Biden’s plan will help reverse the ‘she-cession’

On Wednesday night, President Joe Biden unveiled his “American Families Plan,” which calls for $1.8 trillion to be invested in education, child care and paid family leave. This investment is essential to ensure that all who want join the American workforce have the opportunity. But even more importantly, it is aimed at helping women, who have fallen even further behind during the pandemic.

The recession caused by the public health crisis has been called the “she-cession” for good reason. Women, and particularly women of color, were hit hard by job losses because they were overrepresented in the occupations and industries that involve the most human contact and were most likely to be shut down at the beginning of the pandemic. In addition, increased demands at home to provide care for kids or elderly parents, when schools and elder care were no longer a viable option, meant many women were forced to make the difficult decision to leave their jobs.

As a result, more than 4.6 million women dropped out of the labor force, and the share of women working for pay in the labor market (the employment-to-population ratio) fell from 55.9% to 45.8% in just two months, between February and April of last year, according to data collected by the Bureau of Labor Statistics. Historically, that April 2020 share is the lowest it has been since 1978.

While overall employment has rebounded fairly steadily since last spring, about 30% of the initial female employment loss remains as of March 2021. And the labor force is still down almost 2 million women since before the pandemic.

During recessions, economists usually advocate for policies that increase demand for goods and services in order to get people back to work. But they don’t think enough about the relationships that affect peoples’ ability, availability and choice to supply labor to the economy. These relationships are largely invisible in economic data when potential workers are stuck at home doing unpaid household work or are held back from their full potential in underpaid work.

In order to recover pandemic employment losses and actually realize our true “full employment” economic potential, the US government should ensure that quality caregiving is available and affordable to families, whether it is provided by a family member (at a cost of foregone market wages) or by a paid provider. Caregiving gives more freedom for mothers, fathers and adult children of elderly parents to choose to stay at home or go to work according to what’s best for both their families and the economy.

Biden’s American Families Plan does this by not just subsidizing paid caregiving but also providing universal benefits for all families with children such as paid family leave and child tax credits that provide financial support to parents even if they choose to stay at home.

The April jobs report to be released on May 7 will likely show that the economy is continuing to get closer to a full recovery and “full employment.” But economy-wide employment statistics tell us mostly about how white people — particularly white males — are doing, because they dominate the labor market. What we don’t often see in the aggregate statistics are those parts of our population who are still underrepresented in our labor force, including women and people of color.

One of President Biden’s first executive orders called for a better evaluation and understanding of the inequities in our economy by collecting more disaggregated, granular data on demographic categories currently underrepresented in the official economic statistics.

A more inclusive and equitable economy is the key to building a larger, stronger and more resilient economy. While the pandemic has been a terribly challenging time, it has also demonstrated how much the economy and society relies on unpaid or underpaid caregiving work. Biden’s latest plan for families is the supply-side economic growth strategy our economy needs to not just recover but be better than ever before.