People shop at Pioneer supermarkets on January 12, 2023 in the Flatbush neighborhood of the Brooklyn borough of New York.
Michael M. Santiago | Getty Images
There is one group of people who are disproportionately affected by high inflation: women.
The incessant rise in prices is doubly harmful to women. First, an increase in child care prices began to push women out of the labor market. U.S. childcare costs have outpaced wage growth in recent years, with daycare and preschool prices jumping 5.7% year-over-year in February 2023 and 25% over the past decade, according to the Bureau of Labor Statistics. Child care inflation, which has increased by 214% from 1990 to 2022, has exceeded average family income earnings, which have increased by 143%.
At the same time, sectors with the highest proportion of female workers are seeing inflation outpace wage increases. The health and education sectors, where 75% of workers are women, recorded the second-lowest nominal wage increases in 2022.
THE Ellevest Women’s Financial Health Index, which examines indicators such as employment rates, inflation, reproductive autonomy and the pay gap, found recent progress to be mixed. While the index has edged up from its November 2022 lows – which were lower than at any time during the pandemic – ongoing inflation looms large over further improvements. The sharp decline in women’s financial health over the past year has come in line with double-digit levels of inflation.
“While women pay more, they also earn less,” according to Dimple Gosai, head of ESG strategy at Bank of America in the United States. “The pandemic has undeniably worsened the childcare crisis and inflationary pressures are adding fuel to the fire. Surprisingly, more than 50% of parents spend more than 20% of their income on childcare in the United States. Gosai added that rising childcare costs can both keep and push women out of the workforce, undoing progress made in recent years to reduce gender parity.
“Caring responsibilities prevent more women from entering, staying and progressing in the labor market. It’s more the norm than the exception,” Gosai said. “The pandemic has exacerbated this gap, with women shouldering a greater share of the additional burden of childcare than men.”
The supply shortage in the childcare industry stems from poor worker retention due to low wages, an issue that predates the Covid pandemic. Child care providers are now faced with the dilemma of offering competitive salaries to their workers as well as affordable prices to families and caregivers.
“We’ve seen a negative shock to the supply of childcare providers in this recovery, and that could make this problem worse in the future, but childcare costs are more systemic than others. short-term inflationary pressures we’ve seen Absent public investment, there just isn’t a lot of room to give in this market, and that’s one of the reasons the Treasury Department found that the babysitting is a failing market“said Mike Madowitz, director of macroeconomic policy at the Washington Center for Equitable Growth.
It’s not just women with children who are disproportionately affected by inflation. Women and minorities are underrepresented in higher-paying industries, such as technology or finance, which are more insulated from inflationary pressures, Gosai noted. The researcher called the phenomenon “occupational segregation”.
In addition, inflation has caused women’s baskets to become more expensive at a faster rate, exacerbating the problem of the “pink tax”, or cost premium in the market for goods and services for women. women compared to similar products for men.
Long term consequences
The negative impact of rising prices on women is not just short-term, but has long-term implications for their financial well-being. The Bank of America Institute found in january that women’s 401(k) balances are only two-thirds of men’s.
“Because of the two [the] COVID and the inflation crisis, women are much more likely to have their retirement savings hacked,” said Ariane Hegewisch, director of the jobs and incomes program at the Institute for Women’s Policy Research.
“The debt is much higher, [and] rental costs have increased. So now there is an even bigger hole in retirement or in wealth or any other type of security, financial security that [women] maybe, and it needs to be rebuilt.”
Madowitz of the Washington Center said the Federal Reserve’s aggressive interest rate hikes in its fight against inflation could be “the opposite of being helpful in improving women’s economic health and opportunities” in the short term. The Fed has been raising rates since last year, when overnight was set at zero. Currently, it is in a range between 4.75% and 5%.
For this reason, some fear that the process of cooling the economy will have an outsized impact on women, especially women of color.
“If the FOMC raises interest rates too much in an effort to reach its 2% inflation target faster, it would hurt demand for workers and hurt those who already face more headwinds on the market. labor market, namely workers of color,” Madowitz noted.
Hegewisch also pointed out that higher rates could lead to increased unemployment, which would disproportionately hurt women.
“Unemployment is consistently higher for women and men of color than for others,” Hegewisch noted. “Unemployment is double for black women compared to white women and almost as much for Latinos. And so, if it doubles, that’s fine. [up] at a much higher rate for black women than for white women.”
One solution that could ease the pressures of inflation on gender parity is for companies to invest more in the well-being of their employees, said Bank of America’s Gosai. She named improved benefits for reproductive health care, subsidized childcare and flexible working arrangements as ways for companies to offset higher cost pressures on women.
What can be done?
Passing more comprehensive legislation on social infrastructure could also be a crucial step in addressing some of the damage high prices are causing to women’s health and economic opportunities. Madowitz said policies such as President Joe Biden’s failed Build Back Better Act could not only improve women’s economic prospects, but also prevent inflation from reaching such high levels in the future.
“These investments in child care, eldercare and health care, public education and income support programs would help combat ever-rising prices by increasing labor supply. women’s labor and earnings, while helping to alleviate much of the pressure that keeps women out of the labor force and limits their upward mobility,” Madowitz said.
Rising prices are among the economic hurdles women face, which means that even after inflation subsides, other initiatives must be taken to ensure equal opportunities.
“It’s a problem that’s ingrained. It’s a bigger problem and it’s affecting so many different sectors and so many different geographies. It’s not something that’s just being eradicated by inflation,” said Gosai. “Women earn 82 cents for every dollar earned by a man. That’s something that doesn’t change [even] if inflation goes down tomorrow. This is something that takes a long time to fix. … It’s a vicious circle.
“You need more women who are financially independent and empowered to get an education, to enter the workforce, and to have those opportunities so they can have a level playing field and they can compete as equals. “
– CNBC’s Gabe Cortes contributed reporting