Research: U.S. Unemployment Rising Faster for Women and People of Color

Research: U.S. Unemployment Rising Faster for Women and People of Color

by Alexandra Kalev - April 20, 2020

The Covid-19 pandemic has hit the workforce hard. Jobless claims have reached 22 million, and the Federal Reserve estimates that up to 47 million jobs could be lost. No matter where the numbers ultimately end up, economists agree that the pandemic will have an uneven economic impact - and all signs indicate that minorities and women will be hardest hit.

That’s already happening. According to March data from the Department of Labor, last month the unemployment rate for women grew by 0.9%, versus 0.7% for men. And 60% of the 700,000 jobs eliminated in March were women’s. Overall unemployment rates for women and men were equal, but the trend is unsettling.

The March numbers tell an even more troubling story for black men and for Hispanic and Asian men and women. Black men saw a 1.2% increase in their unemployment rate, and Hispanics and Asians saw a 1.6% increase, versus a 0.9% increase for whites. The overall unemployment rates for black men, Hispanics, and Asians were 7%, 6%, and 4.1%, respectively, versus 4.o% for whites.

A recent national poll finds similar trends. Overall, 33% of Americans say that because of the crisis, they or someone in their immediate family has been laid off or lost a job, but the rates are higher for women (37%, versus 28% for men) and for Hispanics and blacks (40%, versus 30% for whites).

It’s possible that these patterns emerged because, as a recent Pew Research Center report shows, women and minorities are overrepresented in industries at high risk of layoffs, such as retail, hospitality, recreation, and manufacturing.

But there’s more to the story than that. In recent research, I’ve shown that women and minorities are in greater danger of losing their jobs in troubled times not only because they work in high-layoff-risk industries but also because most companies reflexively put them at the top of their layoff lists.

Layoff lists are a necessary evil. Crises can hit fast, as Covid-19 did, so executives may need to compile their lists quickly. To do so, they generally look to position or tenure (“last hired, first fired”). Women and minorities tend to fill the most marginal, low-authority positions and to have the shortest tenures, and so they lose their jobs at disproportionately high rates. That happened during the Great Recession, when 12.5% of women but just 8.8% of men lost their jobs. It happened more recently at Microsoft, which downsized its less-profitable facilities in 2015 and saw the share of women in its workforce drop from 29% to 26.8%.

In my research, I have shown that these are not exceptions. In following 327 companies that downsized and held layoffs, I learned that most based their decisions on either position or tenure and drained diversity from their management teams as a result. Those that relied on position ended up with drops in several categories - white women, Hispanic women, black men, Hispanic men, and Asian men - that ranged from 9% to 22%. Those that relied on tenure saw average drops of 19% among white women and 14% among Asian men.

The executives I talked with at those companies were oblivious to the connection between layoffs and diversity. “Our layoffs were not about diversity,” one told me. “They were more around the job function.” Another offered a similar defense. “Our layoff criteria are strictly based on color-blind stuff,” he said, adding that decisions were “always based on what your job title is.” But job titles are not color blind, and so layoffs aren’t, either.

These practices have broad consequences. Job loss is hard for everyone, of course. But recovering from it tends to be harder and to take longer for members of disadvantaged groups. Women and minorities typically spend more time looking for new jobs, and the jobs they find generally pay less than the ones they left. So if you lay off women and minorities disproportionately, you don’t just hurt them; you also slow the overall economic recovery. Moreover, recent research has shown that companies that remained inclusive during the Great Recession (in terms of diverse workers’ experience and representation in different ranks) did better financially during and after it.

So how can you avoid turning the economic recession into a diversity recession?

Keep track of your lists. Events are happening fast, and managers are often unaware of the diversity implications of their layoff lists. Go over your lists to ensure that your decisions do not disproportionately hurt women, minorities, or any other group that just happens to be concentrated in the targeted jobs. Follow this expert recommendation: Spread reductions evenly across the board. In its 2011 layoffs, Nokia formed selection committees to make its layoff lists so that it could avoid acting on the basis of local managers’ favoritism and blind spots. In my research, I have found that executive who keep track of the numbers managers submit retain managerial diversity amid layoffs.

Think about what people can contribute, not just what jobs they hold. Take stock of more than position and tenure. Look at performance evaluations, which may reveal that you’re about to let some high performers go. Companies that factor performance into their decision-making, I’ve found, end up keeping their best performers, regardless of gender and race. And in doing so, they better maintain their diversity.

Redeploy talent to areas that need strengthening. During the Great Recession, Southwest Airlines did not need job recruiters - a female-dominated position. But to avoid getting rid of employees with good interpersonal skills, it redeployed recruiters to frontline customer-service jobs. As the economy recovered, those workers transitioned back to their original jobs, ever more loyal to the company for keeping them on.

Cross-train and upskill workers. The question of how to maintain diversity in the face of job cuts is not new to retailers. A recent Walmart-funded report by FSG and PolicyLink explains that reskilling frontline workers instead of laying them off minimizes the costs and productivity losses associated with hiring new employees. Many retailers already cross-train so that workers can more flexibility fill different functions and prepare for changing environments. Including women and minorities in these efforts during the recession will help you keep your best performers and your diversity.

Offer early and phased retirement options. Instead of automatically resorting to the “last hired, first fired” approach, consider offering voluntary early retirement or phased retirement options. The U.S. government did that in 1996 to avoid getting rid of all the white and minority women it had recently hired. In the context of Covid-19 layoffs, Boeing CEO Dave Calhoun has announced that the company will offer early retirement and buyout packages.

Cut pay and hours rather than jobs. Employees generally prefer pay cuts or part-time work to layoffs. Some retailers, including Abercrombie & Fitch, Allbirds, Apple stores, Away, Buck Mason, Foot Locker, Gap, and IKEA have managed to continue fully or partially paying their workers despite pandemic-related closures. The cosmetics retailer Sephora has cut its Canadian corporate employees back to 32 hours a week, meaning they now receive 80% of their base pay plus health benefits; it has also asked its U.S. employees to take six paid vacation days off. It did terminate many newly hired part-time employees but provided severance packages and outplacement help.

Don’t slash your diversity team. Keeping your diversity management staff in place will help you think creatively about alternatives and boost your company’s diversity when the recession ends. Amid the company’s 2016 layoffs, Intel CEO Brian Krzanich instituted major overhauls to hiring and promotion plans in an effort to make the workplace more diverse.

Layoffs need not come at the cost of diversity. By thinking creatively in this hard time of crisis, corporate managers can avoid hurting any group disproportionately and may even be able to shrink their layoff lists. If you can employ even some of the strategies described above, you’ll lay off fewer women and minorities, and your organization will be stronger as a result.

Alexandra Kalev is an associate professor of sociology at Tel Aviv University.