33-year low in female labor participation rate requires new childcare and paid-leave policies, JPMorgan says

Woman working in cafe
A woman works on a laptop at a restaurant’s outdoor seating as temperatures reached close to 70 degrees on March 11, 2021 in New York City.

  • Federal family-leave and childcare support policies can help close gender gaps, JPMorgan said.
  • Female labor participation sits at 33-year lows and well below mens’ level due to COVID-19 fallout.
  • Gender-responsive policies can counter the disproportionate hit women faced during the pandemic.
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Full economic recovery in the US might not be enough to close gender gaps exacerbated by the pandemic, JPMorgan researchers said.

The coronavirus and its economic fallout disproportionately slammed American women, with female-dominated sectors like hospitality and education hit the hardest by lockdowns. The greater share of domestic work that women perform in American society also prompted many to leave work and focus on caretaking. Where men made up the bulk of job losses seen during the financial crisis, the current recession has seen job losses land more equally.

Women aren’t just losing or leaving their jobs, either; they’re exiting the labor force entirely. The female labor participation rate, while up from its pandemic lows, still sits at its lowest level in 33 years. More than 2.3 million women have left the US labor force since the pandemic began, versus nearly 1.8 million men exiting the workforce.

Reviving the broader economy should pull some women back into the labor force, the team led by Joyce Chang said in a note to clients, adding Congress can and should do more to close the gap. Federal paid-leave policies for mothers can alleviate the burdens of balancing work with early child care, as can federally guaranteed family leave. Public child care and education programs can also incentivize women to stay employed, according to the team.

The nation’s gender pay gap held at roughly 18% for the past decade, and that spread could widen by another five percentage points if the pandemic’s effects aren’t reversed, according to a National Bureau of Economic Research paper cited by JPMorgan. Recessions historically fuel a 2-point narrowing of the wage gap.

Closing the gender wage gap is good for growth, nevermind society

Promoting workplace equality also has a tangible effect on economic growth. Narrowing the labor-participation gap between men and women by just 25% could lift US gross domestic product by 2%, according to the International Labor Organization. Fully closing the gap would boost GDP by 5%, the International Monetary Fund said.

“Continued focus on gender-responsive policies is required to counter the disproportionate burden women face in the current crisis – and more importantly, to prevent the economic damage from outlasting the virus itself,” JPMorgan’s researchers said.

Some steps have already been taken to help working women. Democrats’ latest stimulus plan includes a child-tax-credit program that will give families with children under the age of 5 up to $3,600 per child over the course of 2021. Those with children aged 6 to 17 can receive up to $3,000 per child.

The package also includes $40 billion for child-care assistance. The average US household spends nearly 23% of its income on child-care costs, according to JPMorgan. The stimulus’ inclusion of a child tax credit and direct relief for care providers helps lower the burden for mothers hoping to keep their jobs while raising children.

Erasing such inequality stands to build a more robust economy after the pandemic, the researchers said. The coronavirus crisis has prompted discussions around family support and flexible work arrangements “that could yield steps forward in the future,” they added.

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The US is leaving economic growth on the table by failing to close gender gaps in pay and hiring, Moody’s says

DC apartment concierge coronavirus
elecia Lewis, 50, works at a computer behind the desk where she works as a concierge at an apartment building in Chevy Chase, MD.

  • Failure to close gender gaps in the US dampens growth and hurts recovery, Moody’s said Monday.
  • The pandemic erased years of progress for prime working-age women participating in the labor force.
  • Closing the labor-participation gap between men and women can lift GDP by 5%, according to the IMF.
  • Visit the Business section of Insider for more stories.

Closing gender gaps in the US labor market can accelerate the economic recovery and provide a lasting boost to overall output, Moody’s Investors Service said Monday.

Gender disparities are nothing new to the US economy. Women earned less than men on average before the pandemic, and, during it, a lack of family-leave benefits forced many women out of the labor force as they assumed caretaking roles.

The gaps weighed on productivity before the pandemic, and the health crisis has only exacerbated the problems, the team led by Shahdiya Kureshi said.

For one, pursuing gender equality can swiftly lift gross domestic product. Closing the labor-participation gap by just 25% in the US would increase output by 2%, according to the International Labor Organization. Fully erasing the disparity would boost GDP by 5%, the International Monetary Fund estimated.

The recovery so far hasn’t been promising. Employment gains for both men and women were roughly the same from May 2020 to January 2021. Yet where men have retraced more than half of their decline in labor-force participation, women have only recovered 40% of their slump. This difference “weakened household consumption and financial stability” late in the pandemic, Moody’s said.

Within the prime working-age population of Americans 25 to 54 years old, labor-force participation among women plummeted and reversed years of steady gains. The rate peaked at 76.9% in January 2020 before plummeting as low as 73.5%.

The rate stood at roughly 75.5% at the start of 2021, the same level seen in January 2018.

One driving factor behind the harsher fallout is women’s overrepresentation in sectors hit hardest by the pandemic. Pay in the food preparation, personal care, sales, and education industries – where women make up the majority of workers – is between 18% and 40% below the average median weekly earnings for women. These sectors also saw significant pay disparities between men and women, according to government data cited by Moody’s.

Mothers have also shouldered a heavier burden through the health crisis. Women aged between 24 and 44 who weren’t employed in July 2020 were nearly three times more likely than men to name childcare responsibilities for their lack of work, according to Census Bureau data.

Where Congress can step in

There are already a few clear steps policymakers can take to close the aforementioned gaps, Moody’s said. Passing national family- and maternity-leave policies can iron out differences seen across various state programs, the team said.

“As women assume most of the family caretaking role, dependent care responsibilities that are not subsidized or compensated can pose a significant barrier for women’s entry into the workforce,” they added.

Childcare costs have also surged in recent years, making the lack of sufficient leave policies even more taxing for women. Married couples with children under age 5 spend 10% of their average monthly income on care for a single child. That sum exceeds the 7% level deemed affordable by the Health and Human Services Department, Moody’s said.

There’s also legislation that can quickly narrow the gender pay gap. The Paycheck Fairness Act has recently been reintroduced and aims to improve pay transparency at companies. Taking up such legislation and other pay-equity measures can elevate women in the workplace, improve employee retention, and productivity, Moody’s said.

Some promising legislation is on the brink of passage. The $1.9 trillion stimulus bill likely to be passed on Wednesday includes a child tax credit for parents to receive up to $3,600 per child. President Joe Biden has indicated he aims to make such a credit permanent. That would revolutionize how the government assists parents and could counter the pressures women feel to pass up work for caretaking.

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Rising remote work is upping job inequality in European capitals and ‘scarring’ some sectors, says OECD report

Paris
The expansion of remote working has led to labor inequalities in major European capitals.

  • An report by the OECD and Indeed warned that remote working may aggravate labor inequality. 
  • Analyzing job postings for major European capitals, experts said the service sector may be scarred.
  • The percentage of remote job postings is increasing but the job market has still not recovered.
  • Visit the Business section of Insider for more stories.

Remote working options have allowed many companies to keep going during the COVID-19 pandemic, with some companies even thriving as a result. However, this hasn’t been possible in all sectors with retail, hospitality, and healthcare among the most affected.

The expansion of remote working has led to labor inequalities in major European capitals including London, Paris, Madrid, and Berlin. Unemployment in the UK hit its highest level in five years last month and job offers have been harder to come by in all the cities and their countries. Meanwhile, remote jobs have thrived.

Sundar Pichai
Google plans to try and accommodate remote working indefinitely.

This is one of the major findings published in a report on remote working in European capitals, co-authored by OECD economist Lukas Kleine-Rueschkamp and the Indeed job portal’s chief research economist for the MENA area Pawel Adrjan.

Using data from the Indeed portal, they said: “Labour markets in these cities are being pulled apart in early 2021, with postings for higher-paid jobs performing better than those for lower-paid service jobs.”

Remote working as a factor of inequality

“The move to remote work is greater and more persistent in these cities than in other places and may be long-lasting,” the report said.

A survey conducted in January by the National Association for Business Economics (NABE) found that just one in 10 companies expected their employees to return to the office after the pandemic.

Major companies have recently extended their remote working policies, with Google planning to try and accommodate remote working indefinitely.

“Cities such as London have already experienced population declines,” Kleine-Rueschkamp and Adrjan added. They said that although it was unlikely that living in a major European capital would not have its perks after the pandemic, “the trends COVID-19 has initiated might weaken their appeal.”

Remote working does appear to be much more prevalent in major cities than in the rest of the country. Remote work increased 7.3% higher in Berlin than in the rest of Germany, and 5.4% more in Madrid than the rest of Spain.

london street
The report warned of the consequences of further decline in European capitals.

Paris and London had smaller disparities but they were still notable. Remote working growth was 4% higher in Paris than in the whole of France, and 2.4% higher in London than the rest of the UK.

Remote job offers previously constituted 5% of the overall workforce in Madrid in 2020 but stood at 15.7% a year later. In the rest of Spain, the rate has increased from 4% to 10.4%.

The report attributes this phenomenon to the fact that “postings in occupations suitable for working at home, like tech, finance, law, and marketing, are most prevalent in big cities.” In comparison, the service sector is heavily affected by remote working and could be “scarred for a long time,” especially in London and Paris.

Fewer jobs available than before the pandemic

The OECD report revealed that job markets in European capitals had been seriously hit by the pandemic. London was the worst affected, with 41% fewer vacancies at the end of January 2021 compared to February 2020.

Paris and Madrid both had around 25% fewer vacancies than before the pandemic, while Berlin had 8% fewer. Paris was the only instance where the capital was worse affected than the rest of the country.

The report warned of the consequences of further decline in European capitals, as their economic growth tended to outstrip the rest of the country. In the years prior to the pandemic, “GDP per capita jumped more than 12% in these cities, almost 3 percentage points faster than national growth.”

At the height of the pandemic-related job market contractions, however, capitals were affected more than the rest of the country.

Job openings in London were 57% lower than before the pandemic, 48% lower in Madrid, 42% lower in Paris, and 26% lower in Berlin. The report noted that “for much of 2020, job openings in these cities were between five and 15 percentage points lower” than the rest of the country.

The report said large cities would “a difficult adjustment period for some urban workers,” adding that “the pandemic’s labor market effects may be temporary for some sectors, but, for others, they may last.”

Policymakers should support displaced workers and those at risk of redundancy by offering comprehensive skills development strategies tailored to local conditions,” the researchers concluded.

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