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For Women, The Price of the Pandemic is Higher. Here is Why...

For Women, The Price of the Pandemic is Higher. Here is Why...

December 01, 2020
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The COVID-19 pandemic has left no household untouched. From financial concerns to emotional tolls, everyone has felt an impact of the sudden changes in life. Businesses and careers catapulted into a new dynamic, relationships put to the test of constant togetherness, health concerns weighing on those with compromised conditions and financial stress added to already strapped budgets. While the theory that we are all “in the same storm, but in different boats” is accurate, there is one unfortunate common thread that the pandemic has woven together for women. Whether it is because of the types of jobs women more typically hold, the role they play in their households, or their disposition to be the family caretakers, the financial impact of the COVID-19 pandemic has disproportionately impacted women. There are three pillars of the pandemic that have left women more financially vulnerable.

Women have been more significantly impacted by job loss than men. The Labor Department has released data that indicates in the month of September alone, 865,000 women dropped out of the work force, roughly four times the number of men. There are a multitude of reasons why women are stepping out of their jobs at a faster rate. The typical household division of labor falls unequally more on women. The result: faced with the stress of trying to educate and supervise school aged children who are now home, many women have found the daily juggle overwhelming. Being they are likely already earning less than their male counterparts, women are quicker to wave the pandemic white flag and sacrifice their jobs or careers. In other households there is a concern for immune compromised family members, or elderly members who need to be cared for. Again, this role more often shifts to the woman. When it becomes undesirable for two parents to be working outside of the home, it is overwhelmingly the woman who puts her career on hold and stays home. Often this “career break” becomes longer than expected, and thus its financial toll continues to build. Re-entry into the workforce can take longer than expected and is likely to force a woman down the pay scale from where she left. Not only are future promotions pushed down the line, earnings power is severely impacted as well.

With financial uncertainty, promotions and salary increases are on hold. In an environment where many have lost their jobs, companies have had to make difficult decisions in order to manage expenses. Often this means that promotions, and their accompanying salary increase, will be put on hold for anywhere from 6 to 12 months. Being that women typically start their careers with a roughly 20% salary deficit from men, the pandemic may stretch these pay gaps further into the future. Many future earnings figures, and therefore savings, will be driven by the growth of the base salary. For example, pay raises, as well as percentage bonuses, are often based on current salary levels. So the pay gap for women typically continues to widen as the years go on.

The “work/life” balance has been blurred by a widespread remote work environment. In certain professions, the “after hours” rewards favor men over women. A study by Harvard University’s Claudia Goldin highlighted that in certain higher paid professions, such as law or business, workers are rewarded for putting in long hours and making themselves available “after hours”. These unspoken job requirements are much more difficult for working women, who are likely trying to balance holding onto a career while continuing their role as primary caretaker at home. COVID-19 blurred the lines of after hours even more. With most companies and workers shifting to a remote work environment, the “balance” of home and work life has become harder to distinguish. Women, more likely to assume the role of “uber mom”, “part time home chef” and “educator/therapist” will see the impact on their careers more heavily than men, even if it is never outwardly spoken. This unofficial cut back on hours and focus, typically just as their careers are taking off, financially impacts women for the rest of their careers, well into their retirement.

Women may find themselves with little career choice during the pandemic. The economic vulnerability that this creates for women in the future may be insurmountable. Regardless of their industry, career, or even if they exit the workforce at some point, women will be at a deeper economic disadvantage when they arrive at retirement. What women can control is putting in place a fluid financial plan that addresses their individual need s and concerns. An awareness of these financial planning strategies is the lifeboat that can carry women through the stresses of the pandemic, with fluidity to change as circumstances arise.

Keri Kutakoff helps women identify all of the financial planning tools available and implement those strategies that specifically allow them to maximize their retirement savings.