America needs to get women back into work

As any summer traveller knows, many people working in the tourism industry these days seem overworked and stressed out. Leisure and hospitality was far harder hit than any other industry in the US during the pandemic, and it is still struggling to keep up, with some 1.4mn jobs unfilled compared with pre-pandemic levels.

This isn’t about a lack of demand — people may be scaling back, or taking vacations closer to home, but they are still travelling. Indeed, post-pandemic travel spending hit a new high in May, according to the non-profit US Travel Association.

In fact, the continued labour shortage in this industry is indicative of a bigger and more problematic trend, which is the loss of women in the workforce, particularly female workers without a college degree. This is a trend that has been building since the 2001 recession; since then, less educated women have seen larger drops in labour force participation and slower recoveries after every recession. But things have hit a new crisis point following the pandemic.

Women make up 53 per cent of the workforce in the leisure and hospitality sector, for example, and more than one in three of the jobs lost by women at the height of the pandemic were in that sector.

The same is true in many other lower-paid service sectors, such as childcare. While overall US employment in May 2022 was at 99.7 per cent of its January 2020 level, according to the US Commerce Department, the employment rate in the childcare sector is still 89.2 per cent of its pandemic rate. Other areas, such as public sector work and education, also lag behind.

The bottom line? Women, particularly those at the lower end of the socio-economic spectrum, aren’t going back into the labour force at the rate that they did before coronavirus. Indeed, female labour force participation in the US was 1.4 percentage points lower at the end of 2021 than it was before 2000.

This puts America very much at odds with the rest of the rich world. During that same period, women’s labour force participation increased 5.3 percentage points in France, 5.4 points in Canada, 6.7 points in the UK, and a whopping 14.3 points in Japan. Amazingly, there are now a greater percentage of women without a college degree working in Japan than in the US.

What’s going on? To sum it up in a word, childcare — or more particularly, a lack of decent, affordable childcare.

Commerce department statistics show that mothers with children under the age of five at home generally have lower participation in work outside the home, but that’s particularly true for women with less education and lower pay.

What is more, local studies have shown that mothers in states with more childcare centre closures and more online schooling have lower levels of employment, and those who have access to care (whether provided by the state, the private sector or family) have higher labour participation rates.

This is a topic that Gina Raimondo, the US secretary of commerce, has begun to address with business leaders. “We desperately need non-college educated women back in the labour force,” she told me during a recent conversation in Washington, “but unless we tackle childcare, they aren’t going to come back.” She pointed out, for example, that employers in certain very tight labour markets, like construction, with highly paid jobs, would love to hire more women. But given that shift work might start at 7am, or end after dinner, mothers with children and no access to affordable care can’t get into, say, union training programmes for such industries. “People simply aren’t grappling with the economics of this.”

In fact, the economics are pretty simple — more women working means more economic growth. A new study by the Conference Board’s Committee for Economic Development released at the end of June estimates that even a one percentage point increase in labour force participation among women between the ages of 18-54 would produce “multiple economic benefits, including an additional income of approximately $73bn”. That’s something that could have a significant effect on consumption and job creation at a time when the US economy is likely to slow.

While plenty of enlightened companies in industries such as tech and finance provide access to good on-site childcare, there’s a strong argument to be made that public care, not private, is the way to go here. For a start, it would cover all workers, including those in lower paid industries and the increasing numbers of gig workers in the US who are piecing together freelance jobs to make a living. According to the CED study, the average income of families using paid child care in the US in 2020 was $149,926. Meanwhile, the median family income was $67,521.

It would also relieve companies of the burden that they are shouldering in the US in providing things that are best done by the state. Healthcare is, of course, top of that list. As last week’s overturning of Roe vs Wade made clear, companies are not only grappling with rising healthcare costs (which the state handles in many other countries) but also the politics of that care. In this, as with the need for decent childcare, the interests of women and of business are actually the same.

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