the money game

Women’s Wages Are Now Growing Faster Than Men’s

Retail workers are in high demand. Photo: Joe Raedle/Getty Images

There’s a tendency to gender our recessions. There was the “man-cession” following the 2008 Great Financial Crisis, when manufacturing and construction jobs dried up, and then those out-of-work men declined to get government-funded retraining in areas like health care, which have usually been worked by women. This time around, the pandemic “she-cession” has come with a child-care crisis, pushing women out of the workforce in droves. At the peak of the economic collapse last April, the unemployment rate among women was 15.5 percent, while it was 13.1 percent for men — numbers that perhaps deepened the overall wage gap of 93 cents to every dollar earned by a man.

But 21 months after the start of the pandemic recession, the economic picture for women is brightening. Since July, women’s wage growth outpaced men’s — a reversal of the trend that had been in place since March 2020, according to data from the Federal Reserve Bank of Atlanta. This September saw the biggest gap in earnings growth between the sexes going back to 1997, with the three-month average of women’s gains reaching 4.9 percent, while men saw a growth of 3.4 percent. It’s stayed around that level since.

The problem with looking at any single piece of data is figuring out what it means amid a broader backdrop — and women, who on average have seen their economic lives more disrupted by the pandemic, have further to catch up than men. “Women are disproportionately likely to be in low-wage jobs in the first place,” said Martha Ross, senior fellow focusing on labor policy at the Brookings Institute Metropolitan Policy Program. “The wage increases are important and good, but often the wage levels are so low to begin with that it’s still not enough for workers to make a living.”

The Great Resignation — the massive turnover as people leave the workforce or find new jobs — appears to be playing a major role in the new trend. According to Gusto, a payroll-services company, women have been more likely to quit their jobs in recent months than men, which has corresponded to a tighter labor market and rising pay in sectors like retail and hospitality, which are typically worked by women. “These areas where women work have been the center of the Great Resignation, and they’ve been able to turn these elevated quits into strong wage gains,” said Luke Pardue, an economist at Gusto. By and large, women have seen an hourly increase of $1.80 per hour this year through November, while men have gotten $1.40 — gains that, for women, have outpaced inflation, Pardue said. “This is definitely an improvement, these relative wage gains, but they still haven’t made up for the losses that they experienced at the beginning of the pandemic,” he added.

Still, the above numbers really only apply to women who stayed in or rejoined the workforce. The unemployment rate for women is now also on par with men at 4 percent — but that masks a host of other, less positive trends, including more women who’ve dropped out of the workforce due to illness or taking care of children. There are also about 3 million women who aren’t working but want a job, where there are about 500,000 fewer men in the same situation. This has skewed data around the gender pay gap, for instance, which narrowed last year, but only because so many women with low-paid jobs were out of a job. “For the people who stayed in the workforce, both men and women, the wage gap looks relatively similar to where it was before the pandemic,” said Kate Nielson, policy director at the American Association of University Women. “The people who left the workforce tended to be lower-wage workers. So I don’t know that it’s accurate to say that the pay gap stayed relatively the same if the bottom dropped out.”

Overall, the rise and fall of women’s employment appears to be tied to the severity of the pandemic. Gusto’s data shows that states with lower vaccination rates have higher quit rates among women, particularly in low-vaxx states likes Idaho and Wyoming. While quits have recently been tied to the number of people switching their jobs, it also includes people who’ve had to drop out of the workforce entirely. “It’s not a coincidence that we see the gender gap in quits rise and fall as COVID cases rise and fall, as new variants come in, as schools are closed,” Pardue said.

The question now is how much of an impact these gains will have for women over the long run — and there’s some evidence that they are part of larger shifts in the labor force. More women have been entering into historically male-dominated fields, like warehousing and construction — industries where employers are under more pressure to fill roles and pay is competitive. “In the United States, people do shift fields. But what we don’t get so much is that women move into male-dominated fields,” said Ariane Hegewisch, program director for employment and earnings for the Institute for Women’s Policy Research. “It’s not new that you can make more in male-dominated fields than in female-dominated fields. But what seems to be new is women moving into construction and women moving into those storage warehouse jobs, where they were fewer before.” And while wage growth driven by quits can peter out just as quickly as it spiked, a provision in the Democrats’ Build Back Better bill that raises wages for health-care workers paid through Medicare and Medicaid could also bring women back into fields that they’ve typically worked, and lock in gains that they might have otherwise missed out on if they weren’t able to switch industries. “That’s where it’s not just a matter of women’s sort of being fed up enough and having enough other options,” said Mary Alice McCarthy, director of the Center for Education and Labor at New America.

Women’s Wages Are Now Growing Faster Than Men’s