Retail practitioners, pundits, and analysts all love to talk about the power of the consumer, and in many cases that consumer is referred to as “she “. It’s hardly surprising; in many retail verticals, women are the primary shoppers. For example, the company that I worked for (a chain drug store) knew that over 70% of our customers were female, most often working moms between the ages of 25-40. Our CEO often referred to our “best ” customers as “Mrs. Consumer “.

In September 2011 in San Francisco, the Asia-Pacific Economic Cooperation (APEC) organization held a conference on the subject, “Women and the Economy “. APEC is an organization whose mission is to promote cooperation between countries in the Pacific region of the global economy. Formed in 1989, the organization currently boasts 21 nations as members, including the U.S., Canada, Mexico, Peru and Chile in the Americas, Australia and New Zealand, Russia, Japan, Korea, China, and other Asian nations. This year’s keynote speaker was U.S. Secretary of State Hillary Clinton, and she made a compelling fact-based argument for increasing women’s participation in the economy, not as consumers, but as productive members.

Entering the Participation Age

The gist of Clinton’s remarks was that the most productive economies are (obviously) the ones where more of the working age population is in fact working. Said the Secretary, “The big challenge we face in these early years of the 21st Century is how to grow our economies and ensure prosperity for all nations and people…. To achieve the economic expansion we all seek, we need to unlock a vital source of growth that can power our economies for decades to come… women. By increasing women’s participation in the economy and enhancing their efficiency and productivity, we can bring about a dramatic impact on the competitiveness and growth of our economies… more of us can contribute to the global GDP…. We are entering the ‘Participation Age’, where every individual, regardless of gender or other characteristics, is poised to becoming a contributing and valued member in the global marketplace…. A rising tide of women in an economy raises the fortunes of families and nations. “

Mrs. Clinton credited consumer-facing technology as the change that has triggered the ‘Participation Age’, just as societal and economic shifts of the past (from agricultural to industrial, from industrial to information) were triggered by the breakthrough technologies of those eras. The change we are in now is triggered by “smart mobile ” technologies that enable anyone anywhere to participate in the global economy, according to the U.S. diplomat. Readers of RSR’s studies and weekly newsletter will recognize the familiar theme: anytime anywhere access to the Internet really is a game changer, in our view the biggest one retail has seen with the introduction of barcode scanners in stores back in the 1980’s. The point that Mrs. Clinton made about the new enabling technologies is that they are universal, not favoring one society, economy, or gender over any other. Every one can participate in the economy – as consumers. What if they all had jobs too? And what if they were paid the same?

Money Talks

Although the moral and societal reasons for gender equality have long been argued, Clinton chose to discuss the economic reasons. “When it comes to the enormous challenge of our time, to systematically and relentlessly pursue more economic opportunity for all of our lands, we don’t have a person to waste, and we certainly don’t have a gender to waste either. So let’s look at the evidence…. ” The Secretary then went on to state these facts:

• In the 21 APEC countries, which represent ½ of total global output, women make up 60% of the workforce;
• According to the Economist, the increase in employment of women in developed countries in the last decade has added more growth to the global economy than China ( “And that’s a lot! “, exclaimed Mrs. Clinton).
• A McKinsey survey indicated that 1/3 of executives reported increased profits in emerging markets when women are empowered.
• Another recent McKinsey study in the U.S. showed that the increase in women in the workforce in the last 40 years has created productivity gains that are equal to about ¼ of the U.S. GDP (approx. $3.5T) – more than the total GDP of Germany.
• A Goldman Sachs Group report showed that increasing women’s participation in the labor force could lead to a 14% increase in per capita incomes by 2020 in APEC countries
• According to the World Bank, eliminating discrimination against women in labor and management could increase overall productivity by 25-40%.
• Women reinvest more in the economy by spending more than men on food, healthcare, home improvement, and schooling.

But Mrs. Clinton pointed out that “progress doesn’t equal success “, and there remain many roadblocks to realizing the full economic potential that women represent.

More than Rosie the Riveter

In January 2010 a milestone was reached in the U.S.: there were more employed women than men, according to US Labor Department statistics (only Canada, Netherlands, and Sweden have higher percentages of the workforce made up by women). But salary equality still eludes many women. For example, in two categories tracked by the government that are related to subjects that RSR studies, the numbers are truly underwhelming: female retail salespersons only make 64.7% as much as their male counterparts, and computer and information systems managers only make 81.8% as much as men holding similar positions. This is in spite of the fact that among the employed population 25 and older, 37 percent of women had attained a bachelor’s degree or more as of 2010, compared with 35 percent of men, according to new data from the U.S. Census Bureau.

In her speech, Mrs. Clinton argued compellingly that the economic gains to be realized from creating equal work opportunity for all workers is good business. But for retailers it might be really good: the trends being tracked by the U.S. Government clearly point out that well paid working women buy more stuff that retailers sell than other people do. Intuitively retailers know that (after all, that’s why the majority of sizzle in the industry is pointed right at women), but the facts are even more compelling. For example, single working women earning $40,000 or more don’t just spend more of their post-tax income on apparel than those making between $15-20,000 (about the gross income for someone working full time at $10/hour), they spend a higher percentage of their income (approximately 5.2% compared to 4.6%, based on U.S. Department of Labor statistics). Likewise, single women in the higher income group spend a greater percentage of their post-tax income on entertainment (over 8%) than women in the lower earning group (5.7%).

The Business Case for Fair Pay

Comparing the fact that better-compensated working women spend a greater percentage of their earnings on the discretionary things that retailers sell to Mrs. Clinton’s assertion that women reinvest more in the economy by spending more than men on food, healthcare, home improvement and schooling, the winning strategy is clear- businesses should more aggressively advocate for equal pay for equal work. Not only is it the right thing to do, it’s the profitable thing to do.