Editor’s Note: Heather Hay Murren is a former commissioner for the Financial Crisis Inquiry Commission and is founder of The Jochebed Scholarships for Women at Johns Hopkins University. The opinions expressed in this commentary are her own.
Women are at risk of losing decades of advancement in the workforce as a result of the Covid-19 pandemic. This crisis will have a much more devastating impact on women’s financial security than the Great Recession, not only through income loss — but also through wealth destruction.
Just in September, 80% of the 1.1 million workers who dropped out of the workforce were women — that is four times more women than men.
Whoever wins the US presidential election will face grave challenges over the next four years as we recover from the economic impact of this pandemic. But we need to think past the immediate crisis toward solving these challenges over the long term.
Leaving the workforce even briefly has a deleterious effect on lifetime earnings: It results in an average 7.3% reduction in pay when returning to the workforce; fewer raises, promotions and tenure; and smaller Social Security contributions and savings, resulting in higher poverty rates for women in retirement age.
Women’s economic progress toward greater equality in the workforce prior to the pandemic, while directionally positive, still left a significant wealth gap between men and women. For example, the median household retirement savings for men is $76,000, compared to just $23,000 for women. One in three women say they’ve saved less than $10,000.
Taking action now to advance gender equality could add $2.7 trillion to the US GDP by 2025. If we take strong and immediate steps — from legislation to employer policies to financial lending — to ensure women are employed at the same rate and at the same levels as men, we not only will close the wealth gap, but we will create a stronger, more stable economy offering women the ability to get back to work.
Without these steps, the current losses in workforce participation could drain years of accumulated capital. They could also force women to forgo future job opportunities as losses of housing and transportation, combined with increased caregiving responsibilities make them unable to take new jobs even as these jobs return.
During the 2008 financial crisis more men lost their jobs than women, with many losses centered in construction and manufacturing, and the historic recession that resulted from that crisis did not have the amplifying effects of an overall lockdown and school closures. Yet during the current recession, women, accounting for 49% of the overall workforce, represented 55% of the initial jobs lost last spring.
As we continue to try to blunt the negative economic impacts of this pandemic, it is critical for policymakers to act not only on steps to improve immediate economic security, but also on pathways for women to fully capitalize on work opportunities — such as affordable child care, access to health care and protections from domestic violence, which has escalated during the lockdowns.
We also need to promote a culture across all sectors that in turn creates more work opportunities for women — such as promoting diversity and equality in the federal workforce, increasing female representation in the boardroom, increasing access to capital for women entrepreneurs, enforcing equal pay and ratifying the Equal Rights Amendment to finally make gender equality part of our constitution.
If we fail to address the gender inequality in our current crisis, it will set women back decades.