MainStreet Macro: When a Summer Off is a Bad Thing

August 02, 2021 | read time icon 8 min

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Growing up, I used to long for summer vacation. (Let’s be honest, I still do).  However, when it comes to women and work, a summer off might be a bad thing.  

The labor market is still recovering from last year’s bruising round of pandemic-related business closures, during which, for the first time in history, women bore more than their share of job losses.  

For some, that premature exit from the workforce was “voluntary”, a decision made to focus on increased family responsibilities during the pandemic. For others, the exit was decidedly involuntary, with women more concentrated in service-related jobs that were hit hardest by the pandemic. 

As the labor market continues its uneven path to pre-pandemic levels of employment here are three trends to watch for women this summer. 

  1.  The summer employment drought 

ADP’s analysis of pre- and post-pandemic data uncovered a seasonal pattern in women’s workforce participation. We looked at female employment growth relative to male employment growth for the years 2018, 2019, and 2020.   

 Percent difference in Male versus Female Employment across Income Groups (2018, 2019, and 2020) 

Source: ADP DataCloud 

For women, employment growth in all three years disappears over the summer months relative to a January start-of-the-year baseline.  

The summer hiring drought is especially pronounced for lower-income women. In 2020, female employment during the summer dropped by a staggering 11% among women making less than $20,000.  

This summer, we’re likely to see improvements. Still, there are barriers to summer jobs that limit stronger gains. Which leads us to the second trend. 

  1. Lack of affordable childcare 

A lack of affordable childcare during the summer could force women to, again, “voluntarily” quit the workforce.  

Childcare programs can be harder to find during the summer months when school is out of session. They can get more expensive and less reliable or convenient. In June, the number of people working in childcare was down 10% from pre-pandemic levels, a sign that these childcare services are still in short supply more than one year later. 

To know if women will be able to fully participate in the jobs market, the recovery of childcare providers is a good indicator to watch. 

Source: St. Louis Federal Reserve Economic Research (FRED) 

  1. Wages and job-switching  

One way to lure women back to the workforce is higher pay. After peaking in May of last year, wage growth has been uneven and ground to a tepid 1.5%  year-over-year in June, according to ADPRI’s latest Workforce Vitality Report.  That’s less than inflation which clocked in an at 5.4% in June. 

Job-switchers, however, have done better. For them, wages are up 5.8%, as companies vie to attract talent by increasing pay. Female job-switchers saw even higher pay growth — 6.4% vs. 5.5% for men — but from a lower wage level of $27.79, compared to $32.61 for men. 

Still, wages are slumping in the leisure and hospitality industry, where the blow delivered by the pandemic was particularly painful. Women represent roughly 51% of workers in this sector, which is the only industry where wages were lower this year than last year.  

In the second quarter, job-holders and job-switchers in the sector both reported a decline in wage growth — minus 1.4% percent and minus 1.3%, respectively — from a year ago.  

My Take 

Last week marked a milestone when we learned that the economy had surpassed pre-pandemic growth for the first time. The pace of economic growth hit 6.5% in the second quarter of this year.  

Labor’s performance, marked by the head-spinning contradiction of worker shortages and high unemployment, has been much more jagged.  

Despite the economy’s show of strength, monetary policymakers at the Federal Reserve don’t see U.S. unemployment returning to pre-pandemic levels until 2023. As Federal Reserve Chair Jay Powell put it at last week’s press briefing, “we have some ground to cover on the labor market side”.  

Vacations are fun, but this summer the economy can’t afford to take time off. A full recovery in the jobs market necessitates a recovery in female employment.   

How well women are enabled to manage work, job searches, and family responsibilities this summer, especially given renewed pandemic concerns from the delta variant, will tell us how close we are to a full job-market recovery. 

On that front, the economy still has a lot of work to do this summer.