COVID Destroyed Women’s Finances
What happened, why, and how to prevent it.
Americans all over are experiencing financial pain, but women, especially women of color, are bearing the brunt.
I touched on this situation a couple of weeks ago, but this topic deserves much more attention. In this article, we are going to review:
- The ugly truth about how women have been historically set up to financially fail, especially in the United States.
- Just how big the outsized negative impact on women from this latest recession is.
- How women can protect their current wealth and plan for their financial futures.
But first, a not-so-fun history lesson.
From Owned Property to (Barely) Owning Property
Over the thousands of years of recorded history, women have had a wide spectrum of legal rights.
The spectrum is illustrated by contrasting the (relatively) large degree of freedom enjoyed by Norse women to the subservient requirements of women in ancient China.
When originally written, America’s judicial system was heavily influenced by English Common Low, which included the shameful practice of coverture.
Sir William Blackstone, Commentaries on the Laws of England, 1765–1769
By marriage, the husband and wife are one person in law: that is, the very being or legal existence of the woman is suspended during the marriage, or at least is incorporated and consolidated into that of the husband…
- Sir William Blackstone, Commentaries on the Laws of England, 1765–1769
What does it mean to not have a legal existence? This essay sums it up well…and it’s appalling.
Because they did not legally exist, married women could not make contracts or be sued, so they could not own or work in businesses.
Married women owned nothing, not even the clothes on their backs.
They had no rights to their children, so that if a wife divorced or left a husband, she would not see her children again.
While not as explicitly defined as the above, the essence of coverture worked its way into the laws of the new American nation after the revolution, and its effect has never fully been negated.
In March 1776, Abigail Adams implored her husband, John, to create the new nation with a different view of women.
…I desire you would remember the ladies and be more generous and favorable to them than your ancestors.
Do not put such unlimited power into the hands of the husbands.
Remember, all men would be tyrants if they could.
If particular care and attention is not paid to the ladies, we are determined to foment a rebellion, and will not hold ourselves bound by any laws in which we have no voice or representation.
Unfortunately, her pleas for equal treatment fell on mostly deaf ears.
Even after the nightmare of the Civil War, the 14th Amendment defined “citizens” and “voters” as only male. (This definition was famously challenged by Susan B Anthony in 1872.)
Women did not gain the federal right to vote until 1920.
Other indignities include:
- Married women weren’t allowed to own property in their own name (and only their own name) until 1900.
- Housing discrimination on the basis of sex and credit discrimination against women wasn’t outlawed until 1974
- Marital rape wasn’t fully illegal in all 50 states until 1993.
Aside from the legal issues, the assumptions of traditional gender roles places women second. For example
- House titles regularly put the husband’s name first, followed by the wife’s.
- When addressing a couple, we introduce them as “Mr. and Mrs.”, not “Mrs. and Mr.”
- Women are expected to take their husband’s last name, a tradition that historically signified a transfer of ownership from father to husband.
And I haven’t even mentioned that, pre-pandemic, women were still only earning $0.82 for every dollar a man makes, a gap that was calculated to remain until 2059. That date has now been pushed back much further, with current estimates showing that equal pay has been pushed back to 2156.
It’s little wonder that women started way behind in their personal finances than men.
It’s also little wonder that any financial hit will, on average, have a much larger impact on women than men.
Just How Bad Was It For Women?
It was bad enough that Bloomberg nicknamed this the “she-cession.”
By just about every measure other than mortality (which is pretty important!), the Covid-19 pandemic has been harder on women than on men.
The majority-female services sector lost jobs at at a faster rate than the majority-male goods-producing sector — which has never happened before in a recession.
More women than men have dropped out of the labor force.
Even women who held onto their jobs generally had to shoulder an outsized share of the new child-care and schooling burdens.
And from The Washington Post, (emphasis added)
The coronavirus pandemic has been catastrophic for women, economically.
Of women ages 25 to 44, 32 percent have dropped out of the labor force to care for children — while only about 12 percent of men the same age have done so.
This has left millions fewer women in the workforce than there were pre-pandemic, setting many women’s economic security back years.
We know why women were in a precarious position prior to the pandemic.
We also know that they got completely sucker punched by the recession.
Why was it so bad? Here are some big reasons:
- The infamous Second Shift responsibilities, especially during lockdown, overwhelmed women, with many leaving the workforce entirely.
- Education, leisure/hospitality, and retail jobs were the hardest hit, and women make up the bulk of those positions.
- Gender discrimination in who gets fired is more rampant than reported, leading to women being the first to get laid off during a bad economy.
The Vicious Cycle of the Second Shift
The burden of household chores and child rearing falling squarely on the shoulders of women is not some outdated gender-biased role that was abolished by the Industrial Revolution and Women’s Rights Movement.
Rather, it was a responsibility that was quietly absorbed by women as they entered the workforce, with most men blissfully unaware of the heavy toll exacted by this invisible mental load.
So when the recession hit, women faced an impossible choice of staying home with their children during virtual learning, or stay at their job and hope some form of childcare would be available during the weekdays.
One problem is that even when men step up their household responsibilities, women are still disproportionately carrying the load.
A second problem, which has its own history of being neglected by local, state, and federal governments, is that child care and family support are embarrassingly inadequate in the United States. As a result, families, especially those in the low-income range, had no choice but to have someone leave the workforce to tend to the children.
With women earning significantly less than men, the choice was quite simply a math problem. If one person has no choice but to quit their job, then it will be the one with the lower income.
Female Majority Jobs Were Hit the Hardest
There are myriad reasons why women are over-represented in certain job categories, but those are beyond the scope of this article.
The bottom line is that women held most of the jobs that suffered most of the layoffs.
School teachers. Wait staff. Store clerks. Hotel cleaners.
They are all majority female.
The salt in the wound is that many of these jobs were already at risk for automation, and the pandemic has just sped up that replacement, reducing the chances for a callback or new position.
Women Were Fired More Than Men
In a legal setting, it is extremely difficult to prove intent. Policing someone’s thoughts is a slippery slope, and many prosecutors avoid this line of questioning for this reason.
However, every now and then, there comes along a situation where intent was abundantly clear, regardless of any claims to the contrary. One of these cases occurred during the December 2020.
When the jobs report came out for that month, it showed that women accounted for 91% of job losses in the government sector. If you contrast this to the fact that women only occupied 58% of positions available in that sector, you can clearly see a bias in who stays and who goes.
Now, there will be no single person holding the “smoking gun”, having written an e-mail explicitly telling HR to lay off almost exclusively women.
But it does illustrate that not only is there a gender bias in hiring, there is also a gender bias in firing, with women once again being the target.
What Can Be Done
The disproportionate negative financial impact of the recession on women is mostly due to systemic issues, which won’t be solved in the near future.
The best thing women can do right now is to protect yourself.
How do you do that? Follow the basics espoused by almost every personal finance article, book, column, and blog out there.
- Know your money, inside and out.
- Review past expenses. Detail how much went to what purchase and why.
- Start a budget. Stick to a budget. Make a better budget.
- Read all the books. Do all the money things.
- Set goals. Make a plan. Have a vision.
- Assign a job for every dollar and tell your money exactly where to go.
- Automate your money, so spending, saving, and investing are on autopilot.
To get money to meet your goals, you can either cut expenses or increase income. You can only cut expenses so far, but increasing income is limitless.
Also, in relationships, don’t let anyone make financial decisions for you.
- Like your friends but not what they want to do? Suggest something you enjoy more (and possibly cheaper).
- Don’t let your husband unilaterally make financial decisions. Make sure you have an equal say about everything from the type of milk you buy to the best mutual fund to invest in for retirement
- Realize just how much Second Shift work you really do, and start delegating it to other in the household. This lets you be a better employee (leading to raises) or work on a side hustle (also increasing income).
Lastly, what I’m about to say is either the height of hypocrisy or a moment of brutal honesty.
Women need to stop listening to financial advice from men.
Men are pretty simple when it comes to money. We want lots of money. Then more money. Then lots more money.
- For some, it’s just a game with our bank account keeping the score.
- For others, it fulfills our need to provide for our family.
- For others still, it’s a personality disorder based on a fear of poverty.
The reasons for a man’s pursuit of money are usually vastly different than those of a woman. The same is true of how we handle money once we earn it.
Save or spend? Cash or credit? Rent or mortgage?
Don’t fall prey to following the loudest voice in the room. Find the voice that rings true for your life, even (maybe especially) if it runs counter to your current financial patterns.
There are many amazing women financial advisors and educators who can help other women to a greater extent that I ever could. Here’s a short list:
- Farnoosh Torabi of So Money
- Bola Sokunbi and company at Clever Girl Finance
- Stefanie O’Connell
- Anna Newell Jones of And Then We Saved
- Chelsea Fagan of The Financial Diet
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This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
