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Women and COVID = Financial Distress and How To Combat It

Women and COVID = Financial Distress and How To Combat It

October 05, 2020

I’m a working mother. And as of the pandemic, I’m basically working two jobs- one paid and one not. I’m now a Teaching Assistant to my school-aged child in addition to being a Financial Planner/small business owner. My daughter is 5, so she’s in virtual kindergarten, which is a skill I’m managing all by itself. But my typical day starts with getting us both ready, then we get on the computer by 8:30 only to be done with school two-hours later. Of course that’s not the end to school, we still have homework to do, but that’s when I can finally sit down at my own desk and clock-in to my full-time job. If you’re a mother, you’re likely in my same position.

A recent survey by FlexJobs reported that 80% of working mothers are primarily handling the online learning responsibilities.1 I’m lucky, I have help from my mother-in-law after school ends so I can change focus to my paying job. But many others aren’t that lucky. Forty percent of the surveyed 2,500 parents with children 18 and younger reported having to change their employment situation by either reducing hours or quitting.1 This, along with typically female staffed industries like retail, salons and hospitality, leave women as being the hardest hit, economically speaking. According to Bloomberg the globe will experience a $1 trillion reduction in GDP because of the loss in female workers.3

According to Heather Smith of Impact Pax World Funds, prior to the pandemic women were typically already in a risky position in that they had lower savings balances than men and shoulder more of the unpaid childcare work than men. 5

How to combat this in the short term Ask your male counterparts to share the weight. Consider reaching out to another parent and see if your kids can learn together either at their house or yours, switching back and forth on a regular schedule. If you’re one of the women without at least 3-6 months of expenses stashed away in a savings account, prioritize building this up! Consider approaching your or your counter-part’s employer and encourage them to adopt a dependent care Flexible Spending Account, if you don’t already have one. Though this is a small monetary incentive, it can be meaningful for parents to have tax-free funds available to pay for their child care expenses, thus relieving them of unpaid childcare duties. Perhaps your employer would even consider offering childcare at the office which would be available to only the staff. This may not be an option now, during the pandemic, but it certainly could be a long-term solution when we are back to working at an office again. In the meantime, your employer could adopt family-friendly policies that allow for work-on-your-own-time or part-time positions that can be maintained without sacrificing your position there. If need be, get creative and seek out a new profession so you can maintain employment while under this newfound pressure. Remote work and digital work is becoming common-place, take advantage of that! A plethora of professions exist that can be done on your own time, such as software design, services that can be offered on off-hours (think: yoga teacher, consulting, writing/editing or sales and marketing). Even consider stay-at-home jobs that offer hours that work best with your schedule, like call center customer-service or something similar.

WOMEN offer so much more than just a person to fill an open position. Having a diverse workplace has been found to promote less “group-think” and therefore greater creativity and innovation as well as more company resilience. 5 The loss of women in the workforce will impact the entire world by the loss of our ingenuity and diversity contributions. Just imagine what the future will be missing out on because we were stuck at home!

How to combat this for the mid-term In addition to maintaining employment you can look to your investments and speak with your dollar. It’s possible to specifically target investing in companies that support diversity and inclusiveness. This is called Socially Responsible Investing and an advisor skilled in this area of investing can help you weed through the available options. In the same vein, you should use the power of your vote! Companies hold shareholder meetings. If you invest using mutual funds you can vote by proxy at those meetings empowering your mutual fund manager to speak on your behalf. This type of pressure put on companies can encourage greater flexibility, compassion and grace towards their female workers and ultimately change the landscape over time. And if one company sees another successful competitor doing this, they just might make the change voluntarily as it’s been shown that businesses thought of as being family-friendly are often more successful than their non-family-friendly counterparts.  

UNFORTUNATELY, the coronavirus’s impact on women’s lives isn’t just a concern affecting the macro -view. Yes, it’s impacting household income. Yes, it’s impacting our GDP. But we can’t ignore the significant long-term impacts for the individual.

One of the most influential variables one’s financial success is your earnings potential. Women are already typically underpaid in the US. In fact, there are only six countries that have a larger pay gap than the US! Chile, Latvia, Israel, Japan, Estonia and Korea have us beat. 4 So we start off earning less, then we take a break from the workforce. It’s been found that women often incur an average 7% pay penalty when returning back to the same position.2

These deficiencies in pay will affect one’s ability to retire in more ways than one. Obviously, without earnings there won’t be retirement contributions being made on your behalf. Maybe you’re lucky and your spouse will contribute to a Spousal IRA for you, but you will still be missing out on the free money you could get as an employer-match in an employer’s retirement plan. The compounding effect on those contributions might be more than you think. For accounts earning 7% per year the value will double in just 10 years. Let’s play this out over time. If you missed out on $5,000 of contributions to your account that really means you’ve missed out on $10,000 in 10 years, $20,000 in 20 years and $40,000 in 30 years. That’s nothing to sneeze at! And let me remind you of how beneficial it is to buy in when the market is low! If you weren’t making contributions to your retirement plan during the stock market crash earlier this year, that means you missed out entirely on a great opportunity!  

As if that wasn’t enough, let’s remember that you and your employer won’t be contributing into the Social Security system on your behalf. It might surprise you to know, but your Social Security benefit is based on your average highest 35 years of income! That’s why it’s imperative that your income continues to grow over time. You might ask why it’s important to contribute to Social Security? Well, that’s another topic I could speak volumes on, but essentially it boils down to the fact that women often find themselves depending on their Social Security benefits more than men. In fact, according to the Social Security Administration, 51% of elderly unmarried women’s total income is from Social Security. 7 All this combined with women living longer necessitates a good, healthy-sized Social Security benefit. It’s a payment that is guaranteed for life and therefore can’t be outlived or drop in value, which is invaluable! 

How to combat this for the long-term If you’re employed, try to sustain benefit-eligible status so you can maintain your retirement plan contributions (and hopefully your employer’s match). If you have to leave the workforce, be aware of the 7% pay penalty when you go back in. If you’re aware, you can better negotiate pay to avoid this happening to you. If you’re married, if monetarily possible, make Spousal IRA contributions on your behalf (this is even more important outside of community property states).


Carrie Waters Schmidt is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Equanimity Wealth Planning and Investing is not an affiliate of Lincoln Financial Advisors.   



1 Pelta, Rachel. FlexJobs Survey Shows Need for Flexibility, Support for Working Parents. 15 September 2020.

2 Skinner, Liz. Wll financial costs of COVID-19 be greater for women? Legacy of coronavirus for women may be its fiscal toll. InvestmentNews. 7 April 2020.

3 Curran, Enda.Women’s Job Cuts May Shave $1 Trillion Off Global GDP, Citi Says. 30 May, 2020.

4 Delfino, Devon. 12 Countries Where Men Earn Significantly More Than Women. 17 August 2018.  

5 Financial Advisor Magazine. Invest In Women- The Gender Pay Gap: Why Should Investors And Clients Care? Panel discussion. 19 August 2020.

6 Madgavkar, Anu et. al. McKinsey and Company. COVID-19 and Gender Equality: Countering The Regressive Effects. 15 July 2020. Women & Retirement Security. 2 October 2020.