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Tom Barkin

Enabling Women to Work

Tom Barkin

Sept. 14, 2020

Tom Barkin

President, Federal Reserve Bank of Richmond

West Virginia Women Moving Forward
Virtual Summit

Highlights:


  • Getting more women into the workforce is our best opportunity to grow the workforce, which could offset an aging population and declining birthrates. While women’s labor force participation increased over the second half of the 20th century, it leveled off around 2000 and then began to decline.
  • In recent years, the decline seemed to be reversing as the tightness of the labor market brought back women who’d been on the sidelines. But, women still faced barriers to labor force participation: the persistent gender wage gap, a disproportionate share of home and care responsibilities, and a lack of high-quality, affordable child care.
  • The current crisis has brought these issues into sharp focus and we are already seeing negative effects on women’s participation in the workforce. We are also at risk of losing child care businesses, which could put even more pressure on working families. And the shift to virtual education could exacerbate the already large gap in educational attainment between children from high- and low-income families.
  • Schools, child care and elder care are essential industries. We need to operate them safely, so families can have peace of mind that they can send their kids or parents without endangering their health. We need to operate them effectively, which includes providing broadband access for all students, so that if virtual learning becomes necessary, children are not at a disadvantage. And we need to operate them affordably.
  • There are some silver linings from this crisis. Employers have never had more incentive to help solve these problems. Rapid advances in online education have solidified the case for expanding broadband access. And, while the high unemployment rate is very difficult for the people affected, displaced workers could be retrained for high-need industries such as elder care, child care and education. Though there is tremendous uncertainty, we can leverage this moment to address challenges that have been with us for decades.

Thank you for inviting me to be with you today, at least virtually. I’m glad to see private and public groups coming together to remake systems that faced challenges even before the pandemic hit.

There is some irony that many people might not be able to attend this all-day Zoom summit about reducing barriers to women’s participation because they are faced with the very barriers we plan to tackle today — and some of you might be trying to multitask in our new virtual back-to-school mode. If so, I understand! But I hope that events like this help us capitalize on the moment to rethink how we do things in order to secure growth for the long haul. Before I say more, let me note that the views I express are my own and not necessarily those of my colleagues on the Federal Open Market Committee (FOMC) or in the Federal Reserve System. Because we are in the “quiet period” that precedes FOMC meetings, I will not address monetary policy in my remarks today, nor can I take any questions. I’m sorry about that.1

Progress and Challenges

The health of every economy depends on economic growth. And that depends in large part on growing the workforce. But, in the United States, as in most developed economies, demographics are not on our side. We have an aging population, and birthrates are declining. 

Where we can get more workers? I want to make the case that our best opportunity is to bring more women into the workforce — and retain them. And there is untapped potential, as just over two-thirds of prime-age adults not in the labor force are women.2

Before I talk about how we might do that, let me take a few minutes to review where we’ve been. Since the 1960s, women’s labor force participation has increased dramatically. It has risen across all ages, races, ethnicities, martial statuses, and education levels. Many factors contributed to the increase, including societal norms, a narrowing wage gap between men and women, and new approaches to household chores.3 Women’s increasing participation has been a boon for our country: It led to economic growth and rising household incomes and offset long-term declines in men’s participation.4

But between 1997 and 2015, the participation rate for prime-age women in the United States dropped almost 3 percentage points. When we dig deeper into the decline, we see a divide along education lines:  The largest drop during that time period was among women with a high school degree or less. For many of these women, the fundamental economic equation just didn’t make sense. Weighed against child care costs, the potential loss of health care benefits, or the phaseout of the earned income tax credit (EITC), many jobs just weren’t worth the hassle and low pay.

In recent years, the decline seemed to be reversing as the tightness of the labor market brought back women who’d been on the sidelines. Employers had been increasing pay and addressing working conditions. Overall, prime-age women’s participation increased 2 percentage points between 2015 and 2019. The participation of women ages 25-44 with a high school degree or less — the group that had previously experienced the largest decline — increased 3 percentage points.5 

But this rise in participation didn’t mean that all the barriers to full participation had been solved. For example, although the wage gap has narrowed significantly over the last 40 years, women still make 81.5 cents for every dollar that men make.6 And women still shoulder more than their fair share at home: Women spend 30 percent more time per day than men on household activities, and mothers spend almost twice the number of hours caring for children as fathers.7 In addition, there is a dearth of high-quality, affordable child care to support working parents. Nationwide, 51 percent of people live in what’s known as “child care deserts,”8 disproportionately in rural and low-income areas.9 And in the majority of states, the average cost of center-based care for an infant is comparable to, or even higher than, in-state college tuition and fees.10 But even with the high costs of child care, the centers themselves operate on notoriously thin margins, and so their health is unstable. And child care workers generally earn low wages and receive few benefits, contributing to high turnover.

Consequences of the Crisis

The current crisis has brought these issues into sharp focus. In previous recessions, men’s employment has been hit harder. But this recession is different: Women account for a majority of private sector net job losses even though they hold a minority of these jobs.11

And they may be at risk for losing more in the future. I’m hesitant to make a strong prediction, but some early research suggests that women are more represented in jobs that require physical contact and in those with high potential for automation.12 If you believe we will be in a post-pandemic world where people will be reluctant to engage in physical contact, then it is reasonable to think these jobs are at risk.

We’ve also seen an explosion of care responsibilities. With schools and day cares closed, tens of millions of kids have been at home. Balancing work, child care, and virtual learning seems utterly impossible for single parents and workers who can’t work from home. I hear this every day in conversations in our Bank. And that’s if you’re fortunate enough to have reliable broadband access or even a home computer at all. The lack of adequate technology is more likely to be a problem for families in rural areas, lower-income families, families of color, and families whose parents have less formal education.13 When I was here two weeks ago, I heard about kids going to McDonald’s to do their schoolwork. We can’t accept that as a model. 

Many families also have elderly parents to care for, at a time when nursing homes seem like less attractive options. Families spending nearly all their time at home also means more meals to prepare, more laundry, and more cleaning. And all of this comes at a time when there is less support. The usual informal backup arrangements, such as grandparents or neighbors, may be off-limits because of social distancing, stay-at-home orders, or concerns about vulnerable populations.

We know this is already disproportionately affecting women’s participation in the workforce. Research from the Minneapolis Fed found that mothers in states with early lockdowns were more than 50 percent more likely to take leave from work than mothers in states with later lockdowns, whereas there was no difference for fathers.14 At the end of July, almost 1 in 3 mothers ages 25-44 reported they weren’t working because of COVID-19-related child care issues, compared to around 1 in 10 fathers.15 As we head into the fall, the challenges of virtual schooling and prolonged child care closures may already be putting downward pressure on women’s participation. In the latest employment report, prime-age women were the only group with declining participation.16

If these challenges continue, there may be additional fallout. In the short term, we risk losing child care businesses as cleaning costs increase, capacity is challenged, and parents worry about infection risk. Almost half of day care providers reported they are likely to go out of business without further financial assistance.17 Some predict these closures will be steeper in lower- and middle-income and rural areas.18 This could put even more pressure on working families. And if parents have to take a break from the workforce to care for children, it’s reasonable to be concerned about the longer-term effects on their wages and attachment to the labor force. A recent Brookings analysis calculated that nationwide, 70 percent of working parents with young children at home — 23.5 million people, including 13 million women — are child care dependent, meaning they don’t have another nonworking adult at home to be a primary caregiver. If even half of that group doesn’t return to work, our labor force participation rate would drop 2.5 percentage points.19 That would be a huge blow to our country’s potential growth.

Another long-term risk is exacerbating the already large gap in educational attainment between children from high- and low-income families. The former have the means to attend in-person private schools, or to pay for private tutoring, or to hire a teacher to facilitate virtual learning for a “pod” of other high-income students. At the very least, they have computers at home and reliable broadband access. The latter don’t have these same resources, and we should be worried about how far behind they might fall.20

Silver Linings

In my view, schools, child care, and elder care are essential industries, so we don’t have the option of shutting them down or letting them go out of business. We need to figure out how to operate them safely, so families can have peace of mind that they can send their kids or parents without endangering their health. We need to operate them effectively, which includes providing broadband access for all students, so that if virtual learning becomes necessary, children are not at a disadvantage. I know that has been a priority in West Virginia. And we need to operate them affordably. One option to explore is a shared services model for day care providers to help them keep overhead down. And there is probably no getting around expanding public and/or private investment in early childhood education and child care. I’m particularly intrigued by the idea of expanding the EITC to provide more support to working parents to pay for high-quality child care.

With respect to these needs, there may be a few silver linings from this crisis. First, employers still need employees, which means they have enormous incentive to help solve these problems. I recently heard about one of the bigger employers in West Virginia operating a proctoring service for employees with kids in school. We’ve also seen rapid advances in online education, and there has never been more political agreement on the need for expanding broadband access. And while the high unemployment rate is very difficult for the people affected, perhaps some of them could retrain for new careers in high-need industries such as elder care, child care, and education. Along the same lines, the pandemic has unfortunately led to a number of store closings. But there could be an opportunity to repurpose excess retail space for child care.

There is still a tremendous amount of uncertainty about what the future holds. But I’m optimistic that our country will find a way to leverage this moment to address challenges that have been with us for decades. Events like this are an excellent start, and I look forward to learning more.

 
1

Thank you to Abigail Crockett, Nina Mantilla, and Jessie Romero for assistance preparing these remarks.

2

Bureau of Labor Statistics via Haver Analytics.

3

Jones, Larry E., Rodolfo E. Manuelli, and Ellen R. McGrattan. “Why Are Married Women Working So Much?Journal of Demographic Economics, Mar. 2015, vol. 81, no. 1, pp. 75-114; Greenwood, Jeremy, Ananth Seshadri, and Mehmet Yorukoglu. “Engines of Liberation.” Review of Economic Studies, Jan. 2005, vol. 72, no. 1,  pp. 109-133.

4

Shambaugh, Jay, Ryan Nunn, and Becca Portman. “Lessons from the Rise of Women’s Labor Force Participation in Japan.” The Hamilton Project, Nov. 2017.

5

Bureau of Labor Statistics via Haver Analytics.

6

Bureau of Labor Statistics. “Median weekly earnings of full-time wage and salary workers by selected characteristics.” CPS Table 37; Goldin, Claudia, Sari Pekkala Kerr, Claudia Olivetti, and Erling Barth. “The Expanding Gender Earnings Gap: Evidence from the LEHD-2000 Census.” American Economic Review, May 2017, vol. 107, no. 5, pp. 110-114.

8

Malik, Rasheed, Katie Hamm, Leila Schochet, Cristina Novoa, Simon Workman, and Steven Jessen-Howard. “America’s Child Care Deserts in 2018.” Center for American Progress, Dec. 6, 2018.

9

Ibid

11

Women account for 52.6 percent of job losses between February 2020 and August 2020, or 5.6 million jobs, while they occupy 48.5 percent of jobs based on 2019 averages according to data from the Bureau of Labor Statistics via Haver Analytics.

12

Chernoff, Alex W., and Casey Warman. “COVID-19 and Implications for Automation.” National Bureau of Economic Research Working Paper No. 27249, July 2020; Albanesi, Stefania, Rania Gihleb, Jialin Huo, and Jiyeon Kim. “Household Insurance and the Macroeconomic Impact of the Novel Corona Virus.” CefES Webinar Slides, June 2020.

13

Lee, Alaina, and Alexander Marré,“The Homework Gap: Digital Access at Home for Students in the Fifth District.” Richmond Fed Regional Matters, Aug. 28, 2020; Pinto, Santiago, and John Bailey Jones. “The Long-Term Effects of Educational Disruptions.” Richmond Fed Economic Impact of COVID-19, May 22, 2020.

14

Heggeness, Misty L. “Why Is Mommy So Stressed? Estimating the Immediate Impact of the COVID-19 Shock on Parental Attachment to the Labor Market and the Double Bind of Mothers.” Minneapolis Fed Opportunity & Inclusive Growth Institute Working Paper No. 33, , August 2020.

16

Bureau of Labor Statistics via Haver Analytics. Age groups include 16-24, 25-54 (prime age), and 55 and up.

17

“Holding On Until Help Comes: A Survey Reveals Child Care’s Fight to Survive.” National Association for the Education of Young Children, July 2020. 

18

Malik, Rasheed, Katie Hamm, Won F. Lee, Elizabeth E. Davis, and Aaron Sojourner. “The Coronavirus Will Make Child Care Deserts Worse and Exacerbate Inequality.” Center for American Progress, Jun. 22, 2020. 

19

Bateman, Nicole. “Working Parents are Key to COVID-19 Recovery.” Brookings, July 8, 2020; American Community Survey, 1-Year 2018 Estimates. Note: The percentage of working parents was updated on 10/9/2020 to correct an error.

20

Pinto, Santiago, and John Bailey Jones. “The Long-Term Effects of Educational Disruptions.”

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