Why inflation ‘hurts women more,’ Sallie Krawcheck explains

Ellevest CEO and Co-Founder Sallie Krawcheck joins Yahoo Finance Live to discuss the Fed’s 75-basis-point rate hike, inflation, women’s financial health hitting a five-year low, and investing.

Video transcript

[AUDIO LOGO]

JULIE HYMAN: As the Federal Reserve steps up its interest rate increases, American households will certainly feel the pinch in their pockets, on their mortgage statements, in their car payments. Here to discuss how consumers can navigate these tough conditions and maintain financial wellness is Ellevest CEO and co-founder Sallie Krawcheck.

Sallie, it's good to see you. Certainly, people are going to see this in all aspects of their financial health, right, the higher interest rates, and also, perhaps, in their willingness to invest, right? If they are seeing higher costs for things, maybe they want to allocate less to the markets. So I know this is a big question, right, but if you take that 10,000-foot view, what are you telling people about how to think about this environment?

SALLIE KRAWCHECK: Yes. Well, Ellevest is a wealth tech platform built for women, really centered on women, built by women, and we're telling her this is the time to continue to make your recurring deposits into your investments, if you're able to. This is the time not to panic and take the money out of your 401(k) or IRA, if you're able to. And I'll be honest with you. The answer we typically back-- get back from her is, I know. You already told us.

And so what we're seeing, going through this difficult time, is women are very concerned about inflation. Something like 77% of women rank it as their top concern. 90-plus of boomer women very worried about recession. But they are staying the course on their investments, which is a reason women, when they invest, tend to outperform men because they do tend to set a plan and stick with it.

BRAD SMITH: Can you lay out for us as well-- and I guess just kind of additive to what you were mentioning a moment ago, the reality of what we had seen early onset in the pandemic and one of the ramifications later on was the "she-cession" and how employment had been impacted disproportionately for women in the pandemic and then now coming out of it as we're trying to emerge from the pandemic. But there's still so much work to be done where women are still trying to make the headway to not only--

SALLIE KRAWCHECK: Sure.

BRAD SMITH: --have parity in wages, but also parity in the ability to invest and to kind of maintain some of those wealth-building mechanisms.

SALLIE KRAWCHECK: Great. Great-- great question. And we wanted to get, really, a comprehensive and quantitative look at the financial health of women, the financial wellness of women. And we went out to see, are there any indices out there? Where's the deep research?

And we couldn't find a comprehensive index, so we built one-- the Ellevest Women's Financial Health Index. And you're right, when you look at its performance over the past, say, five years, women's financial health took a big hit during the pandemic because they lost jobs at a disproportionate rate, improved coming out of the pandemic as they were returning to the workforce, but this year has been tough. Everybody's hurt by inflation.

Women, because our wealth is only $0.32 to a white man's dollar, for women of color, it's pennies, so inflation hurts everybody, but hurts women more. So women were hit by that, which hurts the pocketbook immediately. But the other thing that women were hit by, which is an economic and financial issue, is the fall of Roe v Wade, which might not affect them today, but the research is clear that it affects their pocketbook and keeps women in poverty, keeps women from achieving their full economic parity.

So with the combination of that and consumer confidence falling and looking into recession, just 14% of women say they are financially prepared for a recession. It is worse for women financially by this measure, by the Ellevest Women's Financial Health Index, than it has been in the past five years, worse than the pandemic.

JULIE HYMAN: And as we were showing, as well, the disconnect that we're seeing-- or the different prioritization and concerns among different generations is also quite interesting. While everybody, of course, is worried about inflation, broadly, and worried about the economy, Gen X and baby boomers are more worried about that, or they're listing it as one of their top worries, whereas younger women also put more sort of social issues, if you will, on that list, reproductive rights, obviously more of a, I don't know, personal issue, I guess, personally affecting issue for younger women, housing prices. I mean, it makes sense, right, that younger women are more concerned about these issues.

SALLIE KRAWCHECK: I know. I was saying the boomers are sort of-- there are two ways to-- or many ways to read the data. But one way to read it is 91% of boomers, their number one concern is inflation. And part of me says, oh, they're over it, the other stuff. And the other part of me says, no, they've actually lived inflation before and are the only generation of women, you know, who we surveyed who have and so know, really, how tough it can be in the recession that can come after.

But you're right, what was so interesting is these younger women, the Gen Z, the millennials, really knocked back over the fall of Roe v Wade, really concerned about child care representation. And, in fact, wanting to hear from the companies they work at and the companies they buy from what their stance is on reproductive rights.

And they're telling us-- the majority of millennial women are saying, I would consider leaving my company if our view on reproductive rights does not align. And certainly, 2/3 are, like, I wouldn't buy from someone if our view on reproductive rights doesn't align. So we see the difference.

The one, though, that is across generations, a top five financial-- financial concern for women across generation-- climate change. Climate change broke in the top five, which I-- I think we often don't think of it as a financial concern. But, again, when these things go bad, they hit people in the pocketbook. And if you have less money, they hit you more.

JULIE HYMAN: Yeah, and if you are a younger woman as well, it could be an issue for your children, your children-- it's a long-term issue. One more thing I want to ask you about and that is the disconnect between men and women and their number one financial priorities. Men, it's the retirement, women, it's their family. Is that actually--

SALLIE KRAWCHECK: I know.

JULIE HYMAN: --is it-- now, is that a problem? I mean, it's very sweet, on the one hand, right. But on the other hand--

SALLIE KRAWCHECK: Women.

JULIE HYMAN: --is it sort of a problematic thing that you've got to be focusing on--

SALLIE KRAWCHECK: Well--

JULIE HYMAN: --your retirement?

SALLIE KRAWCHECK: Well, for sure. And recall, women live six to eight years longer than the man in their life. 80%-- by some measure, 80% of women die single. By another measure, when she outsources her money to him and it comes back to her, either because they get divorced or he passes away or something happens, 70% of women have a negative surprise.

So it-- my heart-- my heart, women, their families, but please take care of yourself as well. Please take care of yourself as well. The other difference we saw with men and women, which I thought was really interesting, is men are quite a bit more concerned about stock market volatility and crypto volatility. And women are, like, I just-- I don't have the time. I do not have the time.

JULIE HYMAN: Amen to both of those sentiments, right-- take care of yourself and I don't have the time for that. Sallie, thank you for being here. It's always great to catch up with you. Ellevest co-founder and CEO Sallie Krawcheck. Appreciate your time.

SALLIE KRAWCHECK: Thank you.