Announcement

ADP Research Institute (ADPRI) and the Stanford Digital Economy Lab (the “Lab”) announced they will retool the ADP National Employment Report (NER) methodology to provide a more robust, high-frequency view of the labor market and trajectory of economic growth. In preparation for the changeover to the new report and methodology, ADPRI will pause issuing the current report and has targeted August 31, 2022, to reintroduce the ADP National Employment Report in collaboration with the Stanford Digital Economy Lab (the “Lab”). We look forward to providing an even more comprehensive labor market analysis and will be in touch with additional details closer to the re-launch, later this summer.  For more information on this announcement, please visit here.

MainStreet Macro: Special Edition- The glass ceiling just got harder to crack

July 12, 2021 | read time icon 14 min

Nela Richardson, Ph.D.
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With analysis by Jeff Nezaj, Principal Data Scientist, ADP Research Institute

Women’s job losses during the pandemic topped those of men for the first time in U.S. economic history. Ongoing Covid-related health concerns left millions of women pulled between work and new family responsibilities. As employees, women also were concentrated in industries hit hardest by social-distancing restrictions, such as retail and leisure and hospitality.

In the first six months of the pandemic, women’s labor force participation dropped to 54.6% last April after an eight-year high of 57.8% in February. It still hasn’t fully recovered, reaching only 56.2% as of June.

At the ADP Research Institute, we wanted to know what happened to the women who stayed in the workforce during the pandemic year. We were curious to learn whether gender disparities in pay and promotion were exacerbated by the pandemic. Maybe a shared national emergency had bolstered the professional outcomes of women in the workplace.

To find out, we looked at the gender pay gap a year after the onslaught of COVID-19. This analysis captures the actual pay experience of 12.5 million employees of different ages in more than 30,000 companies across geographies and industries.

We also were able to investigate the impact of the pandemic across corporate hierarchies, from non-managers to the most senior executive levels in an organization. Think of hierarchy levels as the rungs on a ladder, the chain of command from the bottom to the top of an organization. As a whole, 84% of the workforce is composed of non-managers, people on the lowest rungs.

Here are a few things we learned about women in the workplace during the pandemic.

Losses look like gains

Pre-pandemic, women made up 47% of the workforce but just 23% of senior-level positions (fourth level and higher). That might be one reason that women overall earned only 80% of what men did.

Women near the top of the corporate hierarchy had the largest pay gap, with those at the highest seniority level making just 78% of what men earned.

Fast forward a year, and we see what looks like progress. The gender wage gap shrank by 2 percentage points as women’s hourly wages as a share of men’s increased from 80% in 2020 to 82% in 2021. 

Source: ADP Research Institute

It looks good, but it’s a false narrative of progress. Here’s why.

As we’ve noted, women in the workforce were more likely to lose or give up their jobs during the pandemic. Employers writ large lost 20% of their female employees, compared to 17% of their male counterparts.

The loss of female workers occurred mostly at the non-manager level, where employment among women dropped by almost 22%.

Non-managers represent the lowest-paying jobs, and this loss of women workers explains the change in the gender wage gap. Women aren’t gaining on men, they’re just dropping out of the lowest-paying jobs.

Source: ADP Research Institute

More women doesn’t mean better pay

An oft-cited explanation for the pay gap is that women are over concentrated in low-paying jobs and industries. But an examination of a particular sector, health and education, exposes the flaw in that explanation.

Women make up nearly 3 in 4 workers in education and health, yet the sector has one of industry’s widest gender pay gaps. At the most senior levels, women make only 73% of their male counterparts. 

Total employment in education and health fell 15% from the prior year as demand for elective surgeries fell and schools closed among other health related restrictions. In all, 15.5% of women in this sector lost jobs between February 2020 to February 2021. Men’s ranks thinned by only 13.6%.

Despite strength in numbers, women still come up short at every level.

Higher salaries can mean wider wage gaps

Finance and insurance is one of the highest-paying sectors in our study. It also went through the pandemic relatively unscathed compared to other service-sector industries. Most finance jobs were deemed essential and many workplaces remained open at full capacity. Moreover, the finance industry already had automated job functions and could more easily transition to a remote workplace.

Women make up 56% of all workers in the sector, which exhibited the largest gender pay gap of any industry over the past year — a difference of $14 an hour.

Despite being better positioned to weather the pandemic, the gender wage gap in finance widened, dethroning the information industry which historically has held the top spot when it comes to unequal pay.

Women in finance earned 70% of what their male counterparts earned in 2021, down from 71% in 2020.

Fewer than 1 in 4 senior leaders in finance are women. At the most senior levels, the gender pay gap is one of the widest across industries at 73%.

Source: ADP Research Institute

A double-whammy for the hardest-hit

Leisure and hospitality jobs employed only 11% of the workforce before the pandemic but suffered more than 40% of the total jobs lost.

Non-managers in leisure and hospitality were hit the hardest. Women suffered the most losses compared to men of any industry, with 39% of them losing work compared to 35% of men.

Source: ADP Research Institute

Even women who held onto their jobs lost ground when it came to pay.  Gender wage disparity increased, with women earning only 79% of what men were paid a year after the pandemic began, a decrease of 4 percentage points from the prior year.

Source: ADP Research Institute

Signs of progress in a stable industry

Manufacturing was among the least impacted during the pandemic among the sectors, only Construction and Information fared better. Employment losses over the past year were only 11%, which ranks among the lowest across the sectors. In addition, females fared better than males within the sector as they lost only 9% of employees compared to men which saw almost 12% losses – the only sector where females fared better than men across all hierarchy levels.

Manufacturing is also the most equitable industry when it comes to gender pay. Not only that, women continued to make gains during the pandemic year earning 93 cents for every dollar a man made in 2021 compared to 90% a year earlier.

Source: ADP Research Institute

My Take

The shift to virtual could have been beneficial but also in many cases added more responsibilities at home to women due to the pandemic.

In a coda to the workforce statistics, a recent ADPRI Survey found that women were less likely during the last year to get paid more for additional work responsibilities. And they were less confident about switching jobs due to fear of losing whatever flexibility they currently had.

Even with the shift to remote work, women were less likely than men to report that their managers were more flexible than corporate rules dictated.

Corporate America is undergoing a massive workforce transformation, embracing new ways of working and reconstructing business operations in a more virtual, tech-forward work environment.

But women at all levels of seniority still suffer pay and promotion inequities, even after a year of unprecedented change. Yet there are seeds of progress within industries that can be accelerated so more women benefit.

As the job market continues its recovery, women should continue to regain lost ground, but the pandemic setback will cost them. The path to equal pay for equal work will take longer.