The reversal of Roe v. Wade: Its impact on economic growth, financial wellbeing, and the financial services industry

The Supreme Court overturning Roe v. Wade on June 24 this year has not only sent shockwaves across the country on a social level but has also incurred far-reaching economic repercussions – at a time when many Americans are still recovering from the lingering economic effects of the pandemic and the country is on the brink of a recession.

Roe v. Wade was the milestone ruling that established the constitutional right to abortion in the US in 1973. In a majority opinion, the Court held that a set of Texas laws criminalizing abortion in most instances violated a woman’s constitutional right of privacy, and termed it unconstitutional – entitling pregnant women to an abortion during the first three months of their pregnancy.

Fast forward to Supreme Court’s decision last month – the Court upheld a Mississippi law banning abortion after 15 weeks of pregnancy. This move eliminates the constitutional protection for abortion – ensuring that it will become illegal or highly restricted, and allowing states to set their own laws regulating the procedure.

An analysis by the Guttmacher Institute shows that in total more than 20 states are making moves to limit access to abortion after the ruling. Some states intend to ban abortion from the moment of conception, while others are introducing bans at six or more weeks. 

The ramification on economic mobility and workforce

Being denied an abortion can yield negative economic impacts for pregnant women and their families. The Turnaway Study weighed the experiences of almost 1,000 women who had received or been denied abortions — it found that years later, those who were turned away were more likely to have insufficient funds to cover basic household expenses such as food and housing. They experienced lower credit scores, elevated debt, and lesser financial security relative to those who were granted access to a safe termination. 

“In addition to the health and mental health impacts of not having bodily autonomy over deeply personal medical decisions, forcing pregnancy comes with obvious economic burdens,” said Marigny deMauriac, founder and CEO of deMauriac, a financial consulting and wealth management firm for women investors.

For example, the cost of pregnancy alone is more than the actual childbirth. These costs include regular check-ups, ongoing tests, and prenatal care. Despite widespread public support and strong evidence of its mental and physical health benefits, the United States remains one of a handful of countries worldwide that does not offer paid parental leave. Many people can’t afford to take unpaid leave, and almost half of US workers don’t qualify for benefits through The Family and Medical Leave Act. 

Women who take time off of work also experience inequity in estimated lifetime earnings after returning to the field. Inequity in lifetime income perpetuates an already existing income and wealth gap, which cycles down generations and most negatively impacts Black and Latinx women. As a result, they experience reduced earnings over their lifetimes and have less generational economic mobility – given that the going-to-be mother is already a working adult of child-bearing age. The younger ones, who fall under the bracket of middle or high school, drop out of school or don't continue on to college.

“The choice to have an abortion or not is a matter of working towards equality in so many respects, not just a ‘choice’,” deMauriac told Tearsheet.

Often after childbirth, women are less likely to consistently hold down a full-time job due to increased responsibilities. In other scenarios, many find themselves lacking enough money to cover living expenses, resulting in higher levels of poverty and an over-reliance on social welfare benefits. In the larger scheme of things, this negatively impacts the large-scale economic system of the country, as well.

Transactional data in play

Roe v. Wade set a legal precedent for privacy from a due process that is now under threat. The vast amount of private data stored by popular apps — everything from physical location to search history to financial transactions — can make it easy for analysts to determine whether someone is pregnant. Law enforcement agencies frequently access private companies’ data via an array of means that include warrants, subpoenas, and even voluntary purchases. The Health Insurance Portability and Accountability Act may be able to access technology companies’ stored information to collect, compile, and track evidence against individuals who choose to terminate a pregnancy in states where abortion is illegal.

Financial institutions, specifically, collect payment data from customers – by way of which prosecutors can trace records for evidence of an abortion, just as they can from medical providers. 

How do FIs perceive the ruling and what is expected of them?

The most common corporate response to recent anti-abortion legislation has been offering travel and relocation benefits for employees to receive reproductive care out-of-state – which is something Wall Street firms like Bank of America, Goldman Sachs, Citi, Wells Fargo, and JPMorgan Chase all have done. Other financial companies, like Charles Schwab, which is headquartered in Westlake, Texas, haven't commented at all.

It is too soon to measure how effective this benefit is in supporting those most impacted by restrictive laws – low-income communities and people of color. 

However, such benefits will likely be key to retaining top talent. In a survey, approximately half of college-educated workers indicated that they would consider relocating out of state if their home state were to ban abortions. Almost seven in ten workers posit that access to reproductive health care, including abortion, should be provided by companies as part of their workplace efforts to foster gender equity.

FIs that already allow for remote work will continue to do so, while employees may pressure their employers, urging for a policy change by pushing elected officials, paying for relocation costs, allowing remote work, offering legal defense for anyone who obtains or assists with abortion services, creating relief funds and providing free therapy services for those needing additional assistance for complications such as miscarriages and stillbirths – apart from paying for out of state abortions.

Since it's a month-old ruling, it seems like banks want to gauge the situation for now and don't want to over-commit by offering anything beyond travel expenses to employees. Whether or to what extent they will bend their health policies that are well within their state's jurisdiction is still a tough nut to crack. 

“We aren't aware of other major initiatives in this space from banks. One reason for this may be uncertainty around the legal and privacy-related implications of providing comprehensive benefits for workers in affected states,” said Travis Korte, associate director of sustainability research and data at Ethic, a tech-enabled asset manager.

“However, another reason may be the precarious political situation in which some of these firms find themselves owing to donating to anti-abortion politicians and groups like the Republican Attorney Generals Association. Given these ties – some banks have felt for taking a stand in support of these rights, others may be hesitant to move quickly,” he said.

Corporations in America have long talked publicly about embracing their commitments to issues such as women’s rights, racial inclusion, and same-sex marriage – while it recently emerged that they simultaneously donated millions to anti-abortion politicians and the committees that back them, since 2005. Financial services firms USAA, Citi, JPMorgan, and the American Bankers Association have contributed more than $100,000 – while Wells Fargo, Bank of America, and Capital One have each donated more than $70,000 in total to sponsors of anti-abortion bills and to the governors who signed them into law. In total, these organizations have contributed some $1.6 million to these lawmakers.

“It’s time for firms to practice what they preach and use their formidable influence to promote reproductive rights as human rights,” said Kellen Parker, director of sustainability and data insights at Ethic. “This involves speaking out in vocal and unequivocal terms, re-evaluating their political contributions, and reconsidering expansions or operations in states that have implemented — or are looking to implement anti-abortion laws.”

FIs that are pro-choice may go above and beyond taking a stand when it comes to limiting political contributions to certain candidates who continue to be in favor of anti-abortion.

Given that people believe the public sector has failed them, they are pinning their hopes on private investors – who they hope will step up on this issue and seek to divest from companies that have funded anti-abortion politicians in the past or taken inadequate action to defend reproductive rights. 

“We expect next year’s proxy season will see shareholders expressing great interest in how companies are supporting employees’ access to reproductive healthcare and/or aligning political spending with public stances on social issues,” said Parker. 

Corporate leadership may find themselves forced to respond to a wave of proposals that ask them to evaluate the tangible business risks of their policies or lack thereof, and political donations, according to Parker.

Going forward, companies can be proactive in their approach or risk losing valuable employees who may get the impression that there is a discrepancy between what is being said about gender parity, equity, and inclusion – and what is being done. 

“If your firm wants to be competitive, you need to walk the talk, not just send out company-wide emails. People expect and deserve more from the companies where they spend the majority of their waking hours and they should get it,” deMauriac advised.