COVID-19: Women face a bigger financial challenge

Shelly Gigante

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on May 26, 2020

COVID-19 may not discriminate as it steamrolls its way across the country, but it does inflict pain with an uneven hand. And so far, it seems, women are facing a greater share of the economic loss.

From an infection standpoint, men have tested positive for the novel coronavirus in greater numbers and died at roughly twice the rate of women, according to an analysis by The New York Times. The virus has also ravaged racial and ethnic minority groups. Early data found that hospitalizations in the U.S. have been significantly higher among black and Latino populations, perhaps because minorities are more likely to live in densely populated areas, live farther away from medical facilities, or live in multi-generational households, the Centers for Disease Control and Prevention speculated.1

But recent research reveals that COVID-19 has dealt a more devastating economic blow to women, which stands in stark contrast to the economic fallout from prior downturns.

“Historically, we’ve heard recessions referred to as ‘mancessions’ because they generally involved higher losses in manufacturing and construction, which still employ more men,” said Susan Duffy, executive director of the Center for Women’s Entrepreneurial Leadership at Babson College, who sits on the bipartisan National Women’s Business Council. “It’s very different this time around.”

Why? Women are more likely to:

These challenges are daunting but, for some, not insurmountable. Women, in fact, get a lot right about investing and retirement saving that men don’t. The key will be in how well some women can adapt to effects of the current crisis.

Unemployment is higher for women

Of the more than 700,000 jobs that were eliminated in the first wave of pandemic-related layoffs in March, the Labor Department reports that nearly 60 percent were held by women. The April jobs report also revealed that the number of women who were unemployed reached 16.2 percent, compared with 13.5 percent for men.2

“Women have a higher participation in the service and hospitality sector and many of those jobs have been put on hold or disappeared completely during the pandemic,” said Duffy, noting the one exception is in the suddenly-higher risk health care field, where women make up 76 percent of the workforce. Those jobs have remained stable. (Related: 7 steps to financial empowerment for women)

A greater percentage of women than men are also employed on a part-time basis as they juggle the household responsibilities, jobs that fade the fastest when the economy falters. The Bureau of Labor Statistics reported in 2019 that 20 percent of women are employed part-time, compared with 8 percent of men.3

According to the AARP, older working women have fared the worst during the coronavirus pandemic. The unemployment rate for women ages 55 and older reached 15.5 percent in April (up from 3.3 percent in March), compared with 12.1 percent for men in the same age group.4

Many spent more time out of the workforce during their careers than men (to raise children or care for aging parents), leaving them with less saved for their own retirement. Unemployment during the coronavirus pandemic could threaten their financial security further still.

“Now, millions of older women have lost jobs and paychecks because of the pandemic,” the AARP wrote in a recent blog. “Particularly hard hit are the retail and hospitality sectors, which together employed more than five million women age 50 and up. While American workers of all ages are facing similar situations, the recovery prospects for older women are particularly daunting.”

Older women, the blog noted, are closer to retirement age, have less time to recover lost wages, and started off with diminished retirement accounts. Another negative: Returning to the workforce as a pre-retiree may be difficult.

Women on the front lines

But it’s not just higher unemployment rates that trouble the National Women’s Law Center. Low-paid female workers are disproportionately on the front lines of the COVID-19 battle, risking their health as personal care and home health aides, child care workers, grocery store cashiers, and restaurant staff (to name a few) — jobs that frequently do not provide health insurance or paid sick leave.5

Nearly two-thirds of the 22.2 million workers in the 40 lowest-paying jobs in America are held by women, the NWLC reported. Even when the economy was booming in 2018, the most recent year for which national data on poverty and income are available, the NWLC reported that 43 percent of women of color working full time in low paying jobs lived in or near poverty, as did 35 percent of white, non-Hispanic women working full time in these jobs. Nearly half of Latinas, Native American women, and black women working full time in low-paying jobs had household incomes below twice the poverty line.

“The coronavirus catastrophe has exposed what has always been a devastating reality for millions of low-paid women workers across the country: Despite working hard and providing essential services that we depend on, they are paid rock-bottom wages that devalue the work they do and put them at high risk of living in or near poverty, even when they work full time,” said Julie Vogtman, NWLC Director of Job Quality, in a statement. “The analysis underscores what a low unemployment rate often conceals: Having a job is no guarantee of having enough income to make ends meet.”

Women-owned businesses

Not to be forgotten are the millions of women-owned businesses struggling to stay afloat as social distancing protocols persist and nonessential businesses remain shuttered.

More than 11.6 million U.S. firms are owned by women, employing nearly 9 million people, and generating $1.7 trillion in sales, according to the most recent data from American Express.6 (Learn more: 5 ways investors can support women in business)

Start-up businesses are a lifeline for women who need flexible hours or seek to elevate their income potential. But, even before COVID-19, many struggle to attract capital to facilitate growth.

“Women-founded companies receive less investment and get a much smaller percentage of venture capital dollars,” said Duffy.

Data from investment bank Goldman Sachs, which found just 2 percent of U.S. venture capital went to companies with all-women founding teams and 12 percent went to teams with at least one woman in 2017, bear that out.7

Despite the coronavirus-related government assistance available from the Small Business Administration, a significant number of majority-female-owned businesses will not survive, said Duffy.

The child care hurdle

Working mothers who seek to reenter the workforce following the pandemic will face yet another significant hurdle — the lack of access to affordable child care. The supply of qualified child care providers in the U.S. relative to demand falls far behind that of many other developed nations.

Many American mothers must choose between spending the bulk of their income on child care, finding a cheaper, but potentially lower-quality option, or leaving the workforce altogether to act as a full-time caregiver, according to the Center for American Progress. In its 2018 survey, CAP found that mothers were 40 percent more likely than fathers to report that they had personally felt the negative effect of child care issues on their career, too often making job decisions based on child care considerations rather than in the interest of their financial wellness or career goals.

“When problems with child care arise, parents must scramble to find alternative options — or miss work to care for their children,” CAP wrote in its report. “For millions of parents, that insecurity can mean working fewer hours, taking a pay cut, or leaving their job altogether.”

Perhaps that will change in the post-pandemic economy.

“Better child care options are something that we’ve known we need in this country for a very long time,” said Duffy. “There is not enough capacity, so even those women who want to go back to work can’t find child care. It is a serious structural problem, but this could be one of the positive outcomes of the pandemic. Employers that once stubbornly resisted flexible hours and work-from-home schedules may now realize that this works, which gives women greater employment prospects to improve their financial well-being.”

What can be done?

It’s apparent that COVID-19 may be putting more men and minority groups in the hospital, but it’s women who may be paying a bigger financial toll. From higher unemployment rates, to the preponderance of female frontline workers without benefits, to the number of women-owned small businesses that will struggle to survive, the coronavirus pandemic has created a new frontier for gender (in)equality.

That doesn’t mean women can’t counter the challenge. In many ways, women have an edge in money matters.

For example:

  • Women tend to keep on track and be less rattled by market volatility, making them better investors overall.
  • Because they typically earn less in the workforce and tend to live longer than men, many are more diligent about saving for short- and long-term goals.

As the coronavirus crisis unfolds, there are steps women can take that, while not an immediate or absolute panacea, can help put their financial security back on track.

These include a range of actions from building financial literacy to devising a debt management plan to exploring Social Security withdrawal strategies. Many opt to consult a financial professional to help build an overall strategy.

Discover more from MassMutual…

Ways to financially recover from COVID-19

5 tips for single female home buyers

Finding a financial pro during the pandemic

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1 Centers for Disease Control and Prevention, “COVID-19 in Racial and Ethnic Minority Groups,” April 22, 2020.

2 Bureau of Labor Statistics, “The Employment Situation—April 2020,” May 8, 2020.

3 Bureau of Labor Statistics, “2019 Household Data Annual Averages,” 2019.

4 AARP, “With Pandemic, Low-Wage Workers Face Both Greater Economic and Health Risks,” May 11, 2020.

5 National Women’s Law Center, “Low-Paid Women Workers on the Front Lines of COVID-19 Are at High Risk of Living in Poverty, Even When Working Full-time,” April 2, 2020.

6 American Express, “The 2017 State of Women-Owned Businesses Report.”

7 Goldman Sachs, “Closing the Gender Investing Gap,” June 19, 2018.

The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of MassMutual.