Breaking Glass to Sound the Alarm on Women Leaving the Workforce
This year is no exception, as our State Street Global Advisors team applauds the many women who continue to break glass ceilings on this fourth anniversary of the Fearless Girl campaign on gender diversity.
Vice President Kamala Harris as the first woman and the first person of Black and Asian descent to hold the second-highest office in the United States, and Janet Yellen as the first female Treasury Secretary have clearly broken new ground. In Europe, Christine Lagarde as the first female head of the European Central Bank and Ursula von der Leyen as the first female president of the European Commission occupy two of the world’s most important political and economic posts. New Zealand’s prime minister, Jacinda Ardern, not only continues to win praise for her successful management of the COVID crisis at home, but helped break another glass ceiling in November when she appointed the country’s first female indigenous foreign minister, Nanaia Mahuta.
In financial services, we have seen a number of firsts as women have risen to the highest offices at their firms. Jane Fraser is now CEO of Citigroup, Jean Hynes will become Wellington Management’s first female CEO in June, and Thasunda Brown Duckett was just named the new CEO at TIAA, the first woman to lead that company and the second Black female CEO to helm a Fortune 500 company currently. At State Street we are proud that our own Lori Heinel was recently named State Street Global Advisors’ first female Global Chief Investment Officer.
But while women continue to break glass ceilings and make gains at the highest levels, it is happening too slowly and too infrequently. Moreover, this year we need to break a different kind of glass to sound the alarm on the dramatic setbacks women have experienced as a result of the COVID crisis.
In the U.S., about 2.5 million women have left the workforce since the pandemic struck, 275,000 in January alone, or nearly 80 percent of those who dropped out. Economists say it could take years to reverse those losses. Meanwhile, the UN’s flagship report on women in 2020 has this sobering conclusion: “Twenty-five years since the adoption of the Beijing Declaration and Platform for Action, progress towards equal power and equal rights for women remains elusive. No country has achieved gender equality, and the COVID-19 crisis threatens to erode the limited gains that have been made.”
In what many economists are calling the first female recession, women in the U.S. have been disproportionately affected by job losses in female-dominated service sectors like hospitality. In addition, many women who work in essential services like healthcare, transport, and food industries where jobs cannot be done virtually have been forced to leave to care for their children at home.
Providing the flexibility and support that women need to remain and thrive in the workforce is an investment that redounds to the benefit of all of us.
Women are overwhelmingly the primary caregivers, whether to children or elderly relatives. Even in those cases where remote work is an option, the caregiving role during COVID-19 has often forced women out of the workforce.
According to the National Women’s Law Center, female workplace participation in the U.S. has dropped to 57%, the lowest level since 1988. A study by McKinsey and Oxford Economics suggests that employment for women might not recover to pre-pandemic levels until 2024.
Past recessions show that getting back into the workforce has taken longer on average for women than men. This has long-term consequences, because the longer it takes for women to return, the greater the chance they re-enter at a lower position and lower wage, exacerbating the seniority and wage gap between men and women.
As with so many other areas, the pandemic has highlighted foundational vulnerabilities in society that undermine many women’s ability to stay in the workforce. First among these in the U.S. is the lack of affordable childcare and the fact that caregiving responsibilities still disproportionately fall to women. This is especially burdensome for low-wage earners, who in addition to high childcare costs often face inflexible workplace policies and a lack of paid time off or paid medical leave to care for children or other family members.
Even higher-earning women are considering retreat in the face of mounting work and family demands. A September study by McKinsey and LeanIn.org found that of the 40,000 women they surveyed across corporate America, 1 in 4 were prepared to leave the workplace all together or significantly downshift their careers.
When it comes to working women, the pandemic has catalyzed long-simmering tensions. In addition to strengthening childcare infrastructure, both the public and private sectors need to offer women more flexibility and support. At State Street, we continue to offer flexible working arrangements and paid leave programs for both men and women as well as paid back-up day care and caregiver resources. Providing this support is central to our Workplace of the Future plans in a post-COVID world.
As automation disrupts more industries, women require greater educational and reskilling support to get back into the workforce. Companies need to do more to provide on-ramps for women who have taken time off.
U.S. policymakers should also consider innovative approaches to managing unemployment during deep recessions, such as the Kurzarbeit or short-time work benefit that the German government has led and implemented to deal with cyclical downturns. Under this program, workers are kept on at reduced hours and reduced wages that are subsidized by the government so that activity and employment can be ramped up quickly as recovery takes hold, and fewer workers, male or female, drop out of the workforce.
While much progress has been made, the potential for women is even greater. The pandemic has offered many lessons on the need for greater public and private investments in resilience, at both the micro and macro level. Providing the flexibility and support that women need to remain and thrive in the workforce is an investment that redounds to the benefit of all of us. On International Women’s Day, we need to break the glass that will mobilize policymakers and business leaders to reverse the trends that threaten to undermine the hard-won progress so many women have achieved toward gender equality. All of us can and must do more.
As chairman and chief executive officer of State Street, Ron O’Hanley is investing in people, technology and innovation. By encouraging independent thinking from his employees and taking strong stands on global policy issues, Ron is listening for ways to build a stronger future – for State Street and all of our stakeholders.