3 Vital Things You Need to Know About This Recession, According to Economists
One of the first things out of economist Elise Gould’s mouth after our usual pleasantries was this: “This recession is very different from previous recessions.”
She points out that in the 2008 recession, for example, there were lots of jobs lost in areas like construction and manufacturing, which are typically male-dominated. But in this recession, the jobs were lost in fields like leisure and hospitality, retail and the public sector. “A disproportionate number of women lost their jobs,” says Gould, a senior economist at the Economic Policy Institute—and Black and Latinx women were particularly impacted. (Other differences between this recession and past recessions are outlined here.)
Indeed, we have entered a so-called she-cession, which is why Millie asked prominent female economists what women need to know now. Here’s what we learned.
How one woman conducted a DIY spending audit, and created a roadmap to help you cut expenses—and keep more of your hard-earned cash.
Jobs. Unfortunately, the pain we’ve felt in the job market isn’t going to disappear anytime soon: “The economy may not see improvements for a while,” says Gould. “COVID-19 cases rose in some states and some states have re-shuttered.” And the recession may continue to disproportionately impact people of color, as well as lower income workers—many of whom have to be physically present at their jobs, she adds.
But what about those who can work remotely? Some experts note that telecommuting—which many employers have said they will continue allowing to some degree even after the pandemic—could help a variety of different employees, including those who can’t leave the house due to mental health or physical issues, as well as caregivers and mothers, who could better balance their work and care responsibilities.
However, economist Teresa Ghilarducci, a professor at The New School of Social Research and the director of the Schwartz Center for Economic Policy Analysis, points to a new study from researchers at Yale University showing that telecommuting also has its drawbacks. “Working from home is harder on moms than on dads,” a review of the study concludes. “Telecommuting moms spend significantly more time performing housework when they work from home than dads do. Moms working remotely also spend more time doing their jobs with children present than telecommuting dads.”
It’s not all doom and gloom though. The unemployment rate for women peaked at 16.2% in April and fell to 11.7% in June. Though admittedly, jobless claims did tick up again for the week ending July 18, as COVID-19 cases ticked up in many states and businesses had to shutter once again.
Money. The markets have been up and down a lot as the pandemic impacted a variety of industries, so many women no doubt feel panicked about their finances. But don’t do anything rash: “People need to know the importance of staying the course,” says Ghilarducci. “That means keeping their savings intact, investing in a low-fee portfolio of indexed stock and bond funds, and grabbing the joys of compound interest. Save $125 per month at age 25 [and keep doing that each month] and you get nearly $900,000 at age 65; wait until age 45 and you have less than $150,000.”
And Ghilarducci adds that you should keep working if you can, as this will help you secure your financial future: “Cutting back on hours and years in the paid workforce puts you behind at retirement age,” she says. “Family care and schooling disruptions will pressure more women and men to give up their jobs to care for others. The costs of leaving work extend far into the future.”
It’s also especially important right now—again, only if you can—to build up your emergency fund, thanks to the uncertainty of the future. Aim to put at least 6 months of income into your emergency fund, experts say.
Real estate. “The Fed is keeping interest rates low, [so] refinancing mortgages might make sense,” says Ghilarducci. It also may be a decent time, at least in some markets, to buy a home if you have the money: Skylar Olsen, Zillow’s senior principal economist, tells Millie that home prices will likely fall 1% to 2%, but recover by spring 2021. That said, “rental investments are riskier,” says Ghilarducci.
And don’t forget that if you are one of the many renters who received a rent discount or hiatus from your landlord, you may soon lose that rent break. Or if you are a homeowner who got a reprieve on your mortgage, you may soon find that those payments are coming due, as Millie previously reported.