Women, especially women of color, have been dramatically impacted by the COVID-19 pandemic economically. Whether it’s higher prices at the grocery store, inadequate childcare and healthcare availability, subpar sick- and family leave access — communities of color in the U.S. are getting punched in the purse.
How does this affect a company’s bottom line? In the U.S, women buy, or at a minimum have influence in buying, 85% of all consumer products. When women are not able to work due to family sickness, childcare insecurity, emotional burnout and other causes, they are unable to make the purchasing decisions they would under normal circumstances. As a result, both the U.S. economy’s bottom line and America’s quality of life will suffer.
Data show that diverse teams win. A McKinsey study found that companies with higher numbers of racially and ethnically diverse employees have a 35% performance advantage over companies that tend to trend white and monocultural. Before the pandemic, women of color started businesses at the highest rate among American demographics, and they represent a large pool of both well-educated and unskilled workers. Shifts in workplace diversity as the Great Resignation reshapes staffing will result in women of color becoming overburdened, less productive, burning out, or getting sick themselves. For companies, this will inevitably result in less innovation, less profitability and less well-rounded decision making.
Let’s dive deeper into the key social and economic issues that both executives and policymakers need to address to keep the U.S. economy healthy:
Women will continue to bear the brunt of COVID’s economic fallout due in large part to the childcare crisis. In America, 75% of primary caregivers are women, and the stress of straddling work, childcare, and the looming weight of childcare insecurity has crushed many, especially during this time.
As a leader, providing flexibility for your employees is critical to successful performance. Because women tend to be the chief caretakers of their families, flexible hours, access to remote work, and guaranteed sick and family leave are absolute necessities to keep them productive in the workplace. A one-size fits all policy isn’t working. Childcare isn’t the only issue — one of every four primary caregivers for seniors are millennials.
Flexible work environments provide primary caregivers with guaranteed time to care for their children and elders in case of emergency, sickness, or caregiver absences. On the federal level, expanding the child tax credit will allow parents to pay for the child care they need.
2. Inflation and the rising cost of living
It’s time to match salaries with inflation. The U.S. inflation rate reached 7% in December 2021, but the federal minimum wage is still $7.25 an hour — the same as it was in 2009. Many Americans are understandably angry. They’re hungry, unable to pay rent, and unable to sustain themselves and their families.
In response, there is a growing labor movement. We’ve seen the rise of the antiwork subreddit, numerous employee walkouts demanding higher pay, unionization at certain large retailer locations and increasing traction for the “Great Resignation.”
Oftentimes you’ll find a restaurant manager or grocery store supervisor who will complain they’re short-staffed because “everyone is quitting to collect unemployment.” This is because in many cases, unemployment actually pays more than their company’s wage.
The only thing that will keep employees around is paying them more than just enough to survive. For many people, unemployment is still below a livable wage. So if a company has experienced a mass exodus of workers to a government subsidy that still fails to make ends meet, the company’s inadequate pay is likely the problem — not the other way around. The reality is that in order to avoid mass walkouts, companies need to stop focusing on the minimum wage and start paying a living wage.
While inflation and the rising cost of living affects all Americans, it disproportionately affects people of color, particularly women. As we saw in 2020 with the “K-shaped” economic recovery, many of the industries that managed to stay afloat (and profited) mid-pandemic were technology- and software services, while the industries that suffered the most were travel, hospitality and food services.
The People of Color Tech Report released in 2020 showed that only 16% of tech workers were Black and 12% were Hispanic. According to American Progress, among all employed women of color, the largest percentage work in occupations such as cashiers, registered nurses, and elementary and middle school teachers — industries and institutions that are suffering the most during the pandemic.
3. Inadequate healthcare
The uncomfortable truth is that most Americans don’t have access to high-quality and/or affordable healthcare — unlike citizens of most every other developed nation in the world and even many smaller ones. Moreover, women of color historically have less savings and less capital, and as a result, a bigger burden to cover medical expenses for themselves and their families. According to the 2018 U.S Census, 27.9% of households with a Black householder had medical debt, compared to 17.2% of households with a white householder. In addition, households with a householder of Hispanic origin were also more likely to hold medical debt (21.7%) than white households (18.6%).
Without proper investment in employee healthcare, staff will need to tap their paychecks and their savings to pay for medical bills. A poor healthcare plan effectively is a significant pay cut for employees. Businesses need to opt into plans that provide adequate coverage, low deductibles and low monthly payments. While more costly upfront, the investment will pay off when employees can focus on productivity rather than on the stress of paying for medical bills.
Many low-wage and frontline workers are chronically under- and uninsured. Americans need federal policies that make healthcare universal for all citizens. The largest cause of bankruptcy in the U.S. is medical debt (more than 60% of those who file bankruptcy). Meanwhile, in countries with comprehensive, universal healthcare, medical bankruptcy is practically unheard of.
4. What comes next
Both 2020 and 2021 were cataclysmic and unprecedented years for Americans. As COVID continues to produce strains of varying virulence, the most marginalized people in American society will face the brunt of the damage: namely women, particularly women of color.
Martin Luther King, accepting the Nobel Peace Prize in 1964, said: “There is nothing new about poverty. What is new, however, is that we have the resources to get rid of it.” Almost six decades later, a wave of strategic pressure on key decision makers in U.S. business and politics is still needed to restructure a U.S. workforce that simply is not working for many people. Corporate leaders must step up and speak out. Although it’s an uphill battle, there are ways to make meaningful, foundational shifts that ensure a healthy U.S. economy now and in the future.
Cheryl Contee is CEO of The Impact Seat Foundation and founder & chair of the mission-driven digital agency Do Big Things. She is the author of Mechanical Bull: How You Can Achieve Startup Success.