Women are driving the labour market

Of all of the pandemic-era labour trends that are now behind us, the “she-cession” is perhaps the most significant. Far from fleeing the workforce in the US, women are today driving it.

When Covid-19 first struck, female labour was hit hard, not only because women were disproportionately represented in locked-down sectors such as leisure, hospitality and education, but also because they took more responsibility for home-schooling and pandemic childcare. Many thought this would be a long-term trend.

But now the economy is back on track, employment growth among women has not only surpassed that of men post-pandemic, but the labour force participation rate among 25- to 54-year-old women in the US just hit its third record high month – 77.8 per cent of women in that age bracket are now in work.

The experience is the same in Ireland where the growth in employment among women from the worst of the pandemic in the second quarter of 2020, at almost 29 per cent, significantly outstrips the 17 per cent figure for men.

Participation rates here show a 9 percentage point jump for women in the time to 60.1 per cent, compared with a 6.7 per cent rise among men, albeit from a higher starting point.

In some ways, this is a return to normal. In 2015-2020, prime-age labour force participation by women increased 3.5 percentage points, three times the growth rate of men. Economists credit this jump to the tighter labour market following the crash of 2007-2009, which pushed up wages and drew more women into work. The same effect is in play now, but inflation is adding to the impetus.

Women’s return to the labour market dovetails with another recent prediction that hasn’t stuck. While many economists thought the pandemic would lead to lots of boomers sliding into early retirement, the opposite is happening. The millions of people in their fifties and sixties who left jobs are now coming back into work, led by women.

Inflation is clearly one reason for this, but a lack of adequate retirement savings – even with asset prices still relatively high – is another. Only 34.6 per cent of working-age Americans have a company-sponsored 401k pension scheme, which is the primary way of saving for retirement in the US. (Nearly another third have some other type of retirement account.)

The median retirement savings for the bottom half of the socio-economic spectrum is a shocking zero. Women are in the worst shape. They are 80 per cent more likely to be impoverished in their old age than men, according to the 2016 report Shortchanged in Retirement by Jennifer Brown and others, thanks in part to shorter working lives.

That said, they also have new advantages. More flexible post-pandemic work arrangements are a boon for many women, particularly working mothers (women begin to really lag behind male peers in the labour market after they have children). What’s more, the Biden White House has made getting more women and people of colour into the labour market a strategic priority, linking infrastructure spending and corporate subsidies for things such as clean energy and semiconductors to efforts to create a more diverse workforce.

This has already led to some big shifts of women into traditionally male areas, including construction and transport. In the first half of this year, the New York department of buildings issued three times as many building site workers’ safety cards to women as they did in the whole of 2019.

While women are moving into traditionally male work, the trend is not going the other way

Elsewhere, labour rights leaders recently won a big lawsuit requiring one of the nation’s largest bus makers, New Flyer, to hire more women and minorities in places such as California and Alabama, as part of a transition to battery power funded by the Biden infrastructure Bill. Building trade unions say many more women are signing up for training programmes, as employers in tight labour markets make efforts to accommodate work and childcare schedules.

While women are moving into traditionally male work, the trend is not going the other way. There’s a body of social science showing that while women will take manufacturing jobs for higher wages, men – particularly white men – are less likely to move into, say, nursing, even if they would earn more there than in manual labour.

Given that both manufacturing and healthcare are booming, it will be interesting to see how these gender-based trends play out, particularly when you add artificial intelligence into the picture. A recent study from the University of North Carolina’s Kenan-Flagler Business School found women were more vulnerable to AI-based job disruption than men, in part because, percentage wise, more of them are still in white-collar office jobs than in manual services and production. The researchers found 80 per cent of female workers highly exposed to AI disruption, against 58 per cent of men.

While that may be true in the near term, I would argue that as cutting-edge technology moves deeper into areas such as manufacturing and logistics, you will see displacement in traditionally male fields as well.

In the future, it’s likely that those with higher emotional intelligence and the ability to be flexible about tasks and retrain themselves quickly to deal with whatever comes will be most in demand, whatever their gender. That reminds me of a conversation I once had with a financial services chief executive, who told me she loved hiring working mothers because their effort to be home in time for dinner made them so productive and efficient. That’s a gender-based labour trend I can get behind. – Copyright The Financial Times Limited 2023


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