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March 02, 2021 | GSAM Connect

Empowering Women: How COVID-19 has Affected the Gender Gap

Women’s History Month is an opportune time to reflect on the global progress toward achieving gender parity. For the first time ever, there is at least one woman on every S&P 500 company’s Board of Directors1. Female CEOs in the US are represented across industries – automotive, healthcare, info tech, energy, and financials. And globally, countries with at least 50% female labor participation rates account for 62% of world GDP, underscoring ways in which women continue to have a significant influence on the economy.

But there is still work to be done. Measures of global gender parity across four broad categories – economic, education, politics, and health – suggest that the median country scored 70 out of 100 on the Global Gender Gap Index2. The US scored only two points higher than the median at 72. Women also often take greater responsibility for childcare and home care, are less likely to be in leadership positions, and are over-represented in service occupations. Some of these very issues, such as labor and pay gaps, have been exacerbated during the COVID-19 pandemic.


COVID-19 has amplified the gender labor gap: COVID-19 may have amplified economic inequalities across many dimensions. Globally, women make up 39% of the workforce, but they accounted for 54% of total job losses at the pandemic’s peak3. In the US specifically, women lost 5.4 million net jobs in 20204. Part of this asymmetrical impact can be explained by an occupational concentration in service industries that were most sensitive to the virus, including restaurants, hospitality, and personal care.

As employment rates have yet to fully recover, US women have also been challenged by a lack of childcare support through traditional systems. In fact, two out of three working parents have changed their childcare arrangement due to COVID-19, and the majority have yet to find a permanent solution5. Meanwhile, existing childcare facilities are still financially overwhelmed by the lock-down in March, making it difficult for them to operate while adhering to reduced capacity guidelines. The combination of limited in-classroom learning and stretched daycare capacity may ultimately keep working moms out of the labor force for longer. As Exhibit 1 illustrates, from March to September 2020, US women with children left the workforce at a faster pace (+1.8pp) relative to US men with children, potentially signifying the greater childcare responsibilities that are taken by women.

Exhibit 1: Women have disproportionately left the workforce


Source: Federal Reserve Bank of Dallas, Pandemic Disproportionately Affects Women, Minority Labor Force Participation, November 2020.


Gender gaps extend to pay and retirement as well: Pay disparities reflect another obstacle to gender parity. According to the latest earnings data collected by the US Census Bureau, US women earned 82 cents for every dollar received by men6. Though some of this pay gap can be explained by differences in industries, educational attainment, and years of experience, the remaining gap (estimated at 90% of the total) is unexplainable, perhaps driven by unconscious biases that may be possible to overcome.

Over multi-year periods, this pay gap may create a savings problem for women, especially as they tend to outlive men. Assuming a 45-year career with steady wage growth and retirement set in 2020, a woman would have potentially amassed $6.3 million in savings by the age of 707. Still, this would have resulted in a 15% retirement shortfall (about $1.1 million) relative to the savings accumulated by her male counterpart. To close this gap, this same woman would have had to stay in the workforce for an additional eight years.


Economic and market impact from closing the gap: A focus on reducing female labor and pay inequalities can result in a sizeable increase to US growth potential, as shown in Exhibit 2. Currently, there is an 11.3% employment-population ratio gap between women and men8. Closing this employment gap would mean increasing women’s participation in the workforce by 15 million individuals, and in turn, boosting labor income by 5.5%. By also closing the existing wage gap, women’s labor income would gain another 6.6%, for a total earnings improvement of 12.1%. Assuming labor’s share of GDP remains at 60% and earnings correspond to a worker’s marginal product, this estimate would imply that labor equality may expand US GDP by 7.3% or
$1.5 trillion annually.

Exhibit 2: Closing the labor and wage gap can add 7.3% to US GDP

Source: US Bureau of Labor Statistics and GSAM SAS Market Strategy. As of January 31, 2021. For illustrative purposes only.  The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. These examples are for illustrative purposes only and are not actual results. If any assumptions used do not prove to be true, results may vary substantially.


In our view, closing even a portion of the gap can still pay dividends, leading us to remain optimistic for the future. A continued focus on labor force inclusivity, pay disparity, and diversity, can enhance economic outcomes for everyone. We believe that every measure counts, because as Christine Lagarde, President of the European Central Bank says, “empowering women is not only the right thing to do – it makes economic sense.”



12020 Spencer Stuart Board Index. Based on proxy statements filed by S&P 500 companies between May 2019 and May 2020.

2 World Economic Forum, 2020 Global Gender Gap Report, December 2020.

McKinsey & Co., COVID-19 and gender equality: Countering the regressive effects, July 15, 2020.

4 US Bureau of Labor Statistics, December 2020.

5 US Chamber of Commerce Foundation, The Importance of Childcare to US Families and Businesses, December 2020.

6 US Census Bureau, 2019.

7 Scenario considers 1) a starting median male salary of $53k based on 2019 US earnings; 2) a constant female pay gap of 18% applied to the annual male salary to derive the female-equivalent salary; 3) median realized wage growth of 2.5% and 2.1% for women and men, respectively, informed by the US experience over the past 20 years (2000-2020); and 4) a constant 15% annual contribution to a 401K retirement account, using a 60/40 S&P 500 Index/Bloomberg Barclays US Aggregate Bond Index asset allocation strategy.

8 US Bureau of Labor Statistics, January 2021. 

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About the Author

Candice Tse

Candice Tse

Global Head of Strategic Advisory Solutions, Goldman Sachs Asset Management

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