just because we buy more clothes.

Jean Chatzky: (26:49)
It’s because our clothes are more expensive.

Katica Roy: (26:51)
And they are taxed at a an average higher rate. So in the tariff schedule, they’re part of the statistical calculation that they use to calculate the tariffs. Part of that is gender, it’s part of the calculation. And so on average, sometimes men pay more. But on average men pay 11.9% in tariffs and women pay 15.1%.

Jean Chatzky: (27:14)
Is there anything that we can do about this?

Katica Roy: (27:16)
Yes, we can lobby Congress to change it. So either they removed gender as part of the tariff calculation or they choose to use whatever is the lower tariff rate on those items.

Jean Chatzky: (27:30)
Lastly, you teed this up, so I’m going to go there. Student loans?

Katica Roy: (27:33)
Yeah.

Jean Chatzky: (27:33)
Why is it that women hold the disproportionate amount of student loans? There’s two main reasons. One is the gender pay gap. That is, there’s less money coming into our wallets, so we can’t pay off those loans as quickly as men.

Jean Chatzky: (27:47)
So it’s continue. It’s not necessarily the original amount borrowed?

Katica Roy: (27:51)
That is part of it. Let me just go back to the numbers. So women acquire 57% of all bachelor’s degrees and higher in the U.S. But they hold 67% of all student loans. So let me start with that number, right, so we’ve got a 10 point gap.

Jean Chatzky: (28:05)
When you look at the students coming out of college each year, is it that if women are getting 57% of the bachelor’s degrees in any given year, as they come out of school, do they have 57% of the debt?

Katica Roy: (28:22)
No, they have more, and that’s the second reason.

Jean Chatzky: (28:22)
Why is that?

Katica Roy: (28:27)
So the second reason is because they are less, their parents are less likely to save as much money for their daughter’s education than for their sons.

Jean Chatzky: (28:39)
I’m going to have to go have like two drinks after this podcast.

Katica Roy: (28:43)
So if you look at this from a personal financial perspective, I have student loans and I’m a breadwinner mom for a family of four. What if I could take my student loan money that I pay, which is not an insubstantial amount of money, I have two master’s degrees, which I paid for. What if I could put that money into a retirement account? And what if I did that? I’m 45 what if I did that when I was 25 or maybe 29. Think about the amount of savings that we could actually accumulate over a time if we weren’t putting this heavy burden, particularly on the backs of women. And then anyway, and you look at the connection between that and women twice as likely to live in poverty when they’re retired. And all of these pieces are connected.

Jean Chatzky: (29:31)
Katica Roy, you’ll have to come back because I have a feeling that there is just so much more to dig into with you.

Katica Roy: (29:38)
Thank you. Well I would love to come back.

Jean Chatzky: (29:40)
All right. We will be right back with Kathryn, your mailbag, and a big bottle of Chardonnay. I’ve got a new crush.

Kathryn Tuggle: (29:51)
Yeah, she’s amazing.

Jean Chatzky: (29:52)
Kathryn Tuggle from hermoney.com has joined me in the studio. So you saw Katica speak at where?

Kathryn Tuggle: (30:02)
We were on Yahoo Finance together on their livestream Wifi PM.

Jean Chatzky: (30:09)
Gotcha. Yeah.

Katica Roy: (30:10)
She’s amazing. We instantly hit it off in the green room. We started talking and I said, what do you do? And I was like, Oh, okay. All right. You’re coming on the podcast.

Jean Chatzky: (30:21)
Well, thank you for bringing her to us. I just found myself getting more and more frustrated with all of her knowledge and statistics. Not her knowledge, ’cause her knowledge is fantastic. But just, I mean every time I come across that stat from the American Association of University Women, I just figure, ugh. Things will change. And what she’s saying is things are not really going to change unless companies changed them.

Kathryn Tuggle: (30:45)
Right? I mean, it’s tough hearing from someone like her, right? Because we think that yes, we’re fighting an uphill battle, but we’re fighting the good fight and we’re, we’re doing what’s right. But then she comes in and says, you know what? The change has to come from corporations and that’s disheartening. But at the same time, we know that there are more females in positions of leadership in companies.

Jean Chatzky: (31:09)
Every year.

Kathryn Tuggle: (31:09)
Every year.

Jean Chatzky: (31:09)
Almost.

Kathryn Tuggle: (31:12)
It’s discouraging, but at the same time we have the right ingredients to get where we need to go.

Jean Chatzky: (31:19)
Yeah. I’m going to hold on to that little note of optimism coming out of there. What do we have from our mailbag?

Kathryn Tuggle: (31:25)
Our first question comes to us from Apula and it is short, sweet, and to the point. She says, how long into dating someone should you wait before talking about financial issues? Thanks so much.

Jean Chatzky: (31:38)
I think it depends on how the dating is going and we all know somebody who met somebody and 30 days later they were engaged and they have had a long and happy life together and we also all know somebody who’s been dating the same person for 10 years and it doesn’t look like they’re merging their lives anytime soon. It depends on the relationship and I think to have a rule, you know an akin to, okay, I’m going to wait until the third date before I sleep with you is a little disingenuous. You got to be able to say, this is getting serious. Because finance and money are a difficult topic, right. They are a serious topic and you can learn a lot by, as my mother says, using your eyes and using your ears before you actually have to tee up the conversation. So I think you’d discuss it as soon as you suspect that it’s getting serious enough that their finances are going to matter in your financial life and your finances are going to matter in theirs. Does that make sense?

Kathryn Tuggle: (32:54)
It does. It does. What if you have something that’s a deal breaker, if you know that if somebody has $200,000 in student loans that you do not want to pursue a relationship.

Jean Chatzky: (33:04)
I think you probably can figure out if they have student loans. I don’t know if you can figure out the amount, but I think you could probably figure out what their pain points are based on how they handle their lives pretty early on. And I may be wrong about this in some cases, I think dropping a nugget or two about your own life, you know, I’m really fortunate I was able to go through college and only come out with $20,000 in student loans and God it’s a pain, but I write that check every month and I’m looking forward to being done with it in six years and hope they start to offer things up. If you suspect that they are earning a really nice living but underspending tremendously and not seeing a lot come from that, you might be able to sort of filter out that they’ve got other obligations, whether it’s child support or student loan debt or whatever. I think sort of watching and listening will. Give you some signals. And then you can ask. I mean, you know, if you offer up a fact about your own life, I think you can ask about the same fact from the person you’re dating, if that’s something that you know is really a deal breaker for you.

Kathryn Tuggle: (34:23)
Good advice. Think of intake, right?

Jean Chatzky: (34:25)
I think so. I mean, that’s how I’ve always done it as a reporter. When did you talk about money with your husband?

Kathryn Tuggle: (34:31)
It’s a great question. It seemed to flow organically. We never had like one big money chat really.

Jean Chatzky: (34:37)
Yeah. And for me and Eliot as well, I mean, I think he knew going, he actually did know going in because I had asked him when we just knew each other through publishing circles, I had asked him to help me negotiate a contract because that’s what he did for a living. So he knew exactly what I was making. And he knew that he was making less than, so, you know, I mean it was very clear from the time that we started dating that I was the greater breadwinner in the relationship.

Kathryn Tuggle: (35:09)
Right. It’s nice when it happens organically and you don’t have to have the big money sit down before you’re at a personal level of intimacy.

Jean Chatzky: (35:18)
I think you’re right.

Kathryn Tuggle: (35:19)
Yeah.

Jean Chatzky: (35:20)
All right. Good question. Short question. Long answer.

Kathryn Tuggle: (35:23)
Amazing. Our next one comes to us from Grace who writes Hi Jean, love the podcast and Women With Money. Thanks for all you do to empower women. Some background. I’m 31 years old and make about $45,000 a year at a nonprofit. Prior to this job I was a state employee and I was required to pay into the state pension program each month. When I left the job I had about $4,000 in contributions, but I didn’t stay long enough to vest and I decided to roll the money into a traditional IRA and make post-tax contributions of $100 per month. I’m also currently making pre-tax contributions to a 403(b) with my current employer at $200 a month. There is no company match offered. I’ve been doing this for about a year and a half now, but I’m wondering if my money would be better off in only one account. And if so, which one? Thanks again.

Jean Chatzky: (36:13)
So for administrative ease, I would lean toward the 403(b) with your employer. The money is coming out of your paycheck automatically. It’s going in. You might want to bump up your contribution by the additional hundred that you’re putting into the IRA and put that into the 403(b) instead as long as you are happy with the investment alternatives that you’re being offered in this plan. But I’m also curious about the fact that you’re making post-tax contributions of $100 a month to a traditional IRA. If you’re putting money into a traditional IRA, that should be pre-tax contributions or contributions on which you get a tax deduction. Otherwise you should be putting that money into a Roth IRA with post-tax money. That money will grow tax-free forever and you’ll have a lot of leeway about whether you do or don’t want to pull it out in retirement. But either way you’ll never have to pay taxes on that money again. So should you decide either that you want to stay with two accounts or that you like the option of having a Roth? And by the way, I like the option of having a Roth. I like the option of having some choice about where to pull that money from in retirement and being able to pull some money out of a Roth for education or to buy a first home is another nice benefit. I would make that account outside of your 403(b) a Roth rather than a traditional IRA. Does that make sense?

Kathryn Tuggle: (37:56)
It does. So she should put the money that’s currently in the IRA into the 403(b)?

Jean Chatzky: (38:03)
She can leave it in the IRA. That’s fine. I mean, as long as it’s not costing you a lot of money, you probably will just leave the money that’s in the IRA. I’m really focused on the new contribution. And continue to contribute to the 403(b). If you think you can do more and you want to do more and you like the options in that account, then you can shut down the contributions to the IRA for now and just put more into the 403(b) or you can decide that you want some money in a Roth and put money there instead.

Kathryn Tuggle: (38:37)
I think I get a little too heavily focused on doing something with old accounts so that you don’t lose them. Right.

Jean Chatzky: (38:44)
As long as they’re invested, as long as the money is growing, you don’t have to. If you end up with a lot of orphan retirement accounts all over the place, I like the idea of rolling them all together into one rollover IRA, or at least into accounts with the same firms so that you can go into their portal and you can see everything on the same page and make sure it’s all in balance. I think that’s important, but she’s not really talking about that many accounts here. She’s talking about one inside her company’s plan and one outside and I’m okay with that.

Kathryn Tuggle: (39:20)
Cool.

Jean Chatzky: (39:21)
Yeah.

Kathryn Tuggle: (39:21)
Our last note comes to us from Ann in Alabama so high y’all to Ann. She writes, Hey ladies, I have enjoyed the episodes and articles on the FIRE movement. I especially enjoyed when Jean got a little sassy and pointed out that traditional retirement planning isn’t wrong, it’s just a different option. Here’s my question. In the traditional retirement saving and investing model, you change your asset allocations as you get closer to your retirement date and then get very conservative with your investments once you’re retired. How does asset allocation work in FIRE? Do you have to stay super aggressive with your investments forever and just change your spending to mirror market conditions? Thanks, Ann.

Jean Chatzky: (40:01)
So Ann, I have to admit I wasn’t exactly sure about this. We checked in with Scott Rieckens who is the producer of Playing with FIRE. The documentary film that we did a show about earlier this year and Scott basically advises a philosophy that he says comes from J.L. Collins, who wrote the book The Simple Path to Wealth, and that is yes, being flexible with the withdrawal rate and that by the way is important for everybody in and around retirement. When you are trying to adhere to the 4% rule, pulling 4% from your portfolio to try to make it last throughout your retirement, in a year when the market is down, your 4% is going to be less and you’ve got to make sure that you are taking less in those years. In years when the market is up, you can allow yourself to take a little bit more and the nice news is that retirees are showing us they are resilient like that. They’re able to spend a little less when they have to, spend a little more when they can. In terms of the FIRE crowd specifically, they subscribe to the idea that if you’re looking for the closest thing to assure bet, you want to assume that inflation will rise. Keep your withdrawal rate a little bit under 4% and hold 75% stocks and 25% bonds and J.L. Collins says that that tends to hold up over time. If you’re a little more risk averse, you may want to bump the 25% in bonds to 30 or 35% in order to allow for a smoother transition. And if you’re able to be flexible on the date that you are going to take that financial independence, then you can be even more heavily weighted towards stocks knowing that you might push it off a year or two if the markets have a down year. But that’s the way to go with that. And thanks so much for a great question. Thanks Kathryn.

Kathryn Tuggle: (42:11)
Of course. Thanks. And we encourage anybody to submit their questions mailbag@hermoney.com.

Jean Chatzky: (42:17)
Great. And in today’s Thrive, if a child in your life is thinking about where they’ll head to college, chances are you are already hearing a lot about college application season, which means campus visits. These visits can be so much fun for the students, and yes for the parents, but they are also fraught with problems of the financial variety. By the time you add up the cost of things like gas, hotels, meals, and airfare, the cost of the visit can easily top $1,000 and maybe more, if additional family members want to go or if the school is particularly far away. There are ways, though, to keep the costs down. Many counselors advise starting near home and looking at schools that are within just a few hours drive, so an overnight stay isn’t necessary. Some schools offer virtual tools on their websites, which your kids can take first before you get on the road. If your child loves what they see, then you can have a bigger conversation about packing bags and going for real. Also, if your child is from an underrepresented racial or socioeconomic group, there’s a chance that their dream school may offer a free fly-in visit. Give the admissions office a call to ask. And finally stay away from the campus bookstore. Really. Purchasing college swag can be really tempting, but it can also be really costly. So rather than seeing collegiate gear from every school as a souvenir, make a deal with your child that you’ll spring for clothing once they get in. Thanks so much for joining me today on HerMoney. Thanks to Katica Roy for the great conversation. I’ve loved talking to her and hope to do it again soon. If you like what you hear, I hope you’ll subscribe to our show at Apple Podcasts. Leave us a review. We love hearing what you think. We also want to thank our sponsor Fidelity. We record this podcast out of CDM Sound Studios. Our music is provided by Track Tribe and our show comes to you through PRX. Tune in next week for a very special Thanksgiving show. We’ve got Mitch Albom coming into the studio to talk to us about his new book, Finding Chika. It’ll be a treat. We’ll talk soon.


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