Listen to On the Minds of Investors
It finally happened in February. After almost 12 months of relying on our parents for childcare so that my wife and I could continue to work during the pandemic, we were faced with a hard decision: either start looking for somebody to watch our daughter during the day, or one of us would have to quit. We sat down over a glass of wine to talk about it, and after a long conversation (along with a few awkward moments of silence), we decided that I would continue to work and my wife would leave her job.
Unfortunately, I imagine that this story resonates with many young professionals – and especially women – who have been forced to put their careers on hold due to the pandemic. However, this is not just about women leaving their jobs to provide childcare; we have also found that women are over-represented in those sectors most affected by the pandemic, such as hospitality, sales, education, and other services. As a result, while men were the primary driver of rising unemployment rates during the Global Financial Crisis (GFC), women and men have contributed more equally to higher unemployment rates during COVID-19.
At the same time as women are accounting for a larger share of unemployed individuals, the female labor force participation rate has declined. The participation rate for women tends to be structurally lower than for men around the world; however, it has been trending higher in Europe since the late 1990’s, whereas that same period of time represented a peak in the U.S. Although the female participation rate had begun to improve prior to the pandemic, the early stages of COVID-19 saw participation rates decline for women more than men. Furthermore, the past few months have seen far greater variability in the female participation rate as failed re-openings and reinstated lockdowns have impacted those industries where female employment is most prevalent.
So what can be done to address this? Reopening the economy (and schools) this year should provide a cyclical lift to female employment and participation, but there are structural issues that also need to be addressed. The longer these women are unemployed, the more trouble they may have re-entering the workforce down the road. At the same time, lower female labor force participation will weigh on the pace of potential economic growth going forward.
The Federal Reserve has made it clear that they are laser-focused on returning to full employment. One can only wonder if they will be looking for a durable rise in the overall participation rate, or whether they will take a more granular view and seek more equal progress across the gender spectrum.
Female labor force participation has struggled to rebound
Share of labor force aged + 16 years, percent