The She-Cession: Analyzing the Gendered Impact of Economic Downturns

Written by Nitika Desai ( W’26)

Beneath surface-level statistics like GDP declines and rising unemployment rates during economic downturns lies a nuanced, often overlooked narrative – the “ She-Cession.” The “She-Cession” sheds light on the disproportionate impact that recessions have on women, an issue that has been exacerbated by the COVID-19 pandemic.

Historically, economic downturns have hit women harder than men. For example, data reveals that women were laid off in much larger numbers at the start of the pandemic. According to the U.S. Bureau of Labor Statistics, the unemployment rate for women aged 20 and over peaked at 15.5% in April 2020 compared to 13% for men in the same age group.  

This disproportionate effect can be attributed to many factors. Firstly, women are employed more in industries such as hospitality and retail, which are usually hit the hardest during recessions. Moreover, women’s overrepresentation in these service-related sectors puts them at a higher risk of job loss. 

It is also interesting to note that many macroeconomic factors, like inflation, are not gender-neutral. For example, while the cost of goods and services in aggregate is up, the cost of consumer goods and services marketed specifically to women grows about twice as fast as those marketed to men: 4.15% year over year compared to 2.2 % year over year, respectively. 

Additionally, women often shoulder the majority of caregiving responsibilities and face additional challenges when schools and care facilities close during economic crises. For example, the pandemic led to a significant exodus of women, reducing their working hours or leaving the workforce entirely to take on additional caregiving responsibilities. In September 2020, four times as many women as men dropped out of the labor market, with 865,000 women leaving their jobs, according to the National Women's Law Center.

The existing gender wage gap means that women, on average, earn less than men. This wage disparity can be exacerbated during economic downturns when wage cuts and reduced hours become more prevalent, disproportionately affecting those already earning less. Additionally, women are more likely to be in part-time or precarious employment situations, which often lack job security and benefits. This phenomenon was highlighted in a report by McKinsey & Company, which showed that women's jobs were 1.8 times more vulnerable to the crisis than men's jobs, partly due to the increased burden of unpaid care.

The She-Cession is not a new phenomenon, but it is one that demands urgent attention and action. Creating a more equitable future requires the reinforcement and rigorous enforcement of equal pay legislation. Ensuring that women are paid equitably for their work is a fundamental step toward rectifying gender imbalances in the workplace. In parallel, nurturing diverse leadership that includes women in top-tier positions is crucial. Such representation not only breaks the glass ceiling but also shapes organizational cultures that are more inclusive and attuned to the needs of a diverse workforce.

Beyond these foundational steps, companies can adopt more nuanced strategies. Embracing flexible work arrangements and remote work options is paramount. This adaptability allows women to harmonize their professional aspirations with caregiving responsibilities, fostering a work environment that acknowledges and accommodates the dual roles many women play.

Another vital strand in weaving a more equitable future is financial empowerment. Encouraging and facilitating women's engagement in building passive income streams can significantly enhance their financial independence and make them less susceptible to recessions. Investment in diversified portfolios can be a tool for achieving this. The trend toward increased investment activity among women is promising, as highlighted by a 2021 Fidelity study. This study revealed that 67% of women are now investing beyond their retirement accounts, up from 44% in 2018. It also noted that the onset of the COVID-19 pandemic acted as a catalyst, with 51% of women reporting that they began investing since the pandemic's start, and 42% indicating they now have more money that what they started with. 

As we strive to rebuild post-pandemic economies, let us not just aim for recovery, but for a renaissance of economic resilience and equity for women.

References: 

U.S. Bureau of Labor Statistics. (n.d.). Unemployment rate rises to record high 14.7 percent in April 2020. U.S. Bureau of Labor Statistics. https://www.bls.gov/opub/ted/2020/unemployment-rate-rises-to-record-high-14-point-7-percent-in-april-2020.htm 

Commentary: The recession is already here–if you're a woman. (2022, August 4). Fortune. https://fortune.com/2022/08/04/recession-woman-careers-pink-tax-covid-economy-gender-personal-finance-katica-roy/

COVID-19 and gender equality: Countering the regressive effects. (2020, July 15). McKinsey & Company. https://www.mckinsey.com/featured-insights/future-of-work/covid-19-and-gender-equality-countering-the-regressive-effects#

Fidelity. (2023, October 9). Fidelity investments® study: Women tapping into their financial superpowers to gain ground with their money. The NewsMarket. https://newsroom.fidelity.com/pressreleases/fidelity-investments--study--women-tapping-into-their-financial-superpowers-to-gain-ground-with-thei/s/f912c67e-75e9-4398-9ea8-dd6e196005a4

The ‘Pink tax’ :: 705 FCU. (2016, June 13). 705 FCU. https://www.705fcu.com/2016/06/13/pink-tax/