The Impact of the Quarantine Economy on Women in the Small Business Workforce, October ’20
The ongoing COVID-19 pandemic affects everyone, but its impact isn’t equally felt. Nearly every small business in the country is facing unprecedented challenges, yet data collected by Gusto, benefits + payroll provider for 100,000 small businesses, demonstrates how women are bearing the brunt of COVID-era economic fallout—experiencing higher furlough and termination rates than their male counterparts.
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Gusto data gathered during the COVID era (March 2020-present) reveals the pandemic is amplifying existing inequalities and deepening gender disparity which could roll back opportunities for women in the small business workforce. The past several years of payroll and employment data collected by Gusto shows that women consistently record a higher attrition rate (terminations, both voluntary and involuntary, and furloughs) than men. Now, during the ongoing pandemic, the gap between genders is even more pronounced. Since March, women workers were 24% more likely to be furloughed than men and 22% more likely to be terminated. That’s a wider gap than we saw in 2019, when women were 21% more likely to be terminated and 17% more likely to be furloughed than their male counterparts.
Unlike in previous economic recessions, where the bulk of job losses hit male-dominated industries (such as manufacturing and construction) the hardest, job losses in this COVID-related downturn are particularly acute in female-dominated industries, particularly those that rely on face-to-face interactions. Gusto data shows termination rates since March are higher across-the-board for women than men and in a few select industries—retail, healthcare, social assistance, education, non-profits, and facilities—the gender disparity is particularly pronounced, especially among lower-earning workers. The gap between men and women’s termination and furlough rates was historically wide in the midst of lockdowns. In March ‘20, the termination rate for women was a record 24% higher than those for men. In April ‘20, 11.9% of women who had been employed before the onset of the pandemic had been furloughed. This represented a massive 179% jump in comparison to their male counterparts.
The ongoing economic fallout from the COVID-19 pandemic is driving a disproportionate increase in women’s unemployment. Urgent, deliberate action is needed, in the form of additional aid and resources, before these short-term losses turn into long-term consequences.
- Since COVID hit in March ‘20, women workers have been furloughed at a rate 24% higher than men and terminated at a rate 22% higher than men. 26% of women who were employed prior to the pandemic have since been terminated, as opposed to 21% of men.
- During lockdowns, the gap between men and women’s termination and furlough rates was historically wide. For the month of March ‘20, the termination rate for women was a record 24% higher than those for men. For April ‘20, furlough rates for women were 52% higher than men, the widest gap ever recorded by Gusto’s data. In April ‘20, 11.9% of women who had been employed before the onset of the pandemic had been furloughed. This represented a massive 179% difference in comparison to their male counterparts.
- The gap between women and men’s termination and furlough rates widened in 2020. In 2019, women were 17.5% more likely to be furloughed than men and 21% more likely to be terminated. In 2020, women were 24% more likely to be furloughed than men and 22% more likely to be terminated.
- The widening gender disparity is most pronounced in several notable industries and for lower income workers. 2020 saw a larger gulf between men and women’s termination rates for lower income workers and across the healthcare & social assistance, retail, nonprofits, and education sectors compared to the same period last year.
- Between March ‘20 and September ‘20, headcount growth rates are more than double (133%) for male-owned businesses than female-owned businesses. This gap has been gradually widening over the course of the year in the wake of COVID lockdowns.
Terminations Higher For Women than Men in 2020
At the height of COVID lockdowns, the disparity between women and men’s termination and furlough rates was the highest they’ve ever been. In March ‘20, for instance, 9.8% of women were terminated—a rate that was 24% higher than men (7.9%). For context, the largest gap recorded in Gusto’s prior year data was 21% in September of 2019. Additionally, in April ‘20, 11.9% of women who had been employed before the onset of the pandemic had been furloughed. This represented a massive 179% jump since March ‘20 in comparison to their male counterparts.
By September, this historic gulf between men and women out of work has narrowed, but still remains far wider than we’ve seen in previous years. 5.8% of women who were employed prior to the pandemic are furloughed as of September ‘20 as opposed to 4.6% of men. That’s a 24% higher furlough rate for women over men—an uptick from the 17.5% higher furlough rate for women than men we saw back in September ‘19. When comparing furlough rates this year to the same period (March-September) last year, women’s furlough rates are +32.5% higher than in 2019 and men’s are +25% higher.
26% of women who were employed prior to the pandemic have since been terminated, as opposed to 21% of men (a 22% higher rate for women). This gap has widened slightly since the same period last year, when women were 21% more likely to experience termination than men.
Women were also more likely to experience a reduction in hours in September ‘20 than men, but the difference between men and women has actually narrowed in 2020 compared to last year. Over the past several years, men have been slightly more likely to have their hourly pay rate reduced by at least 10% than women.
Table 1. Rates of employer actions affecting employee wages in 2019 and 2020 as compared to February of the same year.
Table 2. Year-Over-Year (YoY) % change in rates reported in Table 1.
Terminations Higher For Women Across All Industries
Termination rates (including both voluntary and involuntary terminations) are higher across almost all industries for women than men, a stable trend we’ve seen across time in Gusto’s historical employment data. Figure 1 below, for instance, shows that women experienced higher terminations in the majority of the industries in 2019 (construction being an exception). For a few select industries, however, there has been a notable increase in the disparity between men and women in 2020.
Figure 1: 2019 March-September Cumulative Termination Rates Cut By Sector and Gender
Figure 2: 2020 March-September Cumulative Termination Rates Cut By Sector and Gender
Table 3: Select industries where the gender disparity in termination rates widened in 2020.
The widening gap can be explained in large part by the varying roles that tend to attract women versus men within sectors. The facilities sector, for instance, saw the gender termination rate gap widen almost three-fold this year—from 10.4% in 2019 to 29.9% in 2020. This sector, which is broken out more granularly in Table 4 below, tends to see a stark division between the types of jobs taken by women and men.
Women, who are over-represented in cleaning service businesses (62% of jobs in these companies were held by women in 2020), saw their termination rates rise from 35.9% in 2019 to 40.5% in 2020. This aligns with the types of roles that were cut during the pandemic—fewer people felt comfortable with in-home, indoor services, and many office buildings either remain closed to workers or require significantly less janitorial services. Meanwhile, men are drastically over-represented in the outdoor jobs within the facilities sector, such as landscaping (83% of workers in these roles were men in 2020). Termination rates for men in this bucket actually fell from 30.3% in 2019 to 25.1% this year as more people spent time at home and increased their investment in their house and surrounding property.
Table 4: 2019 and 2020 Termination rates for men and women working in Facilities.
The gender gap in terminations didn’t widen across the board, however. There are several industries where the gap narrowed (although women still experienced higher attrition rates than men). In the food and beverage industry, for example, job cuts were so extreme (46.5% of women and 45.9% of men), it didn’t matter who you were, the type of role you had, how much money you were making or how senior you were—your job was imperiled. Case-in-point, in the food and beverage industry, back in 2019, women were terminated at a rate 8.8% higher than men. In 2020, that gap had dropped to 1.3%. Table 6 below shows a breakdown of Food & Beverage workers’ termination rates in 2019 and 2020 by Income Bracket.
Other industries that saw the gender gap narrow were mostly desk-based sectors, such as Technology, Professional Services, and Insurance. Cumulative termination rates across these industries were actually lower in 2020 than in 2019, probably explained in part by a reduction in voluntary terminations (quitting) while workers face questions about their alternative employment prospects in the COVID economy.
Table 5: Select industries where the gender disparity in termination rates narrowed in 2020.
Table 6: Breakdown of Food & Beverage termination rates, cut by income bracket.
Termination Disparity Across Genders Worsening for Lowest Income Roles
In both 2019 and 2020 women experienced higher termination rates than men across all income brackets.
The disparity between men and women’s termination rates has narrowed in 2020 for workers making more than $13k, but for the lowest income, often part-time workers, the gap has widened. In 2019, women earning less than $13k a year were terminated at a rate 8% higher than men. Over the same period in 2020, the difference had increased to 9.3%.
Table 7: 2019 vs. 2020 Termination Rates for Women and Men, Broken Out by income bracket.
Figure 3: 2019 March-September Cumulative Termination Rates Cut By Income Bracket and Gender
Figure 4: 2020 March-September Cumulative Termination Rates Cut By Income Bracket and Gender
When we isolate these income brackets to focus on specific industries, some eye-opening trends emerge. For instance, when looking at termination rates within the retail sector broken out by income bracket (Table 8 below), we can see that women were actually terminated at a rate slightly less than that for men in 2019 within the lowest income brackets (workers earning less than $35k per year). For workers making more than $35k in Retail in 2019, women were terminated at a much higher rate than men. In 2020, however, the termination rates for women in these higher income buckets were actually closer to their male counterparts than in 2019 (a gap of 8.5% in 2020 versus 36.4% in 2019). For lower income retail workers in 2020 in, the termination rates for women spiked dramatically in comparison to those for men. Women earning less than $13k annually in retail were 17% more likely than men in the same income bracket to be terminated this year.
Table 8: Retail Workers – 2019 vs. 2020 Termination rates for Women and Men, broken out by income bracket.
A similar pattern has emerged within education. Lower-income women working in education (those making less than $35k a year) typically have a lower termination rate than men. Between March and September of 2019, 27.3% of women working in education and making $13k-$35k were terminated, as opposed to 29.0% of men. In 2020, however, the termination rate for lower income women in education jumped to 30.6% for women while falling to 27.4% for men.
In other words, in 2019, terminations were 5.7% lower for lower income workers in education who were women than they were for men. In 2020, however, terminations for women in this sector and income bracket were 11.7% higher than those for men.
Termination rates for higher-income workers in education tend to be lower for men than for women. Women in education making more than $70k saw a termination rate 20.2% higher than men in the same bracket in 2019. In 2020 that gap had widened marginally such that women making more than $70k in education were terminated at a rate 21.8% more than men.
Table 9: Education Workers – 2019 vs. 2020 Termination rates for Women and Men, broken out by income bracket.
Healthcare & social assistance (a sector that includes businesses ranging from dental offices to daycares) saw a dramatically widening gender gap in terminations for workers across all income brackets.
Table 10: Healthcare & Social Assistance (gender termination gap widening in 2020 across all income brackets):
35% of women working in Healthcare & Social Assistance making less than $13k a year have been terminated since February 2020, as opposed to 28% of men in the same income bracket.
A Growth Gap has Emerged Between Male-and-Female-Owned Businesses
In a typical year, businesses owned by men tend to show higher headcount growth than businesses owned by women. In 2019, for instance, male-owned businesses grew by 3.7% between early March and end of April whereas women-owned businesses grew by 3.2% (a 16% relative gap). Over the same months in 2020, however, that gap in growth rate had widened to 23%.
Table 11: 2019 and 2020 Headcount Growth from early March until end of April
When looking across all intervening months since COVID hit, the disparity in headcount growth between men and women-owned businesses grew even more. By September, headcount growth for businesses owned by men had risen to 6.3% whereas women-owned businesses had only recovered to 2.7% — a whopping 133% difference between the genders.
Table 12: 2019 and 2020 Headcount Growth from early March until end of September
Female business owners are more likely to own businesses in industries that were heavily affected by the crisis. For instance, 62% of businesses in the Salon & Spa sector are female-owned.
But even when controlling for industry, Gusto’s data shows that women-owned businesses grew at a lower rate in 2020 than those owned by men within the same industry. For example, the gap in headcount growth rate in 2020 between men-owned and women-owned retail stores was 166% (versus last year, where the gap was only 19%). In food & beverage, the gap in headcount growth rate in 2020 between men-owned and women-owned businesses was 97% (versus last year, where the gap was only 8.2%).
This could indicate that more women had difficulty attaining supplemental funding to help keep workers on board or that their businesses have been more likely to temporarily or permanently close in 2020 (either by choice or due to financial reasons).