Exclusive: Pandemic Could Cost Typical American Woman Nearly $600,000 in Lifetime Income

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New signs of the nation's expanding recovery from the pandemic crop up every day, but for millions of women in the U.S. the economic punch of COVID may never be over. Long after the face masks have been tucked away and the kids are back in school full-time, after offices reopen, jobs are regained and life returns to some semblance of normalcy, the financial fallout of the past 15 months will continue to trail these women—likely, for the rest of their working lives and throughout retirement.

More than 4.5 million fewer women are employed now than at the start of the pandemic, either through layoffs in the female-dominated industries hit hardest by the virus or because they were pushed out of work to care for children home from school or daycare. Most of these women, research shows, are now also likely to earn less—perhaps, far less—in the future. During this period, they didn't get promotions. Or training. Or job opportunities. They lost seniority at work. And, when they return, employers are likely to regard them differently, less committed to their jobs, studies also show. These ingredients are a recipe for a lifetime of lower wages. That, in turn, will result in lower Social Security benefits and income from savings once they retire.

The potential long-term cost of this combination of losses for women—the income they've given up during the pandemic, plus the future income they'll miss out on, plus reduced retirement benefits—is enormous.

According to an analysis for Newsweek by economist Michael Madowitz of the Center for American Progress, a typical woman earning a median wage of $47,299 before the pandemic stands to lose more than a quarter of a million dollars in income over her lifetime, assuming she returns to full- time work by 2022; if she's out until 2024—that's how long the consulting firm McKinsey forecasts it will take for women's employment to get back to pre-pandemic levels—those losses could rise to nearly $600,000. For an average college-educated woman (median income: $62,140), the potential losses grow to $346,000 after two years out of the workforce and more than $785,000 after five years. And for those who were making a six-figure salary pre-COVID, the losses could top $1 million or more.

Collectively, women in the U.S. who left the workforce in 2020 could take a financial hit of $885 billion for two years out of work, Madowitz's calculations show. For context, that's about seven times the net worth of Facebook founder Mark Zuckerberg or slightly less than the gross domestic product of The Netherlands.

"If we don't do something about this, women will take a huge hit," says Madowitz. "They will eat the cost of the pandemic for the rest of their working lives."

It's not just these women who will pay a price. The loss of productivity of female workers due to the pandemic also impacts economic growth: McKinsey projects the global hit to GDP, if no action is taken to counter the effects, could be $1 trillion by 2030.

"There's a collective penalty we're all going to pay for forcing women to figure out how to manage a global health emergency on their own."

"When we don't have women in the workforce, the economy isn't as strong as it could be," says sociologist Marianne Cooper of Stanford University, a leading researcher on gender. "There's a collective penalty we're all going to pay for forcing women to figure out how to manage a global health emergency on their own."

At the least, the push for gender equality in the workforce will inevitably be set back years, research suggests, as women's earnings collectively fall relative to men. A recent study published by the National Bureau of Economic Research found that the pandemic is likely to cause the gender wage gap to increase by five percentage points and that it probably won't recover to pre-pandemic levels for 20 years.

Says Cooper: "The tale of this economic damage to women might be quite long."

A Slower Recovery for Women

Exactly how deep the damage will be, individually and for the country, is still a giant question mark because the pandemic, and its impact on women's ability to work, is unprecedented. As C. Nicole Mason, president and CEO of the Institute for Women's Policy Research, points out, there has never been an exodus of women out of the workforce like this before.

A litany of grim statistics tell the tale. Four out of 10 women in the U.S. have either stopped working or cut back hours because of COVID, according to a recent survey by Mason's group. By last fall, four times as many women as men had left the labor force. The percentage of women working—most recently, 57.2 percent—hasn't been as low as pandemic levels since 1988. At the current rate of recovery, the National Women's Law Center (NWLC) estimates, women will need more than two years, or 28 straight months, to recover the jobs lost since February 2020.

She-Cession Graphic

That pace has been slower than men's recovery. In the most recent government jobs report covering April, men had net gains in jobs while women had net losses: 2.2 men entered the workforce for every one woman who exited, according to NWLC's analysis. Overall, some 2 million women have left the workforce—that is, they're no longer actively look- ing for jobs—since the pandemic started. If those women were counted in jobless statistics, women's unemployment rate would be 8.1 percent, instead of the reported rate of 5.6 percent. For Black and Latina women, hit disproportionately hard by COVID-related job losses, the rate would be above 12 percent.

The longer the current job losses drag on, the steeper the long-term financial costs will inevitably be. "There's a direct connection between women having to involuntarily cut back on working and career mobility and advancement," says Mason. "We know that when women leave the workforce, for any period of time, it impacts earnings."

There is a body of research that shows just how costly the career timeouts that many women take to care for children typically are. Being out of work for just one year over a 15-year period translates into 39 percent lower annual earnings, according to a 2018 study from the Institute for Women's Policy Research. Similarly, a Center for American Progress study that Madowitz conducted in 2016 found that a 26-year-old working woman earning the median wage, who takes five years off to care for a child, lowers her lifetime earnings by 19 percent, due to the combination of losses of current income, future wage growth and money for retirement.

In the five-year projections that Madowitz ran for Newsweek, 40 percent of the pandemic's long-term cost to women who lost or left jobs came from losing current earnings, 30 percent came from lower future income growth and the final 30 percent came from reduced retirement benefits. All of the calculations assumed the worker was 30 years old when she stopped working because of the pandemic; once back at work, made typical contributions to an employer-sponsored retirement savings plan that earned a conservative 4 percent a year after inflation; then left the workforce for good at age 67, spending 20 years in retirement.

Pandemic Cost Graphic

Individual experiences, of course, will vary—and could lead to very different outcomes. Younger women may see even steeper long-term costs, because they'll have more years for earnings losses to compound, while the reverse could be true for older women. A shorter period of time out of the workforce, lower or higher-than-average salaries and future wage gains, a longer retirement, higher returns on retirement savings (the analysis did not include a company match and assumed a conservative 4 percent average annual return after inflation) or not having a 401(k) at all, as is the case for many women are all factors that would affect personal totals.

What the projections don't take into account: the cumulative effect for women who previously took time off from jobs because of caregiving responsibilities. Because, of course, even before the pandemic, working women in the U.S. were behind the curve financially. In 2019, on average, a woman earned just 83 percent of what an average man made. And that gap was wider for Black and Hispanic women.

The costs of parenting play a big role. For every child a woman has, her income falls by an average of 4 percentage points for life, according to widely cited research from 2014, partly as a result of discrimination from employers and partly from the time-outs from the workforce mothers have long had to take to care for children, given the country's lack of universal paid parental leave and affordable child care. (Fathers earnings actually increase with each child.)

The pandemic served as another forced timeout for women—akin to having another child—but on a massive scale.

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Labor force participation for women, most recently 57.2 percent, hasn’t been as low as pandemic levels for over 30 years. An unemployed woman in California unpacks her belongings after moving in temporarily with her brother. Sarahbeth Maney/The San Francisco Chronicle/Getty

'The New Normal: Not Working'

Susan Coll-Guedes, an art teacher and mother of three who lives near Atlantic City in New Jersey, is one of the many women for whom the pandemic will be a double hit. Coll-Guedes, 47, worked part-time for nearly 20 years to care for her severely disabled oldest son before returning to a full-time position in 2017. She says, "I was finally going to catch up."

Coll-Guedes was one year away from getting tenure when the pandemic hit and the family's caregiving arrangements unraveled. The nurses they relied on for her son, who needs round-the-clock care, also had jobs in hospitals or other facilities where exposure to the disease was high, and were often quarantining or simply unavailable. Meanwhile, her younger children, ages 9 and 7, were also home from school, learning remotely.

Throughout the spring and summer of 2020 ,Coll-Guedes and her husband, also a teacher, juggled care and working from home, and muddled through. But things got tougher in September, when her school district went back to in-person learning. She asked for an accommodation, but was denied because she did not personally have a medical condition that put her at risk. Instead, she took a 12-week paid family leave, but eventually felt forced to resign. "We really had no choice," she says.

Coll-Guedes can't even start to look for full-time work yet because her son's nursing care still isn't reliable with the pandemic ongoing. "It's endless," she said. "This is the new normal: Me not working."

When she's older, she says, she'll depend on her husband's pension and the little she's been able to put aside: "I'm gonna be that person relying on whatever I can scrape together."

If Coll-Guedes is out of work for another five years she would lose at least $369,934, according to calculations Madowitz ran on a childcare cost calculator he created a few years ago to help parents figure out the cost of leaving the workforce. That estimate doesn't even include a key benefit Coll-Guedes was forced to give up: a pension that would've paid her the equivalent of a full-time job in retirement. That's simply gone.

Coll-Guedes worries that she's too old now to ever get a full-time job again. Who will want to hire a woman nearing 50 for a job that a younger person with less experience can do, for less money, she says. "The joke in this house is [my husband will] retire and finally, it's my turn to work full time," she says. "I'll be like, 70 years old."

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A woman walks by the closed bookstore on May 5, 2020 in the Brooklyn borough of New York City. ANGELA WEISS/AFP/Getty

'The Retirement Crisis To Come'

Many women might not feel the full hit of the past year until they approach retirement. And they're already at a disadvantage there. Because women earn less in their lifetimes, they typically have less saved for retirement than men. Yet they need more money because women live over five years longer than men, on average.

Women face higher poverty rates in retirement. And receive lower Social Security payouts: an average of $1,154 a month vs. $1,466 for men.

COVID will exacerbate the situation. In a January survey, nearly three-quarters of the women surveyed by Nationwide Financial said the pandemic had negatively impacted their retirement savings. And a Capital Group study out in May found that nearly 45 percent of millennial women had stopped contributing to or withdrew funds from their employer's retirement savings plans last year.

"If there's a retirement crisis for women in 30 years, the pandemic will be where it all got started."

Melissa Boteach, a vice president at the National Women's Law Center, put it this way: "If there's a retirement crisis for women in 30 years, the pandemic will be where it all got started."

For many women, though, planning for retirement is not the priority now; just trying to get by is.

Dominique Virgo, age 30, was working as a school security guard in Patterson, New Jersey, earning $340 a week, when everything shut down last year. Her boss called her back to work this February but she couldn't return. Virgo is home with a one-year-old baby and is helping her stepkids with virtual school while her husband is out at work.

If you look at how much Virgo's lost in future earnings based on her pre-pandemic wages, it comes to $81,269 for two years out of the workforce. She wasn't putting anything into a 401(k).

Virgo said that she had some money in a retirement account from a job she held years ago, but she recently withdrew those funds to pay her rent. "I want to start putting money to the side for retirement," she says. "But I'm trying to get out of debt."

'They Start Back At The Bottom'

When women can start looking for work again, the challenges will be brutal. Once a woman leaves the labor force, getting back in is a struggle. And the longer a woman stays out of work, the harder it is to get rehired. Employers have long been wary of hiring someone who's been unemployed for an extended period of time.

One study, inspired by the last Great Recession, found that there's an "unemployment cliff," after you're out of work for longer than six months. Researchers from the Federal Reserve Bank of Boston sent out nearly identical fake resumes—the only factor that changed was the length of unemployment listed. They found that hiring managers would put the long- term unemployed candidate at the back of the line.

And while some women have already managed to go back to work, there are rising numbers who are now among the long-term unemployed. Some 44 percent of the women in the U.S. who were unemployed in April had been out of work for longer than six months.

The difficulties are even greater for parents whose time out of the workforce stemmed from caring for children. A 2018 study out of the University of North Carolina–Chapel Hill compared callback rates for job openings among three types of otherwise-equal applicants: people currently employed, unemployed workers and stay-at-home parents returning to the workforce; both groups with gaps on their resume had been out of work for 18 months. The study found that stay-at-home moms were only half as likely to get called for an interview as moms who were unemployed for other reasons and only a third as likely to get a call as employed parents. The biggest perceived knock against them: being less committed to their work.

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If women who have stopped looking for work were counted, the unemployment rate would be above 12 percent for Black and Latina women vs. 8.1 percent for women overall. Here, a woman applies for unemployment benefits online. Joe Raedle/Getty

Women are just going to fall behind their peers, says Titan Alon, an economics professor at the University of California-San Diego. Alon coauthored the recent National Bureau for Economic Research study that examines the long- and short-term impacts of the pandemic on women and anticipates a five-point expansion of the gender wage gap.
What's fueling the widening gap? Women will fall behind men in pay when getting rehired, Alon explains: "If I'm looking at two candidates, a man and a woman, and the woman was out of the labor force for a year, you're going to pay her a little less."

Women will also fall behind in getting promotions, he says, because they've missed out on the opportunity to accumulate experience on the job or take on more responsibility or new projects. "Even if the economy recovers, when the next assignment comes around, managers will look around, and say these female candidates may not know what's going on," Alon says.

There's also the possibility that women, especially mothers, will face increased discrimination in hiring at a time when many are interviewing from home with their families often in the background.

"Mothers are already viewed as less competent," says Rachel Thomas, cofounder and CEO at LeanIn, the women's advocacy nonprofit. "You can imagine what that's like in COVID times."

Meanwhile, many women at the lower end of the wage scale, who were laid off, are coming back into the job market earning even less than before the pandemic, Mason from the IWPR says. There are women who lost relatively low-income jobs, working in hotels, say, where they'd manage to get raises over the years. Now, when they go back on the job market, they're starting again from scratch.

"We've talked to women who worked for the same company for 20 years, over time getting incremental wage increases," Mason says. If they're forced out and try to get a new job: "They start back at the bottom."

'Losing a Piece of Who I Am'

Despite the long-term financial repercussions, more women are thinking about taking a career break as the twin pandemic stresses of trying to work from home and care for their kids take their toll. While historically mothers have shown higher levels of ambition at work than women overall, a McKinsey/LeanIn survey last year found that a third of mothers were considering downshifting their careers or leaving their jobs altogether.

Tommia Hayes, a 31-year-old mother in Washington, D.C., recently became one of them. Hayes was making around $80,000 a year working as a communications manager for a nonprofit before the pandemic struck. She worked from home for nearly a year while her 7-year-old son was logging in to school and her husband was working remotely, as well.
"I was getting so stressed out. I had a headache every day I logged in," she says.

Meanwhile, her son's teachers were telling her that he was at risk of falling behind. He'd get bored during Zoom classes and turn off his camera and just start playing with their dog or even nap, she said.

Hayes left her job in February. "We don't know when he's going back full time," she says of her son. "Someone needs to give him attention and care." Hayes says her husband, who works in the transportation industry, outearns her.

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A security guard hands out an instruction sheet outside of an unemployment office in Detroit that was closed due to COVID. JEFF KOWALSKY/AFP/Getty

Hayes said she knows there are big financial costs to dropping out, and that it's going to take time to get another job. She stopped working after her son was born, and it took her a year to find a new job back then, she said.

She's OK with the idea that her next job might set her back a little career-wise. "At least my son will be OK," she said. "I mean, it sucks, but for me everything is about my son."

According to Madowitz's calculations, Hayes, who was contributing to her employer's retirement sav- ings account—could lose as much as $421,511 in lifetime income if she stays out of work for another year.

Beyond that massive hit, there's something else at stake, she said. Hayes worked hard to get to where she is. She earned her master's degree, while she had a one-year-old at home, forgoing vacations or nights out with friends to put herself through school. She had finally gotten herself to a place where she was earning more money in a more senior role. She and her family were starting to take vacations. Now, living off one income, they'll scale back.

"My biggest concern is possibly losing a piece of who I am."

"You work so hard to get to where you dreamed you were going to be and then you have to make this sacrifice," she says. She cherishes her role as a mother, but that's not the only way she sees herself. "My biggest concern is possibly losing a piece of who I am."

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In the government’s most recent jobs report, men had net gains in employment but women still had net losses. A business owner in Whitinsville, Massachusetts, walks past the empty offices of workers she had to furlough earlier this year. David L. Ryan/The Boston Globe/Getty

'None of Us Know What This Means'

Hannah Lidman, a 43-year-old married mother of two young children in Seattle, walked away from a company she founded when everything shut down last spring. It was a startup devoted to helping parents find child care and business dried up when child care centers and schools closed their doors.

After that, she managed to get a full-time job doing advocacy work remotely. It paid about $80,000 a year, but Lidman left it behind after only a few months. She couldn't manage a 50- to 60-hour work- week with both a 4-year-old and 7-year-old at home.

"I felt like such a failure," she says.

Lidman knows she is, in key respects, one of the lucky ones. Her husband works in tech and earns far more than she'll ever be able to make doing the nonprofit advocacy work she's built her career on. She isn't stressed about the finances, exactly, but rather the lost opportunities and momentum.

She was doing her family's taxes at home in Seattle earlier this year, like she does every year. When she saw how little she made in 2020, laid out plainly on the tax form, she cried. "I've no idea what kind of damage I've done," she says. "There is a huge swath of women in my professional circle who are all moms with young kids. All of us had either had to step back or make sacrifices. None of us know what this means for us."

One giant wild card in assessing the potential long-term damage to working women—the psychological toll as well as the financial one—is whether employers are going to empathize with what happened to women last year.

Sure, typically, women are penalized for career time outs. But this time, with so many women forced out of work—with little choice amid an unprecedented pandemic—will those penalties ease up?

"You could imagine a reasonable employer looking at a pandemic gap year and thinking 'I'd be a terrible human to pay you less,'" Madowitz says. Still the idea of relying upon employers to not be terrible is not a "perfect scenario," he says.

At least one economist already sees signs of the difficulties that women, particularly mothers, will face as they try to return to full-time jobs. In a survey conducted in the fall of 2020, Lauren Bauer, a fellow in economic studies at the Brookings Institution, found that 40 percent of unemployed mothers who left their jobs to take care of children during the pandemic were seeking work.

And thought there are more jobs available now, mothers are still having a hard time. These women are seeking what Bauer calls "unicorn" jobs—they need something flexible because the child care issues haven't been solved yet. Says Bauer, "It's hard to find a position with the flexibility you need to care for kids."

Increased access to child care, part of a package of proposals recently floated by the White House, could be a game changer. One of several systemic fixes that experts say could mitigate the long-term financial toll of the pandemic, universal child care would raise the collective lifetime earnings of 1.3 million women by $130 billion, Columbia University and the National Women's Law Center estimate. Given the concentration of women in low-paying jobs, raising the federal minimum wage to $15 an hour could also help ensure a lifetime of higher earnings for many women who have lost their jobs.

Of course, the future is not simply in the hands of employers or the government. There's also the matter of this pandemic. Many women won't be able to get back to work until the schools fully reopen, more folks are vaccinated and life returns to some kind of normal.

Madowitz agrees: "The pandemic ending would be good."

Emily Peck, a former senior reporter at HUFFPOST and WALL STREET editor, covers business, economics and gender inequality. She is a cohost of SLATE's Money podcast. Follow her on Twitter @EmilyRPeck.

Michael Madowitz, economist with the Center for American Progress, provided the projections of the pandemic's long-term cost to women.

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Photo Illustration by Newsweek; Source Images Getty