Women of colour are worst affected by the U.S. COVID-19 labour shock

One of the positive turns that the U.S. economy took during a decade-long recovery through 2019 was a steady rise in the share of women looking for work and working.

Women’s labor force participation had declined in 2007-2009 during the Great Recession, and many economists had worried that would become permanent, weighing on growth overall as women kept their skills and efforts off the table.

When women’s participation started climbing around 2015, particularly for Blacks and Latinas, it helped boost growth and likely was a force behind the increases in household income that also began around then.

The coronavirus has seized back those gains, and sparked another debate over whether reduced participation will persist.

Recessions typically fall hardest on racial and ethnic minorities, due to bias as well as a last-hired-first-fired dynamic. During economic expansions, job gains typically flow last to those groups, which means less seniority when downturns arrive.

For women, the coronavirus recession has posed a shock along two dimensions: More jobs have been lost in service industries and occupations where women are disproportionately represented, while women have also shouldered more responsibility for the challenges to family health, school closures and other disruptions from the pandemic.

The result: Not just lost jobs, but a departure from the labor force altogether that can recast demographics of who works and earns, who can buy a home, invest, or help children pay for college.

Younger women in the first stages of career and family formation had made some of the strongest recent gains in labor force participation, and now have seen the sharpest drop. The average age of a first-time mother in the United States is currently around 30; the largest decline in labor force participation has been among 25 to 34 year olds.

The blow has fallen hardest on women of color. Since February, the number of Hispanic women in the U.S. labor force has fallen nearly 7 percent, the number of Black women declined 5.6%, and the number of white women by nearly 3%. That compares to a drop of just 1.7% for white men and less than 1% for Hispanic men. The drop for Black men was more than 4%.

Will those workers come back?

That question will determine the quality and breadth of the U.S. recovery, and whether this recession exacerbates wealth and income inequality, as many suspect it will. It is possible for overall economic output, for example, to keep climbing if sectors like manufacturing and technology rebound further -- areas where the dollar value of output per worker is typically higher -- even as some industries remain depressed.

But at some point the loss of millions of wage earners will be felt, and full recovery will be elusive until either their former employers recover, or those workers gravitate to new firms and occupations.

The most recent jobs report, for September, was not encouraging, with women and Blacks leaving the labor force and overall job growth slowing.