Pandemic Economic Effects on Women
A New Paradigm for Women Hit by Covid’s Economic Impact
Covid-19 has sucked for pretty much everyone, in every possible way. We all feel its health effects, the fear and anxiety, and don’t forget the frustration, annoyance and isolation of these long months. For women in particular, though, this horrible pandemic packs a powerful wallop right in the pocketbook. And like the “long covid” we hear so much about, this pain will linger.
Covid spurred massive layoffs in 2020, which continue in certain sectors even today. These layoffs take a greater toll on working women[i] than their male counterparts, because women make up the bulk of the workforce in the hardest-hit sectors — and because they tend to hold positions lower on the company totem pole (and higher on the ‘first fired’ list).
In early 2020 women lost five times as many jobs in a single month as they did throughout the entire 2007–2009 Great Recession[ii]. But layoffs didn’t drive the damage on their own. School equals daycare for millions of families. When schools and daycares closed in the initial stages of the covid outbreak in the U.S., it was moms rather than dads who quit working to tend and teach children, for the most part.
By the way, that’s based on abundant data, not just observation and anecdote; as a 2021 article by leading sociologists points out, “In 2019, mothers’ rate of labor force participation was about 18 percentage points lower than fathers’. By 2020, this gap grew by five percentage points in states where schools offered primarily remote instruction.”[iii]
Other research shows that between February and April of 2020, the increase in unemployment for mothers with children between the ages of six and twelve was 51 percent bigger than the increase in fathers’ unemployment.[iv] Still another article cites statistics illustrating that “mothers with young children have reduced their work hours four to five times more than fathers.”[v]
Whether stemming from job layoffs or the simple need to take care of children, women are leaving the workforce at an alarming rate, and this bodes ill for their future financial wellbeing.
Time out of the workplace carries long-term economic impact. There’s a significant loss of political capital at the organization; even if a woman returns to her old employer after a hiatus at home, she is rarely able to return to the same job with the same pay.
Years spent off the career track are seen as not just neutral, but detrimental to her value as an employee. After all, she’s not been there to network day-to-day basis with colleagues and bosses to show her value. Unable to show her skills routinely, there’s a strong assumption that she has lost whatever sense she had to begin with. (Though few would phrase it in such crude terms, that’s what it boils down to.)
And when she’s ready to return to work? She comes back at a lower level, complete with lower compensation. So…less money, but it’s worse than it seems at first glance. At many organizations she’s also now forever seen as “mommy track” material, rather than someone to be cultivated for a senior leadership role down the line. And by opting out, she’s lost that prior compensation benchmark.
Not only does she lose the income during the years out of the workforce, she’s lost the compound interest of raises and cost of living increases. Going back in, she’s penalized yet again by starting at a lower rung with less pay. It can take years just to get back to the income level she left at — which is worth less now due to years of inflation.
And during all these years, both out and back in the workforce, she’s not saving as much money because she’s not earning as much money. She’s not contributing as much to her 401(k) plan, nor is she accumulating restricted stock units at the rate she would have been had she not left her job.
Her male partner who didn’t take time out is building his balance sheet at a faster rate, along with building value in his compensation and benefits package. Though they may have started as financial equals, now he’s worth more money and earns more income. That means the next time someone needs to stay home to provide care for parents or children or any other reason, it’s only logical that the woman is the one to leave her job, yet again.
A new paradigm
How do we solve this problem? If women aren’t to fall woefully behind and lose even more than we already have[vi] of the economic progress we’d made over the past half century, we must have a new approach. It’s about aligning your own intellectual capital with the logistical realities of your lifestyle.
I’m talking about entrepreneurship. About consulting, leveraging niche-specific skills accumulated on the job. About starting another type of business — or buying into one, using capital saved while working. There are more business brokers than ever, a fact that reflects a huge increase in M&A activity. If you have money and want to buy into an existing company, there’s an opportunity to do it.
Going out on your own takes courage and discipline and a shit-ton of work. But there’s also flexibility. Working for yourself in a field that doesn’t demand 9 to 5 corporate hours allows you to schedule around family needs and priorities, so you can successfully grow your new company while still fulfilling the domestic obligations society and partners — and women themselves — often expect.
Focus on the business, focus on the family and forget the 401(k). But don’t forget about your financial future! Set up a SEP IRA, so you can continue to fund your retirement and ensure that your balance sheet grows alongside your partner’s.
Dealing with covid has meant all kinds of shifts in families, businesses and society at large. Change was unavoidable, but the pandemic doesn’t have to destroy women’s economic progress. We simply have to adopt a new way of thinking about work, and how to make work and family work together.
[iii] Collins, C., Ruppanner, L., Landivar, L. C., & Scarborough, W. (2021, January 21). The Gendered Consequences of a Weak Infrastructure of Care: School Reopening Plans and Parents’ Employment During the COVID-19 Pandemic.
[iv] Landivar, Liana Christin, Leah Ruppanner, William J. Scarborough, and Caitlyn Collins. 2020. Early signs indicate that COVID-19 is exacerbating gender inequality in the labor force. Socius: Sociological Research for a Dynamic World 6.
[v] Collins, Caitlyn, Liana Christin Landivar, Leah Ruppanner, and William J. Scarborough. 2020. COVID‐19 and the gender gap in work hours. Gender, Work & Organization. DOI:10.1111/gwao.12506