Bulletin
Investor Alert

New York Markets Close in:

Aug. 17, 2020, 2:30 p.m. EDT

The COVID-19 recession will widen the gender pay gap — but there might be a silver lining

By Meera Jagannathan

COVID-19’s disproportionate economic toll on women could create a larger gender wage gap during and immediately after this downturn, suggests a new study. But the so-called she-cession could also fuel changes that decrease gender inequality in the long run, the analysis adds.

Women in the U.S. have endured steep job losses due to their high representation in “high-contact” service sectors such as restaurants, travel and hospitality, which social-distancing guidelines have capsized, according to a working paper distributed by the National Bureau of Economic Research and authored by researchers from the University of California San Diego, Northwestern University and the University of Mannheim.

Women are also more likely than men to be unable to work during the pandemic due to “a lopsided division of labor” in heterosexual couples, the paper said, the result of women taking on a greater burden of extra child-care duties amid day-care and school closures .

Men have borne the brunt of unemployment during previous U.S. recessions, the paper said, including in the 2008 downturn, which earned the unfortunate nickname “man-cession.” But the coronavirus recession flipped the script: While men’s unemployment increased 9.9 percentage points as jobless claims surged between February and April, women’s unemployment rose 12.8 percentage points, according to the paper. Women’s employment rate also saw a greater decline than that of men.

“As a result of the COVID-19 pandemic, countries around the world, including the United States, have entered the sharpest economic downturn since the Great Depression,” wrote the authors, whose analysis used a quantitative macroeconomic model. “[W]e argue that the central economic distinction between this downturn and other recent recessions, aside from its severity, lies in its impact on women’s employment.”

Typical recessions moderately decrease the gender wage disparity since they tend to have a greater impact on men, the NBER study said. While normal recessions close the gender wage gap by 2 percentage points, though, a pandemic recession widens the gap by 5 percentage points. 

“In the short and medium term, a pandemic recession erodes women’s position in the labor market, first through direct employment losses, and later through the loss in labor market experience brought about by low employment during the recession,” they said.

But in the long-term future, the authors contend, a pandemic recession can actually decrease labor-market gender gaps.

They point to the rise in husbands serving as primary child-care providers, as well as an increase in the amount of time fathers spend on child-care duties in a pandemic recession; these two factors, they say, will “erode social norms that underlie the unequal distribution of childcare between women and men, thus increasing the share of ‘modern’ couples with egalitarian social norms.”

It’ll still take several years to fully compensate for the initial skill depreciation of women who work less or leave the labor force, they said.

“We also conjecture that the wide adoption of working-from-home arrangements during the crisis will lead to a persistent rise in the share of jobs in the economy for which telecommuting is an option,” the authors added. “Together, these changes imply that the ‘new normal’ after a pandemic recession will see a higher share of women in the labor force and a lower gender wage gap compared to the pre-recession economy.”

Just two in five of the 12.1 million jobs lost by women from February to April have returned, according to a recent analysis by the National Women’s Law Center , a nonprofit that advocates for women’s equality. Many positions women have gained over the last few months are in sectors such as leisure and hospitality, the organization said, and therefore at risk of being affected by subsequent business shutdowns.

“Even after July’s gains, Black women and Latinas continue to be hit hard by the economic crisis,” the report added. “While the overall unemployment rate dropped to 10.2% in July, almost 1 in 7 Black women (13.5%) and Latinas (14.0%) remained unemployed.”

Link to MarketWatch's Slice.