Introduction: The Early Impact of COVID-19 on Women in the Global Economy (Q4 2020)
Following the external shock of the COVID-19 pandemic and the subsequent economic downturn, the U.S. economy has shown signs of recovery against an estimated 2.4% contraction of GDP for 2020. While many analysts see the global economy as poised for solid recovery in 2021, uncertainties remain. Economic measures and forecasts have been disrupted by the crisis, and growth is likely to be choppy.
Amid the downturn’s uneven economic signals, one aspect of the disruption has been clear. The pandemic has visited a uniquely negative impact on women in the global economy. The most vivid illustration is in the global care economy, which is comprised of US$10.8 trillion in unpaid labor, performed mostly by women. The work of unpaid caregiving, which keeps many women out of the workforce, increased notably as schools and daycares shut down. Furthermore, a host of services normally measured under economic production were provided at home. These ranged from tutoring, more cooking as restaurants closed, and increased elder care, to more housecleaning, and home repairs. School, home, care, and services gaps were filled by the unpaid care economy, primarily by women.
Two additional and related areas of COVID-19 impact are the overwhelming job losses by women and the predominance of women in low-paying essential jobs. In the U.S., nonwhite women are the most likely to fill the jobs named as essential under federal guidelines. On the whole, women fill 53% of critical retail positions and over 75% of essential health care and social work jobs. Related to this is the outsized job losses by women in the U.S., starting when non-essential low-paid service jobs were lost early in the crisis. Women held a majority of U.S. jobs lost in the early months, with single mothers bearing the highest rate.
In April 2020 the U.S. female labor force participation rate dipped below 55% for the first time since 1986. Moreover, based on the costs of work disruption due to caregiving, at mid-year the economic impact of the workforce changes facing women was estimated at US$341 billion. The sustainability of hard-won progress in workplace diversity is at risk. In their sixth annual Women in the Workplace report, McKinsey and Lean In describe an intensifying of longstanding challenges facing women in corporate America. A broken rung for women at the first management level remains stubbornly in place, perpetuating a long-term gap in all management levels. In previous years the Workplace study found that men and women left their corporate employers at similar rates. According to the 2020 update, over the summer several million women already considered departures or leaves of absence – a much higher rate than men – due to the disruptions in caregiving support.
By year-end, there was a bleak picture of job losses for minority women in the U.S. Women accounted for 55% of net job losses from February through December. Of the 12.1 million jobs lost early in the crisis, more than two of every five had not returned by year-end. The unemployment rate for all women went from 3.1% in February, 2020, to 6.3% in December, comparable to 6.7% for all men, which increased from 3.4% in 2019. But the unemployment rates for minority women were higher than the overall rates for men and women at year-end. Black women closed the year at 8.9%, up from 4.9% in February. The rate for Latinas was 8.8%, up from 4.8% in February. Unemployment for Asian women went from 2.6% at the end of 2019 to 7.4% at the end of 2020.
Led by the U.N., there is a steady chorus of calls for a women-focused recovery from the global pandemic and economic downturn. In the U.S., how will the Biden Administration respond? Renewed calls for a national paid family and medical leave policy is a key focal point. There are also spotlights on wages and benefits for service workers; subsidized childcare, particularly for low-paid essential workers; and increased flexibility by employers around caregiving. In an early signal on the wage front, a federal minimum wage increase to US$15 per hour was among the initial executive orders signed by President Biden. As further policy initiatives are closely watched, how can investors both support and benefit from a gender-focused recovery? Gender lens investing can play a key role.
Covid-19 Impact & Recovery Update (Q1 2021)
The COVID-19 pandemic and resulting economic downturn have had an unequal negative impact on women in the U.S. and globally. Women’s unemployment has risen more sharply than men’s since the start of the pandemic. As schools and daycares closed, women’s workforce participation has been lowered by the increased burdens of unpaid caregiving. Even as economic recovery is underway, the full brunt of the pandemic’s outsized negative impact on women is still felt and documented.
Pandemic’s negative impact on women continues to unfold
According to the National Women’s Law Center’s (NWLC) March update, U.S. women’s unemployment stood at 5.7% at March 31, 2021. Unemployment for Black and Latina women remained particularly high at 8.7 and 7.3%. The unemployment rate for white men was 5.2%, while the rate for Black men was 9.8%. The NWLC asserts the women’s unemployment rate would rise to 8.0% if figures included the 1.8 million women who have left the workforce since the pandemic started. The women’s labor force participation rate declined from 59.2% in Feb 2020 to an historical low of 57.4% in March 2021, with the last recording of this same rate occurring in December 1988. Men’s U.S. labor force participation slid from 71.6% Feb 2020 to 69.5% in March 2021. Women face continuous hurdles to workforce re-entry, securing only a third of the 916,000 jobs gained in March.
Data from a fourth-quarter 2020 U.S. survey by the Kaiser Family Foundation (KFF) showed that 10% of women respondents quit their jobs due to pandemic-related reasons. Among lower income women this figure was 17%, and leaving a job was more likely for single mothers. The reasons cited were COVID-19 health risks of essential jobs and the closures of schools and daycare, for which mothers were more likely than fathers to miss work or leave a job. In addition, a significant number of women had to take unpaid leave due to the same dynamics.
Similar trends have unfolded for women beyond the U.S. PwC’s annual Women in Work Index recently summarized unemployment for women in OECD countries. Throughout the OECD, unemployment increased 1.7 percentage points for women in 2020, compared to 1.5 percentage points for men. The study found that GDP in the OECD as a whole would increase US$ 6 trillion per year if female employment rose to Sweden’s rate.
The Care Economy
U.N. data shows that the second shift of caregiving now totals approximately 31.5 hours per week, up from 26 hours per week before the pandemic. Surveys show that women’s additional 5 hours of caregiving per week is greater than the 3.5 additional hours reported by men, who now spend an average 24 hours per week.
First-quarter reporting from the International Labor Organization (ILO) demonstrated unprecedented 2020 global job losses of 114 million. Worldwide, the employment reduction for women stands at 5% in 2020, versus 3.9% for men. In 2019, women’s global labor force participation rate was 47.8%, compared to 75.9% for men. In 2000, this gap was 51% to 78.2%. Due to the long-term gender gap in labor force participation, absolute losses in 2020 were higher for men. Across all regions, women have been more likely than men to leave the labor force during the pandemic.
Economic stakes of reduced female workforce participation are high
The PwC study found that if the OECD is to fully recover from the pandemic’s predicted impact by 2030, progress toward gender parity must be double its historic rate. According to McKinsey, failure to take a women-centered approach to recovery could lead to a $1 trillion loss in global GDP by 2030. According to the NWLC March report, following from the job gains in March, women need 15 months in a row of equivalent gains to recover the pending 4.6 million net jobs lost since Feb. 2020.
The pandemic’s impact on women extends beyond the substantive labor force reduction. The KFF study found that a majority of mothers reported the pandemic had taken a toll on their mental health, with one in five reporting a major toll. According to the U.N., in addition to the labor force impact of the pandemic, many areas are seeing a reduced access to health care for women. Alarmingly, up to 10 million girls are at risk of becoming child brides due to the pandemic.
Women in Technology
Recent research by Girls in Tech summarized the pandemic’s impact on women who work in technology. 63% of those with male bosses reported burn-out, compared to 44% who have female bosses. Information Technology is consistently the first or second highest sector allocations across gender lens equity funds.
Policy responses underway in the U.S.
Passed in March, the American Rescue Plan Act (ARPA) included a range of provisions to support families. These included increases in the child tax credit, housing and utility assistance, and funding for education. Also included was funding for childcare, where women’s workforce participation is supported by providing daycare options for parents and job security to childcare workers.
While a proposed increase in the national minimum wage was not in the final ARPA legislation, it is important to note that 59% of the estimated 32 million workers impacted by a raise in the minimum wage would be women and people of color. During April the federal government instituted a minimum wage increase for all federal contractors.
Essential Work Sectors
The female-dominated essential work economy needs opportunities and higher wages. Women comprise 93% of home health workers, where median hourly pay is $12.15. Women are 89% of nursing assistants, who earn a median $14.26 per hour. Women make up 77% of retail cashiers and 88% of housekeepers. Both groups earn less than $15 per hour. Gender lens equity funds hold an average 35% weighting in essential work sectors.
The Biden Administration has put forth several proposals around jobs and benefits following the Rescue Plan Act. The American Jobs Plan proposal includes funding for home-based care for elderly and people with disabilities. The proposed American Families plan would devote resources and funding to a range of programs. These include paid family and medical leave, where the U.S. lags other OECD countries, childcare funding, universal pre-kindergarten, and tuition-free community colleges.
Marshall Plan for Moms
With increased attention on unpaid caregiving, Reshma Suajani, CEO of Girls Who Code, proposed a Marshall Plan for Moms, which included a call for stimulus checks for mothers. How much is the labor of an average stay-at-home parent worth? According to salary.com, the 2019 value of a homemaker was $178,201. This pulls two things into sharp focus: the economic value to be gained by shifting portions of this labor from unpaid to paid; and the losses suffered by the economy when parents are out of the paid workforce.
Global economy must not return to an unjust “normal”
U.N. Secretary General Antonio Guterres made a recent statement on the pandemic’s litany of drastic setbacks for women. He stressed that the global economy must not return to the previous discriminatory, unjust and unsustainable “normal.” Rather, there is a clear need for inclusive multilateralism.
In addition to corporate, national, and multilateral policy-making, investing in women can also move the dial on accelerating the pace of change and establishing a new normal. Global investors of all sizes have a role to play in achieving gender equality in the public and private sectors. This report provides a quarterly update on gender lens investing in the public equity sector, as well as gender lens fixed income vehicles available to individual and institutional investors. Gender lens investing is positioned to play a key role in supporting a women-focused recovery.
Update on the Need for a Women-Focused Global Recovery (Q2 2021)
The COVID-19 global pandemic and economic slowdown both saw measurable recoveries in the first half of this year. Vaccines began rolling out in the early spring, and the U.S. economy grew rapidly during the second quarter. Progress became dented by a summer resurgence of the virus, driven by the Delta variant. Case numbers have dialed back up in the U.S. and beyond. The economic effects of the resurgence have yet to unfold. Against this backdrop, there has been uneven access to the vaccine. 46.6% of the U.S. population was fully vaccinated by June 30. In contrast, only about 1% of the population in low-income countries received at least one dose by June 30, while only 14% received one dose in lower-middle-income countries.
Update on the impact of COVID-19 on women
In looking at U.S. employment as the second quarter came to a close, women had 47.6% of job gains for the month of June, according to the National Women’s Law Center (NWLC). Women’s June unemployment levels came down from the highs of April 2020, with the rate falling to 5.5%. However, over 40% of unemployed women had been out of work for longer than six months. If the women who left the labor force since February 2020 were counted in unemployment figures, the June rate would have been 7.6%. Moreover, unemployment remained higher for minority women, with Black women at 8.5% and Latinas at 7.9%. June unemployment for White men stood at 5.2%.
Gender-unequal impact of COVID-19
The global pandemic has dealt outsized setbacks to the world’s women in several ways: more jobs have been lost by women; there has been a dramatic increase in unpaid caregiving work, with much of the burden falling to women; and there have been COVID-19 safety risks in the low-paying service jobs predominantly held by women. See previous discussions of these dynamics in our year-end 2020 GLI review and our Q1 2021 Review.
A recent Newsweek analysis shows that a woman earning the pre-pandemic median U.S. wage is positioned to lose between $250,000 to $600,000 over her lifetime, depending on when she returns to work full time. This doesn’t even account for the retirement income gender gap, which averages 26% in OECD countries. As women have faced higher job losses during the pandemic, and therefore fewer contributions to retirement savings, this gap has only increased. In the U.S., women’s annual contributions to retirement savings are approximately 30% lower than men’s, according to the Government Accounting Office (GAO).
The U.S. turned in robust hiring in July, with employment rising by 943,000 jobs. The overall unemployment rate declined by 0.5 percentage points to 5.4%. Women accounted for 69% of those gains, the largest one-month increase since August 2020. Women still need five straight months of equivalent gains in order to recover the 3.1 million net job losses since February 2020. At the end of July, the U.S. was still down 5.7 million jobs from pre-pandemic levels.
Globally, Oxfam International estimates that women lost US$800 billion in earnings in 2020. This represents a loss of 5% of global jobs held by women, compared to 3.9% by men. This does not include job losses by the millions of women who work in the informal economy. UN Women estimates that an additional 47 million women will be pushed into poverty this year due to the pandemic and the lack of policy responses to address women’s economic security and the rise in unpaid care work. Moreover, the United Nations (UN) has been repeatedly calling attention to the increased risks of both domestic violence and child marriage as women are staying at home due to lockdowns, job losses, and unpaid caregiving work.
Returning to Work Requires Childcare
As vaccines have rolled out, albeit unevenly, the already pronounced negative impacts of COVID-19 on women now include expectations to return to work without adequate and affordable childcare, and without universal paid leave. This is particularly true in the U.S., which has yet to pass universal paid leave and remains the only OECD country without any provision for it. In the meantime, one third of childcare centers in the U.S. have not re-opened, with prolonged closures primarily impacting minority families. Where available, childcare costs have increased in order to cover the expenses of COVID-19 safety measures. Some companies and states are offering childcare benefits, and others began offering backup care this year.
To return to work, women need reliable school schedules, affordable and high-quality childcare, paid caregiving leave, higher wages, and flexible work policies.
Supporting women back to full-time work, with the accompanying economic gains, requires complex solutions. The flexible policies extended by some companies are not enough. At a minimum, surveys have shown that women need reliable school schedules, affordable and high-quality childcare, higher wages, paid caregiving leave, and flexible work policies. Before the pandemic, low-paying services jobs were predominantly held by women. As a choppy U.S. re-opening got underway through the spring and summer, a high number of openings for services jobs have been left unfilled. Following the disruptions of the pandemic, workers, including the women who have traditionally been filling such posts, have shunned many services openings, shifting their focus into jobs with better pay and working conditions.
Diversity, Equity, and Inclusion (DEI) Funds
Our coverage universe now includes diversity, equity, and inclusion (DEI) funds, which focus on policies around a range of corporate equality measures. DEI funds widen the offerings available to public sector impact investors.
Policy responses: The need for a women-focused recovery
In the largest gender equality gathering of global public and private sector leaders since the 1995 Conference on Women in Beijing, UN Women convened the Generation Equality Forum in Paris in June, hosted by France and Mexico. The Forum announced US$40 billion in commitments to gender-focused initiatives by governments, development finance institutions (DFIs), global philanthropic organizations, and the private sector. Centered around six action coalitions, a five-year Global Acceleration Plan for Gender Equality was unveiled by UN Women during the conference. Acceleration of progress on closing gender gaps was a focal point due to the outsized negative impacts of COVID-19 on women, including increased gender-based violence (GBV), job losses, and gaps in caregiving supports.
The U.S. announced Forum-related commitments and initiatives to prevent GBV, strengthen women’s economic security, and protect sexual and reproductive health and rights. Other UN member countries also announced significant policy reforms and initiatives. In the impact investing market, 2XChallenge announced a goal of raising US$15 billion by the end of 2022. Founded by G7 DFIs and focused on projects in developing economies, the program has already committed US$7 billion to gender equality initiatives, attracting additional commitments of US$3 billion from private investors – exceeding its initial 2018 challenge of US$3 billion in total commitments.
In addition to the Generation Equality Forum, the June Group of 7 (G7) meeting included 13 recommendations by the Gender Equality Advisory Council (GEAC). These contained several proposals for addressing the unequal impact of COVID-19 on women, a range of education measures, recommendations for ending GBV in all forms, and a number of economic empowerment proposals. The Council also highlighted the lower political participation of women globally.
For gender lens investors, the commitments and recommendations from the recent global meetings present opportunities to advocate for their implementation, as well as to become shareholders or bondholders of the investment vehicles that respond to the call. Recommendations for equal access to capital by women-owned micro-, small-, and medium-sized enterprises is a long-held goal of gender lens and impact investors, DFIs, and a broad range of equality advocates. Progress toward equal access to capital – and the growth of women-owned businesses – will lead to investment opportunities for private and public investors.
The Ongoing Need for a Women-Focused Global Recovery (Q3 2021)
A resurgence in global COVID-19 cases in the third quarter was driven by the Delta variant. U.S. GDP growth decelerated during the quarter on a sharp upward trend in cases, a choppy labor market, and an array of supply chain bottlenecks. Vaccinations have continued at a steady pace in the U.S., with global rates remaining mixed. 72% of the U.S. population had received at least one dose of the vaccine by the end of September. In contrast, only 2% of the population in low-income countries received at least one dose by then, while the global rate stood at 44%. Only 15 countries had fully vaccinated more than 70% of their populations as the third quarter came to a close.
Latest employment trends for women in the U.S.
The back-to-school season further highlights how the previous normal does not work for women. The September 2021 U.S. jobs report showed that women had a net loss of 26,000 jobs during the month, while men gained 220,000. The National Women’s Law Center (NWLC) estimates that U.S. women will need two consecutive years of job gains at the September level to recover the three million net job losses suffered since February 2020. The women’s unemployment rate stood at 4.2% at the end of September, compared to a pre-pandemic rate of 3.1% in February 2020. Unemployment for Black women was 7.3%, compared to a pre-pandemic rate of 4.9%. If the U.S. unemployment figures counted the nearly two million women who have left the labor force since February 2020, the women’s unemployment rate would have been 6.8% at the end of September.
The particular impact of COVID-19 on Black women must be addressed. Black women have lagged the worst in job recovery since February 2020, with 291,000 Black women leaving the workforce through September 2021.
Workplace dynamics and the impact on women
As we have highlighted in previous quarters, low-paying services jobs were predominantly held by women before the pandemic. In the U.S., low-wage workers made up 43% of the workforce pre-pandemic. While jobs have been added to the U.S. economy after the initial sharp losses in early 2020, many workers have shunned recent services job openings, by either leaving the workforce or shifting their focus into jobs with better pay and working conditions. As of June 30, 2021, low-wage earners were 52% of those leaving or shifting into new jobs. The avoidance of low-paying jobs, high burn-out, and the burdens of increased caregiving, are all contributing to high levels of job exits and transitions by U.S. women. As job openings in the U.S. go unfilled, what is being called the Great Resignation is women being forced out of the workplace due to increased caregiving burdens. Nearly one-third of all mothers have left or reduced their work since 2020.
Employment progress (but still far to go)
U.S. women’s employment finally saw an upward trend during October. Amid overall strong job growth, women gained 57% of jobs added during the month, and 251,000 women over 20 joined the labor force. Even so, at 57.3%, women’s labor force participation remained largely unchanged year-over-year, down from the pre-pandemic level of 59.2%. The women’s unemployment rate came in at 4.4% at the end of October. Women will need eight months of job growth at the October rate to regain pandemic job losses.
McKinsey & Company and Lean In recently released the seventh annual Women in the Workplace study, the largest annual survey of women in corporate America. With the burdens of child care and housework five times more likely to fall to women, the report found a widening gap in levels of burn-out reported by women and men. Women reported a burnout rate of 42% in 2021, compared to 35% for men. In 2020 this was 32% versus 28%. The study found that one in three women – at all job levels – has considered downshifting or leaving her career. In an environment of heightened focus on racism, the Women in the Workplace report found disconnects between publicly stated DEI commitments by companies and the reality of what minority women continue to experience. All women experience micro-aggressions at work, but Black women are three times more likely to face certain common micro-aggressions.
The Workplace report also found that women are more likely to take on the extra work to support a diverse and inclusive workplace. Women are largely tasked with performing diversity, equity, and inclusion (DEI) work, which results in higher employee satisfaction and retention, with less burnout. At the same time, this critical work is primarily overlooked in the promotion and career path process, with few companies recognizing it.
Beyond Women in Leadership
Supporting women back to full-time work, with the accompanying economic gains, requires complex solutions. At a minimum, surveys have shown that parents need reliable school schedules, affordable and high-quality childcare, higher wages, paid caregiving leave, and flexible work policies. Learn more about efforts to support workforce gender equality beyond women in leadership.
Global policy responses needed
Globally, the pandemic continues to inflict an unequal impact on women. UN Women recently unveiled A Feminist Plan for Sustainability and Social Justice: Beyond Covid-19: The Imperative for Transformative Change. A women-centered global recovery plan is a necessary response to a combination of economic crises for women. These include a livelihood crisis, a care crisis, and the ongoing gender impact of the climate crisis. Urgent levels in all three areas have been ushered in by the gender impact of the global health disaster, an impact which includes COVID-19, as well as heightened occurrences of gender-based violence and child marriage. The report asserts that a feminist economic recovery would ensure sustainable livelihoods for all and would stop treating both unpaid care work and the environment as limitless resources that can be used for free and depleted without cost or consequence. Instead, a feminist recovery would put economic policies at the service of sustainability, gender equality, and social justice.
We second UN Women on this: Care as a public good. Not free. Not limitless on the backs of women.
Placing care at the center of economic recovery would prioritize investments in quality care jobs with living wages and social protection, and this initiative would also support unpaid caregivers. Care should be treated as a public good, with adequate resources and regulations. Care should not be treated as a personal choice or family obligation, nor as limitless and supplied for free. The UN Women plan calls for financing, public-private partnerships, accountability, and metrics around caregiving.
U.S. policy responses needed
The childcare provisions of the Biden Administration’s Build Back Better plan would provide federal funding for early childcare, from full support for low-income families up to a cap of 7% annual income spent on childcare. U.S. families currently spend an average of 13% of their income on childcare. In addition, the plan proposes paid family and medical leave and investments in long-term care, including improved pay for caregivers.
National Strategy on Gender Equity and Equality
On October 22, 2021, the White House announced the first-ever National Strategy on Gender Equity and Equality. The Strategy, which is designed to include a push to organizational equality and policy actions at all government agencies, is intended as a long-term roadmap for the U.S. to close persistent gender gaps. The principles of the Strategy are designed to promote equality for all genders throughout the economy, with acknowledgment of longstanding systemic discrimination and barriers affecting women and girls. In addition, the Strategy seeks to address the impact of intersectional discrimination on the basis of gender, race, ethnicity, sexual orientation, religion, socioeconomic status, and other factors.
Also, the Build Back Better bill was approved by the House of Representatives on November 19, 2021. Following months of negotiations, the bill includes provisions for universal pre-k education and paid family and medical leave, among other measures.
See our take on how gender lens investing supports the priorities of the new National Strategy on Gender Equity and Equality.
See the current gender lens equity fund performance