Women, Work, and Recognition: The Case for an Inclusive Recovery

There's no vaccine for gender inequality. It's time for bold policy action.

BY Scott Anderson Chief Economist Bank of the West

Dec 24th 2020

Almost as soon as stay-at-home orders began in early 2020, women began sharing how hard the pandemic was hitting them. “Women’s invisible labor is keeping America going,” wrote Zoe Fenson for The Week in April.

“In the COVID-19 economy, you’re allowed only a kid or a job,” wrote Deb Perelman for the New York Times in July. “The long-term losses for professional adults will be incalculable, too, and will disproportionately affect mothers.”

The data quantifying those losses is now upon us. Of the 1.1 million people who dropped out of the workforce in September four out of five were women. Through October 2020, women trailed men in job recovery, recapturing just 39 percent of jobs lost since spring. Women saw 1.5 million fewer jobs than men.

Working mothers are hardest hit. According to University of Southern California research, among working parents who are married or living with their partner, women were 17 percentage points more likely than men to have become the sole provider of childcare between April and June. Almost half of moms with school-age children reported symptoms of psychological distress last spring. In July, they were more than twice as likely to report symptoms than fathers.

It is not only a societal wrong that the economic, social, and mental toll of the pandemic is falling disproportionately on women’s shoulders, it’s an economic loss for us all.

It is not only a societal wrong that the economic, social, and mental toll of the pandemic is falling disproportionately on women’s shoulders; it’s an economic loss. McKinsey estimates that global GDP growth will be a whopping $1 trillion lower in 2030 than it would’ve been had women’s unemployment tracked men’s in every sector.

The economic case is mounting for an inclusive recovery strategy that targets the barriers putting women at such risk. We need something bold and corrective—not unlike Japan’s Womenomics campaign last decade—that lays the groundwork for a more equitable economy post-pandemic.

Women Were Economically At-Risk Before COVID-19

Before the pandemic, women already faced economic hurdles. Globally, women are paid less than men, have fewer savings, lack social protections, and are more likely to be burdened with unpaid care and domestic work, according to UN Women.

Women also tend to cluster in the sectors most affected by COVID-19. According to McKinsey, even though they account for 39 percent of global employment, women hold 54 percent of jobs in the accommodations and food service industries, which are among the sectors worst affected by the crisis. It’s a similar story for retail, the arts, recreation, and public administration.

Even in advanced economies that have made considerable progress on gender equality in recent decades, coronavirus is taking a devastating toll, not least because women are absorbing the crisis on two fronts. Women occupy a staggering 70 to 90 percent of frontline jobs, such as nurses, childcare workers, and cashiers. And burning the candle on the other end, the pandemic has disproportionately increased the amount of time American women dedicate to unpaid family care at home, adding 90 minutes to two hours daily.

When working fathers receive higher pay than working mothers, simple household economics dictate that women would be first in line to leave work. But the longer they remain out of the workforce, the steeper the climb becomes upon return. A 2018 study by the Institute for Women’s Policy Research found that women who leave the workforce for one year see their annual earnings drop 39 percent. After four years, women see a 65 percent decline. For men, leaving the workforce for four or more years will mean their earnings fall 57 percent.

Working Women Are Good for Business

Here’s the good news: we can make a strong economic case for tackling these inequities. According to the Harvard Business Review, gender diversity in the workplace can make companies more productive, more valuable, and more attractive to top talent. Researchers also found that gender diversity can boost labor force productivity and incomes for both men and women because women bring new skills to the workplace. In the U.S., a 10 percent increase in female labor force participation has been associated with a nearly 5 percent increase in real wages across the board.

Meanwhile, women-owned businesses have been an economic growth engine in the U.S. From 2014 to 2019, the number of women-owned businesses grew by 21 percent—more than double the growth rate for businesses overall.

Companies that hire more women are also a draw for investors. Stanford University Professor Margaret Neale studied shareholder reactions to the gender diversity announcements made by publicly traded companies between 2014 and 2018. Her research found that stock prices rose if a company revealed more gender diversity.

There’s also evidence from the startup world that gender has an impact on investment returns. Teams with a greater gender balance at private equity and venture capital firms have been shown to generate 10 to 20 percent higher returns, and a study of 1,500 early-stage companies revealed that businesses founded by women also delivered more than twice as much revenue per dollar invested.

How Can We Put Women First in the Recovery?

Removing the barriers that keep women out of the workforce should be an important piece of any pandemic recovery strategy. We only need to look at other countries for examples.

Japan, which ranks 121 in the World Economic Forum’s Global Gender Gap Index (GGGI), made economic empowerment for women the cornerstone of its growth strategy in 2013. To bring more women into the workforce and help them stay there through motherhood, Japan’s Womenomics campaign entailed generous parental leave policies, expanded access to child care, mandated equal pay, and required public and private disclosures about gender diversity.

Removing the barriers that keep women out of the workforce should be an important piece of any pandemic recovery strategy.

Female labor participation is now higher in Japan (71 percent) than in the U.S. (66 percent) and Europe (62 percent), according to a 2019 report from Goldman Sachs. That said, the program was no silver bullet. Japanese women are still vastly underrepresented in corporate leadership roles and suffer from lingering bias, underscoring how difficult it is to reverse long-held societal beliefs about gender roles.

Nevertheless, the U.S. coronavirus response is a chance to draw on policies like Japan’s to provide women with immediate relief while improving their long-term economic prospects. McKinsey recommends that women-centered government interventions focus on workplace- or state-provided childcare solutions; digital and financial inclusion so women have equal access to digital tools as work moves online; and working to address biases that often leave women doing the bulk of unpaid labor.

In Iceland, which ranks first on the GGGI, women have access to affordable childcare, are guaranteed equal pay, and share parental leave with male partners. “If applied properly, these policies have the potential to change the makeup—and the rules of the game—of both the public and the private spheres,” wrote Katrín Jakobsdóttir, Iceland’s Prime Minister, in an op-ed last year. “Why? Because they enable women to participate in the labor market and public decision-making, while making space for men to share domestic responsibilities.”

People may balk at the costs of social programs like Iceland’s, but policies that promote gender parity could pay dividends down the line. McKinsey found that the economic benefits of narrowing gender gaps are six to eight times greater than the social spending required to narrow them.

The pieces may finally be moving into place to make progress on this front. Vice President-elect Kamala Harris pushed for six months of paid family leave for workers during her own bid for president, and in what could be a win for women’s interests, the next Congress will be the most gender-diverse yet.

The work to dismantle the forces that have placed so much of the pandemic burden on women will not be easy, but it is entirely possible. Following the lead of countries like Iceland and Japan—and building upon those policies—the U.S. can look forward to an inclusive recovery that puts women at the center. We’ll all be better for it.

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Scott Anderson Chief Economist Bank of the West

Scott Anderson analyzes international, national, and regional economic trends and provides forecasts for bank management, business lines, and clients. He is frequently cited in the media, including Bloomberg, CNBC, the Los Angeles Times, Reuters, and USA Today. In 2019, Scott won the NABE Outlook Award for most accurate economic forecaster.

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