Woman Power: The Rise of the Sheconomy

How women are using their rapidly increasing spending power to impel changes in the way companies operate

By Belinda Luscombe Monday, Nov. 22, 2010
    • Photo-Illustration by Hugh Kretschmer for TIME

    In the hierarchy of activities that people despise, getting a car repaired is in pole position, sort of the auto equivalent of having a tooth pulled, except you bleed money and don't get a smiley sticker as you leave. Garry Rosenfeldt, marketing-research director for Midas International, knew this. After their cars were fixed, only 1 in 4 Midas customers returned to buy other services. Even dentists see their customers more often than that.

    To ascertain what might make it more pleasant — or at least less odious — for customers, Rosenfeldt set up an experiment in late 2008 in which customers were recorded before and after they brought their cars in for repairs. He found that while auto shops inspired fear and loathing in men and women alike, the two sexes had different ideas about how to improve the experience.

    Since Midas is in the testosterone-y world of engine blocks and overhead camshafts, it needed to aim for what the men wanted, right? Nuh-uh. "From a financial point of view, I'd rather have a woman in the shop than a man," says Rosenfeldt. They're better customers, he believes, more loyal and evangelistic. "They talk about looking for 'their guy,'" he says. And once they find him and trust him, he adds, "they spend more."

    Over at Best Buy, Julie Gilbert, a senior vice president whose job it was to figure out high-end male consumers, had already come to the same conclusion. She liked to do her research in living rooms, so she got herself invited to a couple of rich guys' homes to figure out why they'd buy widgets and peripherals at Best Buy but not pricey home theaters. Almost from the first home she visited, she realized she was talking to the wrong person. "The women took over the conversation," Gilbert says. "They had incredible passion and intensity about the store experience, and for every issue they also had a solution."

    What these two and many other businesses discovered is the Sheconomy.

    Everyone knows, or has long suspected, that the purse strings are held by women. It's oft repeated that they make 85% of the buying decisions or are the chief purchasing officers of their households. The difference today — one that has enormous consequences across global economies — is that women are also the earners. In October 2009, the U.S. workforce became nearly half female: women held 49.9% of all nonfarm labor jobs and 51.5% of high-paying management and professional positions, according to the Bureau of Labor Statistics. This is not likely to be a blip. For every two guys who graduate from college or get a higher degree, three women do. This is almost the exact opposite of the graduation ratio that existed when the baby boomers entered college.

    And as the U.S. continues its migration from a manufacturing economy to a knowledge-based one, women are poised to snag more jobs. They make up the majority of the workforce in 9 of the 10 occupations the BLS predicts will add the most jobs in the next eight years.

    While it's true that most women still earn less than men, are far less likely to be in the highest-salaried executive positions and suffer a prohibitive motherhood penalty, about a third of women outearn their husbands. And according to James Chung of research firm Reach Advisors, who spent more than a year analyzing data from the Census Bureau's 2008 American Community Survey, among one specific segment — childless city-dwelling single people in their 20s — the average pay gap favors females: in metropolitan areas, their median full-time income is 108% that of their male counterparts. In some places, says Chung, "they've not just caught up — they're clocking the guys." In Atlanta, women are at 121% of men's pay; in New York City, 117%.

    These gains, mostly the product of education, may dissipate as these women have kids. Nevertheless, better pay for more women changes many things — including, most fundamentally, how much money they have. Evidence of this shift is visible all around the world. A recent Booz & Co. report called women "the Third Billion," meaning that, globally, they are the next emerging economy. Much of this is a result of women's growing economic power in developing countries, but even in the U.S., women hold sway over 51.3% of the nation's private wealth, as Maddy Dychtwald observes in Influence, one of many books on the subject of female economic empowerment to come out in the past 12 months. "We're on the brink of a massive power shift, a grinding of the gears of history into a new human condition," she writes. "It's a world where women can, if they choose, seize the reins of economic control."

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