The Pandemic’s Negative Impact on Diversity in the Labor Force

October 30, 2020
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Author: Mara Zemicael

With evidence mounting that a diverse workforce leads to higher revenue and increased innovation, businesses have prioritized diversity and inclusion initiatives. In recent years, businesses across industries have set goals to increase racial and gender representation among both rank-and-file and senior-level leadership employees, as well as board members.

The pandemic has made it challenging for many women and racial minorities to remain in the workforce.

Though these diversity and inclusion initiatives are expected to continue into the future, the current pandemic threatens the progress many businesses have made. Many of the workers initially laid off or furloughed in the early days of the pandemic were concentrated in leisure and hospitality, health care, education, or retail trade – the industries hit hardest by the virus. These workers were often disproportionately low-income, female, Black and/or Latino.

Most industries not as reliant on in-person interaction have fared better in the pandemic economy. However, among female and Black or African American workers, higher levels of unemployment persist. This is true even for those not employed in sectors most affected by the pandemic. Below we explore these factors and what talent acquisition professionals and businesses can do to keep these groups in the workforce, as well as how they can keep their talent pipeline open to entry-level talent who have graduated or will graduate into the current pandemic economy.

Why a Diverse Workforce Benefits Businesses

Dr. Marianne Wanamaker, a ThinkWhy Executive Advisory Board Member, economist and associate professor at the University of Tennessee’s Haslam College of Business, emphasizes that for the U.S. economy to reach its full potential, we need each demographic group to contribute to its full potential.

“The past 10 years have seen a real growth in the rate of women’s participation in the economy, and the same is true for racial minorities and for America’s seniors,” she ways. “The COVID pandemic has reversed some of those gains, and the American economy is suffering as a result.”

In a recent LaborIQ® by ThinkWhy virtual event, The Talent Shuffle, Dr. Wanamaker, along with co-presenter Jay Denton, SVP, business intelligence and chief innovation officer at ThinkWhy, dived deep into the causes of these employment disparities and what businesses can do to prevent the reversal of gains made toward diversity in the workforce.

Female Employment Impacted by Childcare Concerns

In September, the Labor Department reported that 865,000 women over age 20 dropped out of the American workforce compared with 216,000 men in the same age group. Many women – even those not working in fields impacted by the pandemic – have had difficulty remaining in the workforce. The main hindrance is childcare -- specifically, the many school-age children of these women who are not attending in-person classes.

Prior to COVID-19, Titan Alon, an economics professor at the University of California San Diego, found that even when both spouses work full-time, married women with full-time jobs spend about three hours more a week on childcare, compared to married men. This trend of women shouldering more of the childcare duties has continued during the pandemic, even when women go into the office and their male partner works remotely from home.

women-leaving-U.S.-workforce-2020-graph

What does this mean for employers and talent acquisition professionals? With so many women juggling both school-age children and their jobs during work hours, Dr. Wanamaker urges businesses to think about how they can create more flexibility over the next six to 12 months to keep these women employed. This may mean rethinking working hours or paid time-off policies.

Black Workers Disproportionately Affected

At the start of the pandemic, Black workers had closed the labor force participation gap, meaning they were employed at similar levels as White workers. As previously mentioned, Black workers disproportionately worked in the sectors most negatively impacted by social distancing measures. The majority of Black workers – particularly Black women – work in education, health care or social assistance. Although many jobs in these sectors have been added back, Black workers in these sectors have not returned to their pre-pandemic employment levels.

Black-workers-leaving-the-U.S.-workforce-2020-graph

LaborIQ shows that Black workers are being rehired at a slower rate than their White counterparts. Part of this may stem from concerns over contracting the virus. Per Dr. Wanamaker, survey data backs up that many Black workers are willingly staying out of the workforce because of health concerns over the virus. When compared to Whites, Blacks tend to have more pre-existing conditions and often live in multigenerational households. These factors would lead to having a higher likelihood of contracting the virus and suffering complications.

What does this mean for employers and talent acquisition professionals? Over the next six to 12 months, employers may need to offer greater flexibility to work remotely from home. If employees must work onsite, then businesses can stagger work schedules to limit the number of people physically in the office at one time. They can also take more precautions by strengthening sanitation practices and spacing out employees to maintain social distance in the workplace.

How Are Future Earners Affected?

Unemployment among workers ages 20 to 24 remains high. In September, the unemployment rate was 12.5% for this age cohort, while the overall U.S. average was 7.9%. Some research indicates that approximately 1 in 4 recent college graduates is unemployed, and many of those with jobs may be underemployed. In prior downturns, workers graduating from college during a recession saw a 10% reduction in their earnings compared to peers graduating in better economies. It takes about a decade to close this income gap. Unlike in prior recessions, Dr. Wanamaker says that enrolling in graduate school may not be a desirable option, as the virus limits in-person networking opportunities and many classes are now only online.

Related: Recruiting College Grads for the Current Labor Market

What 2021 May Mean for Diversity in the Workplace

Employers and talent acquisition professionals that can adequately address the issues related to childcare and the spreading of the virus will be able to retain an inclusive company culture and continue to attract a diverse talent pool.

Stemming the mass exit of so many in the labor force would be beneficial to both employers and workers. Dr. Wanamaker points out that the ramifications to workers are long-lasting. “We know that when workers leave the economy, it has long-term effects on their career,” she says. “When workers step out of the labor market, it can be hard to step back in. And even when they do, workers often return on a lower income trajectory than the one they left.”

LaborIQ by ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to cities, industries, occupations and business across the U.S.