Last spring, some called the recession a “she-cession,” as so many women had left or been let go from their jobs. This had a simple explanation. Most job losses after the lockdowns were concentrated in industries that employ more women: food, retail, and other in-person services. But as the economy reopens and the labor market recovers, many women still aren’t returning to work. A principal culprit could be government policies.
While women are having an easier time finding employment than a year ago, some effects have lingered. In April 2020, less than 50 percent of women were in the labor force; the female unemployment rate was 16.1 percent. By May 2021, female unemployment fell to 5.5 percent—a huge improvement, but still more than 2 percentage points higher than before the pandemic. Nevertheless, while the labor market for women was more damaged by Covid, it also experienced a stronger recovery: the male unemployment rate stands at 6 percent.
But there are reasons to think that some of the damage to women may stick. Since last winter, 1.8 million women have left the labor force entirely—neither working nor looking for work. At first, closed schools and the high cost of child-care options seemed responsible. But economists who have crunched the numbers argue that closed schools can’t explain higher female unemployment. Women with young children make up only 12 percent of the labor force and were only slightly more likely to leave the labor force than were women without young children. The exception? Women with young children who don’t hold college degrees—they constitute only 6 percent of the labor force but saw the biggest drop in employment. Their employment rate has fallen by almost eight percentage points since the pandemic started.
This suggests that women aren’t working for various reasons. For most families, several factors—child-care options, how much a given job will pay, and their partner’s employment prospects—determine whether they will decide to return to work. Rarely in economics does a single cause explain a phenomenon; policies often affect behavior on the margins. If you’re struggling to find good, affordable child care and you are being paid more to stay at home, that extra factor can tip the scales.
Indeed, several current policies seem to be discouraging women from returning to work. That lower-earning women are staying home the most suggests that expanded unemployment insurance plays a role: many of these women will be paid more if they stay home, and they often can’t work remotely. Moreover, though employers are paying more to attract workers, higher inflation is wiping out these wage gains. The Biden administration also aims to make contingent work more difficult, though the flexibility it offers can be critical for working mothers with child-care needs.
Even if these circumstances are temporary, they could have lasting effects. The administration has downplayed the role of enhanced unemployment benefits but is now promising to phase them out this fall. It also dismisses the severity of recent inflation, arguing that the phenomenon will be short-lived. But some women are leaving the labor force entirely; more women will follow if returning to work remains unattractive. And the more time you spend out of the labor force, the less likely you are to return, as your skills become obsolete and employers become less likely to hire you. Rather than search for one overarching explanation, policymakers should understand that multiple factors interact—and that their combined effect could leave many women out of work for years to come.
Photo by Paul Hennessy/SOPA Images/LightRocket via Getty Images