Impact of the Covid-19 Crisis on Women’s Employment

By , , and ·August 27, 2020
University of California, San Diego, Northwestern University and University of Mannheim

The Issue:

Before Covid-19, the most recent economic recessions in the United States have been “mancessions,” meaning that employment losses were larger for men than women. In contrast, the Covid-19 recession has led to a sharp decline in women’s employment. Because workers who lose employment during a recession often experience earnings losses that long outlast the recession itself, the large impact of the recession on women matters for the evolution of the gender wage gap and women’s future prospects in the labor market. The fact that this recession is impacting men and women differently from past recessions could also have broader consequences for families and the trajectory of the economic recovery.

Women’s unemployment rate rose by 12.8 percentage points between February and April — a 2.9 percentage points larger increase than men’s increase of 9.9 percentage points.

The Facts:

  • During the Covid-19 recession in the United States, women’s unemployment rate rose by 12.8 percentage points between February and April 2020, 2.9 percentage points larger than men’s increase of 9.9 percentage points. In contrast, the five previous recessions were all “mancessions” with a larger rise in unemployment for men (see chart). Gender differences in terms of employment rather than unemployment are even larger. According to survey evidence, from February to August 2020 women’s average hours worked fell by 19 percent, versus a drop of only 12 percent for men. A substantially larger impact on women’s than men’s employment during a recession is historically unprecedented in the United States. 
  • Part of this gender difference is explained by the nature of the shock and the disproportionate impact it had on jobs and occupations that tend to employ more women. Many women work in sectors such as restaurants and tourism, which were severely affected by the crisis. In terms of occupations, employment losses were largest in occupations requiring personal contact (e.g., retail and personal services), and women account for 74 percent of employment in high-contact occupations. We also document  that fewer women work in critical sectors that were not affected by shutdowns, and fewer women work in occupations with a high ability to work from home, which facilitates continuing work during the crisis.
  • An even more important factor is childcare. Continuing closures of schools and daycare centers have greatly increased parents’ childcare needs and reduced their ability to work. 32 percent of the U.S. workforce have a child under the age of 14 at home and are affected by increased childcare needs. In 30 percent of these families all children are under the age six. Since young children require more supervision, many of these parents are unable to work as long as daycare center closures continue and other forms of childcare remain unavailable.
  • The increase in childcare needs affects women more than men. There are many more single mothers than single fathers: 21 percent of children in the U.S. lived with a mother with no partner present in 2017, while 5 percent of children lived with a lone father. Among married households mothers provide more than 60 percent of total childcare. Women provide the majority of childcare even in couples where both parents work full time. As a result, women have picked up the majority of the increased childcare needs during the crisis. Among parents working from home during the crisis, fathers have increased their time spent on childcare and home schooling by 4.7 hours per day, versus 6.1 hours for women. Most affected are mothers with young children, who have reduced their work hours five times more than fathers.
  • The larger impact of Covid-19 on women’s versus men’s employment can also be observed in other countries including Canada, the United Kingdom, and Spain. In all these countries, the sectoral distribution of women’s employment together with the increase in childcare needs accounts for a larger impact of the Covid-19 crisis on women’s than men’s employment. 
  • The fact that women's employment tended to be more stable during downturns, relative to men's employment, provided a form of economic safeguard in many two-parent households during previous recessions. In this recession, that may no longer be the case. Because men were more likely to lose jobs than women during a regular recession, many women were able to partially compensate for a male partner’s lost earnings by joining the labor force or working more. Such ability in the family not only protects family members from economic hardship, but can also have a broader impact in the economy by maintaining a level of consumption that serves as an important shock absorber, lowering the transmission of income shocks to aggregate consumption (see here). In contrast, we find that within-family insurance is more limited during a pandemic recession. In families with children, increased childcare needs during the lockdown make it impossible for many secondary earners to increase their labor supply. Even in families without children, within-family insurance is limited during a pandemic recession due to the fact that women and men are equally likely to lose their jobs and face the same difficulties in finding new jobs. 
  • Losing employment during a recession has a persistent effect on future earnings prospects. Finding a new job can be difficult, and often workers struggle to find positions with comparable pay and responsibilities to what they had before the crisis. Research has shown that workers who lost jobs in earlier recessions lost the equivalent of almost three years of earnings over their remaining careers. In the current crisis, these losses will fall more heavily on the shoulders of women.

What this Means:

The large impact of Covid-19 on women’s employment matters most directly for the economic opportunities of the women who are unable to work during the crisis. Some women will drop out of the labor force permanently. Women in career positions may miss out on crucial promotions and be unable to return to the same career track they were on previously. Over the next few years, these factors are likely to limit women’s career opportunities and increase the gender pay gap. Also, during the crisis the drop in women’s employment reduces families’ ability to self-insure against earnings losses. Many families have no choice but to reduce their consumption expenditures, for example by spending less on food, delaying major purchases, or falling behind on rent. For the economy at large such changes result in a drop in aggregate demand, which can deepen the recession and slow down the recovery. The lack of self-insurance also implies that income support payments (such as expanded unemployment insurance) are even more important compared to other recessions. Moreover, a full recovery is impossible as long as school closures continue, because childcare needs will prevent many parents from returning to work.

  • Editor's Note: This post is based on "This Time It's Different: The Role of Women's Employment in a Pandemic Recession." By Titan Alon, Matthias Doepke, Jane Olmstead-Rumsey, and Michèle Tertilt. NBER Working Paper No. 27660, August 2020.

  • Topics:

    Coronavirus / Employment
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