Women Hit Hardest By Economic Damage Resulting From Pandemic
By: Stacy Francis
October 20th, 2020
Due to recent record-shattering closings, U.S. stocks are officially back in a bull market, marking the fastest stock market recovery in history. For many women, the good news begins and ends there. As recent market trends have proven, the stock market is not necessarily indicative of the strength of the economy. Millions of Americans have been affected by record high unemployment due to Covid-19, and many individuals have a long way to go to make up for financial losses.
The road to financial recovery will be especially long for women, who have taken the brunt of the economic impact. Before the pandemic, there already existed a vast wealth gap between women and men, with women having less in total financial resources, such as earnings, investments and retirement savings. The situation is even more dire for Black women, Latinas and other demographic minorities. Before the pandemic, Black women were paid 62 cents on average for every dollar paid to white, non-Hispanic men. For Latina women, it was 54 cents. According to U.S. Census Bureau data, the median yearly pay for Latinas working full time, year-round is $33,540, compared to $61,576 for white, non-Hispanic men.
Women have now been disproportionately affected by pandemic-related job losses. The World Trade Organization stated that the pandemic is having a larger economic impact on women due to their prominence in sectors hardest hit by the crisis, such as travel and manufacturing. An August report (download required) by the National Women’s Law Center (NWLC), citing the Bureau of Labor Statistics, noted that job losses for women since February made up 53.6% of overall net job losses, yet women account for under half (49.7%) of the workforce.
And while overall U.S. job recovery has been impressive, job recovery for women has not. The NWLC report stated that only 40% of the 12.1 million jobs lost for women between February and April have returned. Further, it found that “while the overall unemployment rate dropped to 10.2% in July, almost 1 in 7 Black women (13.5%) and Latinas (14.0%) remained unemployed,” making their unemployment rate roughly three times higher than it was in February.
For women with families who were able to keep their jobs during this difficult time, new data shows that dads are more than three times as likely as moms to get a promotion while working remotely during the pandemic.
Add to this the vastly disproportionate levels of unpaid labor that women do in the form of child care, cooking, cleaning and caring for aging parents. Women, and especially women of color, were already suffering from lower net worth and a higher poverty rate before the pandemic. Now they have been disproportionately affected by job loss and more exhaustive unpaid labor. “Wage and educational gaps, as well as limited access to finance, a greater proportion of women in informal employment and social constraints all tend to make women more vulnerable to economic recessions,” the World Trade Organization stated. Covid-19’s economic fallout threatens to exacerbate gender inequalities and further roll back economic progress.
Although most of us were blindsided by this pandemic and its economic ramifications, women can combat future economic setbacks by utilizing the following fundamental financial planning principles:
1. Living below your means: The most important thing you can do to safeguard yourself from future economic setbacks is to build up a nest egg. Live below your means and start saving for the future. We usually recommend saving three to six months’ worth of expenses for your emergency fund.
2. Building a diversified portfolio: Depending on your investment goals, your portfolio should be allocated among multiple asset classes (e.g., stocks, bonds, real estate, cash equivalents) and individual investments within each class. Diversification reduces risk.
3. Buying the market: Low-cost, passively managed index funds and exchange-traded funds with a wide array of holdings make good “core” portfolio positions, especially in taxable accounts.
4. Thinking long term: Information overload, such as the constant chatter on news shows, can be distracting and worrisome. Tune it out! Stay focused on the long term, and let the speculators stew over the day-to-day fluctuations of the market.
5. Doing your research: Never purchase a stock based solely on a Wall Street analyst or financial advisor’s recommendation. In some cases, they may be an employee of a brokerage firm with a vested interest in the stock’s future appreciation. Always ask someone providing you advice whether they are a fiduciary, which means they uphold a standard to always act in the client’s best interest.
Closing the economic gap between men and women is a long road, but utilizing these financial principles will begin to provide individuals with a bit of financial peace of mind for the future.