Equity isn’t just something to strive for in the workplace. It’s something to own.
Though salary is often the proxy we use to determine an employee’s success, it’s equity that lets employees own a share of the financial value they help create. Equity builds wealth. And women aren’t getting enough of it.
A new report released today (Sep. 18) from Carta (formerly eShares) shows women make up 35% of equity-holding employees, but hold only 20% of employee equity. The data, which was compiled from 180,000 employees across 6,000 companies, shows women employees own just $0.47 for every dollar of equity owned by their male colleagues. This comes on top of the other well-known gender pay gap, which shows women earn $0.82 in salary for every dollar earned by men.
When it comes to female founders, the gap is even wider. Women founders own just $0.39 for every dollar of equity owned by male founders, according to the report.
“One of the main reasons the gender equity gap exists is because women are underrepresented in higher equity roles like founders, executives, engineers, and early employees,” said Henry Ward, Carta’s (male) CEO & co-founder. “It’s a big gap and it will take time to fix through hiring, training, and corporate diversity initiatives. But we can accelerate that change by looking at the problem top down, starting with restructuring boardrooms and leadership teams.”
California is taking a step to shrink the gap with a proposed law that would require companies to add more women to their boards. But steps like this are half measures compared with the scope of the problem.
Unlike cash, equity—whether in real estate or ownership of a company—often increases in value over time. Without having to do additional work, equity can add to an employee’s wealth. That’s why you see early recruits at companies like Facebook and Twitter become millionaires seemingly overnight when they’re given the opportunity to exercise their options.
If women don’t share equally in the ownership of the companies they are helping to build, it doesn’t just impact their own financial upside. Equity lets employees build the kind of wealth that gets passed down from one generation to the next, which fuels the next generation of entrepreneurs and investors.