2020 could set women's wages back 20 years, study finds
The pandemic has undone many workplace gains for women. Female-dominated industries have been hit hardest by job losses, while many mothers have been forced out of the labor market to take care of children.
Add one more gain that was set back for working women: Reaching equal pay.
While regular recessions tend to reduce the gender wage gap by around 2 percentage points, this pandemic-induced recession has increased it by 5 percentage points, according to a report by the National Bureau of Economic Research. It could take 20 years to close that gap, the report found.
“In previous recessions, for example, the Great Recession, the gender pay gap was actually declining,” Michèle Tertilt, a professor of economics at Mannheim University and co-author of the report, told Yahoo Money. “But we do expect the opposite this time around.”
Previous recessions typically hurt men’s employment more than women’s, leading to a bigger hit on men’s wages. But that has not been the case during the pandemic, which requires social distancing that has hurt sectors with high female employment.
Sectors that suffered some of the worst job losses early in the pandemic were restaurants, retail, hospitality, and health care. Many local and state government jobs are now being lost, too, representing yet another sector where women outnumber men.
“Women are just dropping out in larger numbers or reducing hours,” Tertilt said, “which, down the road, will have an effect on the gender pay gap.”
‘They’re missing career opportunities’
One factor driving the widening of the gender pay gap is women dropping out of the workforce altogether. They may experience a scarring effect because they are missing career opportunities while losing attachment to the labor market. That makes it difficult to return to the same or similar job or increase their compensation when they re-enter the workforce.
A second factor is some women are reducing hours or switching to part-time work. They, too, might be missing opportunities to grow their careers that they likely would have had in a full-time position, according to Tertilt.
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The gender wage gap may widen even more for Black women who are facing a worse job market. The Black unemployment rate is still at 10.8% after reaching 16.8% in May, compared with the overall unemployment rate that has fallen to 6.9% from its 14.7% peak in April.
“Among African-American women, in fact, the rate of single moms is particularly high,” Tertilt said. “So those will be, I expect, dropping out of the labor force or reducing work hours in even larger numbers.“
‘In the very long run, I see some reason for hope’
A 5% increase in the gender pay gap may take 20 years to close, the study found, but some effects from the pandemic may actually help smooth the discrepancy in wages.
“Some of the improvements from the last decade are lost in this recession,” Tertilt said. But “in the very long run, I see some reason for hope.”
The rise and acceptance of remote work may create more flexibility for working mothers when it comes to child care duties. Working fathers may also take on more child care responsibilities if they can work from home, which would help narrow the gap in the long run.
“Now during the pandemic, we've seen many fathers suddenly do a lot more child care than they've ever done before,” Tertilt said. “Those will be role models and lead more fathers to do the same thing down the road.”
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
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