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Greenville Business Magazine

The Evolving Employment Story

By Tom Barkin

President, Federal Reserve Bank of Richmond

The “she-cession” has been a dominant narrative of this pandemic. Unlike the Great Recession, which primarily affected male-dominated sectors such as manufacturing and construction, the Covid-19 recession disrupted the service sector, which employs more women.

From February to April 2020, women’s employment fell 17.9 percent, compared to 14.3 percent for men. More than 12 million jobs held by women went away, and school closures and child care constraints further limited workforce participation for primary caregivers who are disproportionately women. Employment of women of all ages, races and educational levels fell more than employment of men with similar backgrounds.

But, over the last several months, that overall gap has largely closed. As of the May 2021 jobs report, employment for women and men was down 5 percent and 4.6 percent, respectively — a difference of just a few tenths of a percentage point. But it’s important to note that not all women have recovered equally. And a new dichotomy has surfaced by age.

To be clear, the employment recovery for less-educated women still trails the recovery of similarly educated men. For women with a high school diploma or less, employment is still down more than 9 percent, compared to 5 percent for men with the same education. Black and Hispanic women have also seen a slow recovery. Compared to February 2020, employment is still 7.4 percent lower for black women and 6.4 percent lower for Hispanic women. But it’s down 4.1 percent for black men and 2.1 percent for Hispanic men.

Minorities and women with lower levels of education are more likely to work in low-wage roles with a high degree of personal contact, such as those in leisure and hospitality, that were disrupted by the pandemic. As of 2019, 10.1 percent of women without a bachelor’s degree worked in leisure and hospitality, compared to 8.4 percent of men without a bachelor’s degree. Almost 30 percent of women without a bachelor’s degree were employed in service occupations, compared to just under 16 percent of their male peers.

In contrast, college-educated women are now actually outperforming their male peers — their employment in April 2021 was 2.1 percent higher than it was in February 2020, compared to 0.8 percent lower for college-educated men. Part of the reason may again be sector mix. Nearly 50 percent of women with bachelor’s degrees work in education and health care, sectors where employment has fared relatively well for college-educated workers.

These employment differences by educational levels may well be driven by disparities in circumstances. In a late 2020 study, 19 percent of adults with a high school degree had someone in their household who had substituted remote work for in-person work, versus 62 percent of adults with a bachelor’s degree.

Women not able to work remotely may well have been more concerned about their health or less able to find an alternative arrangement to support child care or remote schooling. Perhaps those concerns reduced their ability to participate in the workforce.

Another segment where women are now outperforming men is older workers. Employment is down 6 percent for men 55 and older, versus 5.5 percent for women the same age, compared to February 2020.

This comes amid a surge in retirement, which accounts for nearly 50 percent of the decline in overall labor force participation. And many of those retirements likely wouldn’t have happened were it not for the pandemic.

Excess retirements, meaning people who appear to have retired earlier than they otherwise would have, account for more than half of this drop.

Why did the pandemic push people to retire? There are numerous potential explanations, including fear of exposure to the coronavirus, family responsibilities such as caring for elderly parents or grandkids, or firm incentives like early retirement packages. Older workers might also have been

more hesitant about the steep learning curve associated with remote work or about the challenge of training for a new position after a layoff. And for workers with 401(k) accounts, the robust stock market may have made retirement more financially feasible.

These factors affect men and women equally, so they don’t explain why employment is now recovering somewhat more strongly for women. As with educational differences, the answer might be industry mix.

Looking at job loss among older workers, the industries in which older women are the most concentrated — education and health — together fared better than the industries in which men are the most concentrated (professional and business services, manufacturing, and wholesale and retail trade).

But less visible factors could also play a role. Older men on average are less healthy than women, and their comorbidities could have given them higher vulnerability to Covid-19. This may have reduced their willingness to engage in the workforce during the pandemic.

So what’s ahead? As the service sector returns to normal, it’s likely that its recovery will help many women make up lost ground. Family responsibilities should also become less of a barrier, as schools and child care facilities reopen. Access to remote work may become an enabler of flexibility rather than employment.

Bringing retirees back might be more of a challenge. Historically, the likelihood of retirees returning to the workforce has been very low. But maybe Covid-19 retirements will be different — perhaps, once wages grow and barriers such as health concerns or family responsibilities disappear, retirees will be lured back to the labor force.

We may still see some scarring when we reach our new normal. This could take the form of skill mismatch for lower-wage workers and technology requirements for retirees. Research also shows that the longer someone is unemployed, the harder it is to find work, as both skills and relationships weaken with time.

Growing the economy means growing the workforce, and the Richmond Fed focuses on the evolving story of workforce engagement as we monitor progress toward maximum employment.

That in turn requires understanding employment success by demographic segment and recognizing that the story changes over time. But one theme common to all our analyses is that our least educated citizens face major challenges, and the returns of investing in education are high. This pandemic has been no different.

Tom Barkin is the president and CEO of the Federal Reserve Bank of Richmond, where he is responsible for monetary policy, bank supervision, payment services and the Fed’s National IT organization. He has held this position since 2018.