The Great She-cession

.. Conducted as a part of Oxford University's Skoll Center for Social Entrepreneurship Map the System 2021 competition, the Great She-cession summarizes the effects of COVID 19 on women in the domestic American workforce.

This post addresses socioeconomic findings myself and two research partners, Jennifer Driscoll and Qinny Xiang, conducted in Q1 and Q2 of 2021 as a result of participating in a research competition called Map the System.

Map the System is a global competition run by the Skoll Center for Social Entrepreneurship at the Saïd Business School, at the University of Oxford. This particular project challenged graduate students from around the world to systemically research focus areas of social and environmental change. This body of work focuses specifically of the impact of COVID 19 on women in the domestic American workforce.

By way of credits— I’d like to pay homage to my two research partners on this project — Jennifer & Qinny.

Qinny is a Director of Corporate Finance at Greentec Engineering, bringing a wealth of expertise from Wells Fargo & Deloitte to our project. Jennifer is a Senior Portfolio Officer responsible for strategy management of a $180M investment portfolio in Maternal, Newborn and Child Health at the Bill & Melinda Gates Foundation.

Jennifer, Qinny, and myself came together to collaborate on the Great She-cession after having met each other at Oxford’s Said Business School where were jointly studying Strategy & Innovation.

Throughout this project, we utilized an approach called “Systems thinking” — i.e. a mindset for understanding how things work;

It is a way of seeing connections and interrelationships as patterns rather than isolated events. The process enables identification of leverage points to intervene and contribute to systems change.

We found this approach to be effective because when you pull back and take the 10,000’ view – you can see past the everyday symptoms to identify the root cause of a given problem.

Dr. Rochelle Walensky, Director of the CDC, April-2021

The overarching theme across the Map the Systems competition this year was on Systems Reset. Our project fell into the sub theme of an Economic Reset caused by COVID 19. To that end, we found this quote particularly relevant —

W. Edwards Deming, Management Consultant

That’s relevant because the economic costs we’ve paid this last year and a half were not simply derivatives of a pandemic ….. they were the result of pre existing, historical inequalities exacerbated by an inevitable health crisis.

Throughout this piece we’ll use the metaphor of an iceberg to illustrate the layers of a system. It’s simple but useful in looking at what’s above the surface vs everything that happening below. It starts with a clear outline of the events that unfold to better understand an overall problem, Next we’ll dive deeper into observed patterns. Finally we’ll analyze underlying structures and mental models that hold these power structures in place.

Throughout our research, one startling fact that stood out was… In April 2020, the US economy shed 20M jobs.

As of May 2021, women's jobs on payroll were still down 4.2M compared to pre-COVID levels. Women – particularly African American women, Latina women, and female workers with fewer academic degrees have been disproportionately impacted by job loss during the COVID19 pandemic.

Throughout our research, we developed a simple taxonomy of women in the workforce based on low-wage, high-wage, essential, and non-essential. Disaggregating the data helped highlighted where we needed to dig deeper.

• In the 1st category, Low-wage/Nonessential, women were hit the hardest. Here we have a lot of service jobs such as restaurant workers, hairstylists, technicians and hospitality workers— there is also a higher proportion of black, Hispanic, and education-disadvantaged women in this category.

• Category 2 (Low Wage Essential) and 3 (High Wage Essential) share a common story of direct exposure to the public – whether it was the grocery clerk who faced covid exposure day in and day out or the frontline health workers. These were the women who put their bodies on the frontline to make sure we all got the food, care, and medicine we need. Women in category 2 may not have access to paid sick leave, health insurance, or affordable childcare, and that inevitably impacted their employment status.

• Category 4 (High Wage Non Essential) workers benefitted from the ability to work remotely. They include those in finance, real estate, insurance, professional, technical, scientific, management, and broadcasting jobs. These groups suffered less acute job loss, but recent research found that 1 year into the pandemic.... this group is now at high-risk.

This analysis highlighted 2 key points:

1. If you were a caregiver across any of these 4 categories, school closures and a lack of access to childcare compounded the overall problem.

2. A theme we will pick up on later is that the most important thing to note is that the bucket you fall into is not entirely within your control.

As of April, 2021, 25% of schools were still closed. Even this summer, many daycares and summer camps are still running at reduced capacity. One important reason for this impact on women is that the measures put in place to contain the virus significantly increased the burden of unpaid care. This type of work is disproportionately carried out by women. Some of these social norms, which relegate women to family roles and domestic chores, mean they have had to take a step back in their career to care for their children as measures like school closures came into effect.

Taking a step back, we also acknowledge an enormous number of men have also been impacted by COVID related job loss. However, the data shows that while most fathers had returned to work by November 2020, mothers did not see the same improvement.

We are witnessing an uneven recovery. Men / Yellow. Women / Orange.

Further, at the height of the pandemic, women lost 2.4M more jobs than men. As of May 2021, female job loss was still 720k jobs higher than male job loss. This is why this recession has been called a she-cession.

Generally speaking, recessions have a greater impact on economically disadvantaged groups. The current recession has been no exception. This chart shows that while the labor participation rate declines for all women, African American, and Hispanic women have a larger drop than white women.

- Caucasian women are in blue

- African American women in orange

- Hispanic women in grey

As of June 27th, there were 604K recorded COVID 19 deaths in the United States.

Pulling in some summer data trends the bureau of labor statistics releases an updated jobs report every month. In the May 2021 release, job increases fell far short of projections. What we saw in the prior report for April was that job gains were even lower, 266k vs 1M expected jobs. What was followed by a slightly better, but still lackluster 559K in May 2021.

There’s now a pretty active debate about why we haven’t just bounced back. Some have speculated that there is a labor shortage, others there is a wage shortage, still more that Unemployment stimulus payments are too generous.

The below graph shows labor participation change rates for men and women. If you go out to the right to the most recent month, the red line – which represents women. What we found concerning about the trend for women is that the largest decrease for women was in the category of Professional & Business Services. If you go back to the 2x2 framework, we’re starting to see a rebound in service jobs (Category 1), but a lukewarm recovery in categories 3 (High wage essential) & 4 (High Wage Non Essential).

This is supported by a McKinsey Report that surveyed over 300 companies and 40,000 people from June – Aug 2020. Findings indicate 1 in 4 women are considering leaving the workforce or downshifting their careers.

This same report found 4 in 10 mothers have been working a ‘double shift’ during COVID19

54% of Senior-level US women have felt consistently exhausted during COVID19

$180B earning potential would be lost if all the women considering leaving corporate America quit.

For those that managed being on the frontlines during COVID, we are starting to see an aftershock where many healthcare workers are hitting a breaking point. One talented economist we collaborated closely with on our project, Kathryn Anne Edwards, puts it nicely...

Kathryn Anne Edwards

Next we are going to start looking below the surface at some larger patterns and trends. In order to understand the current economic fallout, we analyzed historical labor market trends dating back to 1948, when the US Labor Dept started tracking gender inclusive employment metrics. At the time in the 1940’s, approximately 1/3 of American women held jobs, and that number nearly doubled by the late 1990s. This is showing the labor force participation rate for men (red) and women (grey). Supported by a variety of policy and cultural norm shifts, womens labor force participation in the US doubled from 30% in 1950 to 60% in 1990.

Two trends to note:

• Since 1990, the number of women in the formal economy, plateaued — where it has remained stalled for the last 30 years.

• As a result of COVID19, the ratio of women participating in the formal economy has now fallen below 57% ….for the first time since 1988.

When we analyzed factors that helped double women’s labor force participation, a causal cycle of sorts emerged that has been well documented:

• When a women can delay marriage and choose if and when to have a family;…..it enables her to have a longer planning horizon for her employment

• It allows her to invest more in her education and human capital

• This creates a broader sense of her career identity before and after marriage and children

• Ultimately, at the heart of this cycle is Agency, Empowerment, & Choice

And we once again acknowledge we are viewing this from a historical perspective where the biggest gains in employment occurred from the 1960s to 1980s.

… But this virtuous cycle is not equally available to all. There are many forces that impact a woman’s ability to work. This includes: political system, access & quality of education, relative economic stability, social & community context, and healthcare access & quality.

What we found is that surrounding the inner cycle is a myriad of factors that can be both barriers or enablers to a woman’s career. This is essentially the concept of birth inequity, which has been referred to as the ovarian lottery by Warren Buffet.

Warren Buffet famously was quoted saying, “I was born in 1930, I had two sisters that have every bit the intelligence that I had, have every bit the drive, but they didn’t have the same opportunities. When I was growing up, you know, women could be teachers or secretaries or nurses. 50 percent of the talent in the country was excluded from virtually all occupations.”

One of the biggest points we want to drive home -- something that became glaringly obvious over the last year - is that is that while we were all in the same storm, we weren’t all in the same boat.

The ovarian lottery...

Warren Buffet

Building from this, moving forward, we’ll examine the underlying structure of the system which existed pre-pandemic, but includes issues that were were exacerbated in 2020 and beyond. We explored s key metric reflecting the status of our economic equality – the gender wage gap. In the last 25 years, despite technological revolution and globalization that lifted millions out of poverty around the world, the gender pay gap in America has only closed by 8 cents in the last 25 years.

Economist Marianne Bertrand describes the gender wage gap in 2 buckets: the Explained and the Residual.

In the Explained category, academic choices lead to different career outcomes for women in the long run. We still see disproportionate underrepresentation of women in higher paying STEM fields. In addition, when women become mothers, they often make changes to their labor supply decisions that translate into large and persistent losses in earnings over the course of their lifetime. This phenomenon is coined “the Motherhood Penalty”.

The “Residual category” this reflects the fact that even if women make it to the top of their fields (such as in the sports arena or C-suite), there is still a residual gender pay disparity.

Touching on educational choices, Science, Technology, Engineering and Math fields lead to industries where the gender wage gap is the smallest.

However, these fields are also wherein women are the least represented, despite the fact that women at large have earned more university level degrees than their male counterparts. We see that women account for 38% of STEM bachelor degrees and 26% of STEM leadership in industries. Minority women, on the other hand, make up only 9.2% in STEM fields and 3% in STEM leadership (per recent studies released by Yale University).

The US Dept of Labor/ Women’s Bureau’s May 2021 report shows that the Motherhood Penalty places significant burden on working mothers. This graph illustrates that mothers with younger kids have lower labor participation rate (for example: 63% for ages under 3) compared to those with older kids (for example: 75% for ages 6-17). Yet, father’s labor rates are much higher, consistently above 90%.

The US Dept of Labor conducted studies across numerous occupations and found that men out-earn women in almost all professions, except for counselors and nutritionists, etc. The largest gap exists in Sales and Finance, accounting for ~45% disparity. We see that women CEOs get paid 72 cents on the dollar compared to men. Even in fields where women are traditionally well represented, like nursing, female nurses are making 91 cents on the dollar relative to men. Furthermore, female founded companies received <3% of all VC funding in US as of 2020, out of total $138B in funding.

According to Labor Dept/ the Women’s Bureau, women still earned 80-83% of men’s income on average. Although factors such as industry and job categories further increase the gender wage gap, most of wage gap remains unexplained.

US DOL Women's Bureau

So what accounts for the “Unexplained” category?

We researched literature about evolutionary psychology, implicit biases at work, risk tolerance, etc and found that one potential factor may be the delta between men & women’s proclivity to display a sense of what is seen as traditionally “Western confidence." For example, as mentioned in the book The Confidence Code:

• Male job applications frequently applied for promotions when they could meet only 60% of job requirements, whereas women did so only when they believed they met 100%.

• Male workers were reported to initiate salary negotiation 4X as often as their female counterparts.

Furthermore, May 2021 data from National Bureau of Economic Research reflects even more sobering insights…the pandemic will likely widen the gender wage gap by 5 percentage points, and it will not recover to prior level for 20 years.

Observing these data points led us to to develop a conceptual, impact based Systems Map for women in the workforce, defining three unique domains wherein women are disproportionately impacted by top down & bottom up forces:

- the Political domain

- the Industry Domain

- and the Social Domain

Within the Industry Domain alone, women in the workforce are subjected to a spectrum of top down challenges, including but not limited to

- Asymmetric representation in major industries

- Marginalized representation in the C suite,

- Legacy workforce policy such as limited maternity leave, and…

Furthermore, we recognize in an increasingly mobile society, women are often driven to move away from family in search of higher paying positions, removing them from a structure wherein they might otherwise be more readily supported in starting a family.

To further refine key externalities, we also created an Influence Map, and placed women at the center of another economic analysis. We evaluated four power dynamics driving, or hindering equality in the workforce:

- the Social status quo

- prevailing Government Policy

- Family & Community Norms

- Workplace Standards

From this lens, an overarching learning emerged -- despite challenges, women have nonetheless succeeded in rising through both industry and academic ranks for the last 50 years. However, herein lies part of the problem… we have learned:

• A parity educated female workforce has thus far, NOT translated to equitable female C suite representation.

  • While we have a workforce that is academically qualified, the number of women in leadership positions has not markedly grown.

  • We also know these superior educational qualifications have NOT manifested as equal pay.

• Equal voting rights do not correlate to symmetry in our electorate…

  • for example Women are 51% of the US population but 20% of the Senate, 30% of statewide elected executives, 27% of sitting judges, & 0% of presidents.

• Lastly, espoused values of gender equality have NOT translated to holistic national policy.

The last level we will look at is deep below the surface. This is where we start getting at the mental models – the entrenched thinking – that helps keep this system functioning the way it does.

In the US, we view our economy, our nation, as the land of equal opportunity.. we tend to have a strong belief in boot-strapping our way to success. While that is true for some, many people are left behind in our current system.

We know:

• Equal investment in human capital does not always translate to equal opportunity.

• Unequal access to high-quality childcare and education heavily impacts future life and career decisions.

It’s no coincidence the COVID 19 pandemic also led to a public outcry against many of the preexisting inequities in our system. The gender equality conversation is far from over. And though we may be for some, we are far from a place of true gender parity.

In conclusion... COVID 19 has magnified the potential to set back the clock, but losing decades of progress is not inevitable.

We’ve all been presented with unprecedented challenges this last year, but it has also created the space for us to BUILD BACK BETTER. We can invest more in the levers that will flatten the socioeconomic gaps in our given domains.

We’ve come far, but we’re not there yet.

We are still at Day 1 when it comes to true equality.

It will take all of us to move the ball forward.

To summarize, this research effort was conducted virtually over thousands of minutes of Zoom meetings, 15 interviews with subject matter experts and female thought leaders from around the world, referencing 25 different research / academic sources…. We hope these learnings were helpful!

The Great She-cession Map the System Submission Recording

The Great She-cession Research Paper, System Maps, Bibliography

The Great She-cession Slide Deck