Ask A Gender Economist: What’s Going On With The Workforce?
Welcome to my weekly Q&A roundup. (Scroll down to find the Q&A.)
If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions—tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. So each week, I pick one question that I believe others would find most instructive and publish my response to it here.
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3 Shifts Coming For The Labor Force
I’m gainfully employed, but I’ve seen more “We’re Hiring” signs now than I’ve seen my whole adult life. Anecdotally, I’ve also had a handful of friends vent to me recently about their staff shortages. What’s a gender economist make of this situation? I wonder if this is only temporary or something more serious?
Fair warning before we continue: as humans, we’re programmed for simplicity because simple is easier (and quicker) for our brains to understand. So brace yourself, because I will not attempt to distill the situation you’re describing down to one easy-to-understand causal variable.
What I will do, however, is provide a forward-looking, gender-based framework to analyze the labor shifts coming for our economy. Here we go.
The labor shortage you’re alluding to is the result of a confluence of variables. From a gender economist’s perspective, the three main variables asserting pressure on our labor force are:
Declining birth rates
Let’s take each of these variables one at a time.
1. Digital Acceleration
Fully 72% of enterprises increased their pace of digital transformation as a result of the pandemic. In 2020 alone, global investments in transformative technologies grew by 10% (to $1.3 trillion), and in the first three months of the pandemic, businesses spent an additional $15 billion per week on IT.
The rush to digitize, while thrilling, cannot happen without a digitally dexterous and literate labor force.
Approximately half of all employees globally will require some form of reskilling within four years (i.e. starting now!). That estimate doesn’t account for those currently unemployed, whose reskilling will determine their ability to meaningfully re-enter and stay in the paid labor force.
We can also expect digitalization to destroy 85 million jobs by 2025, while at the same time creating 97 million new opportunities for people to work at the intersection of machine and algorithm.
However, these new and displaced jobs don’t fall evenly across genders since women are more likely than men to perform routine, clerical jobs. Over the next two decades, economists predict that automation will displace 11% of women’s jobs compared to 9% of men’s jobs (globally).
2. Declining Birth Rates
In addition to the dizzying pace of digital transformation, we also have to contend with falling birth rates. As birth rates fall, policymakers, academics, and business leaders alike worry about prospects for future economic growth. Among other things, a shrinking population decreases the supply of labor.
Last year, the US faced its slowest population growth since the 1930s.
Meanwhile, the natural rate of population growth has already gone negative in Japan, Germany, Italy, and Spain. And, 27 countries have smaller populations today than they did in 2010, a trend expected to increase in the future.
3. The She-cession
Falling fertility rates and increased digital adoption are taking place against the backdrop of a lingering she-cession. Women’s labor force participation rate in the US has regressed to 1988 levels and the gender pay gap has regressed to 1998 levels.
Independent of the digital acceleration and falling fertility rates, such pronounced backsliding on gender equity worries me because women’s incomes have never been more important.
Since 1988, the number of children living in breadwinner mom households grew by 47%. Today, 40% of US households with children are headed by breadwinner moms.
That share of households with breadwinner moms jumps to 51% for Black families. In other words, the majority of Black households with children in the US depend on a breadwinner mom for economic security at a time when Black breadwinner moms face the greatest gender pay gap of any cohort of women in the US. For every dollar White breadwinner dads earn, Black breadwinner moms earn 44 cents.
Alright, so those (digital acceleration, birth rates, she-cession) are the three main factors we need to consider when trying to make sense of the labor force from a gender perspective. At the end of your question, you said: “I wonder if this is only temporary or something more serious?” Based on the research, it’s the latter.
Fundamental changes are underway in our economy. The key question will be: can policymakers and business leaders keep up?
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