Gender Equity Investing

The Effect of COVID-19 on Women: Measuring the Damage and Charting Paths to Recovery


As the pandemic and subsequent economic downturn unfolded, a rush of studies highlighted the unique effect of COVID-19 on women in the global economy. Researchers have called on governments, multilateral institutions, and private employers to place women and girls front and center in recovery efforts.

The task for corporations is to address the negative effect of COVID-19 on women in the workforce while creating a path for lasting equality. The challenge for investors is to actively participate in petitions for change and to reward diversity and equality with capital.

The Negative Impact of COVID-19 on Women

Three areas in particular highlight the unique toll COVID-19 has taken on women.

1. Unpaid Care Economy

The pandemic’s most widespread impact on women is in the global unpaid care economy, which comprises at least $10.8 trillion in unpaid labor performed mostly by women. In many places, unpaid caregiving duties are a key factor keeping women out of the labor force. As the pandemic closed schools and day-care providers around the world, this predicament only deepened.

2. Low-Paying Essential Work

Women also predominate in low-paying essential jobs, which have been put under heightened pressure by COVID-19. In the US, women fill over half of these roles, including 53% of critical retail positions and over 75% of essential healthcare and social work jobs. In particular, women of color are the most likely to fill the jobs considered essential under federal guidelines.

3. Job Loss

A third theme is the outsize share of job losses recently suffered by women, including the loss of nonessential, low-paid service jobs early in the crisis. A majority of US jobs lost in the early months were held by women, and particularly high rates of loss were seen among Hispanic women and single mothers. In April 2020 the US female labor force participation rate dropped below 55% for the first time since 1986. The economic loss of these workforce changes due to disruption in caregiving is estimated at $341 billion.

Globally, the work of addressing the effect of COVID-19 on women is complex.

Lasting Consequences for Women in the Workplace

The vulnerabilities emerging from these trends include permanent job losses, derailment of careers, and loss of progress for women in corporate leadership. In their sixth annual Women in the Workplace report, McKinsey and Lean In describe an increase in long-standing challenges facing women in corporate America. A broken rung for women at the first management level stubbornly perpetuates a long-term gap among all levels of management. There have been some disruptions in the caregiving supports and diversity focus that drove progress for women in labor force participation and corporate promotion. Women of color, who already faced even higher workplace barriers, find themselves even more acutely impacted.

Because of the disruptions and the increased caregiving pressures from school and day-care closures, McKinsey and Lean In note that a high percentage of women are contemplating leaving the workforce or downshifting their careers. This puts hard-earned progress at risk. In previous years, the Workplace study found that men and women left their corporate employers at similar rates. In contrast, several million women now say they are considering departures or leaves of absence—a much higher rate than men. Indeed, the National Women’s Law Center reports that 80% of workers who dropped out of the labor force in September were women. Meanwhile, women gained only 43% of the new jobs created during the month.

To learn more about gender lens investing, read Gender Lens Investing in Public Markets: It’s More Than Women at the Top.

Gender Lens Investing Opportunities for a Women-Led Recovery

There have been many proposed solutions to the multilayered effects of COVID-19 on women. In the US, calls for a national paid family and medical leave policy, subsidized childcare for low-paid essential workers, and increased flexibility by employers around caregiving are just a few. The Workplace report points out that the forced flexibility of 2020 has not prevented people from staying productive in new ways. Combined with planned flexibility and increased caregiving supports, a continued focus on representation of women in leadership (WIL) and pay equality could boost sustainable diversity.

US and global gender lens equity funds have a role to play, including capturing the ongoing opportunity to invest in corporate leaders in WIL and other measures of equality. In addition, gender lens funds can participate in shareholder engagement strategies to promote gender and racial diversity at all corporate levels, the disclosure and repair of pay gaps, and comprehensive caregiving benefits. Progress in these areas could allow workplaces and employees to emerge from this crisis better equipped to combine flexibility with productivity.

Gender lens impact funds can also expand investments in women-owned enterprises in developing economies, particularly areas that have seen the biggest drops in women’s economic participation. The UN Development Program and UN Women recently launched a global gender response tracker to measure and report on how countries are addressing women’s social and employment needs during the pandemic. Initial data shows that only 12% of the 206 countries and territories have implemented measures and policies focused on supporting women in these areas.

Finally, venture capital (VC) investors may see significant gender lens opportunities ahead. Persistently low funding of female entrepreneurs in the US dropped further in 2020. However, there are encouraging signs that greater VC attention is focusing on marginalized groups such as women, who are projected to control a majority of US wealth in the coming decades.

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