Betsey Stevenson, economist and Professor of Economics and Public Policy at the University of Michigan Gerald R. Ford School of Public Policy, focuses on the impact of public policies on the labor market. Former member of President Obama’s Council of Economic Advisers & Chief Economist at the U.S. Department of Labor, she researches women’s labor market experiences, the economic forces shaping the modern family, and the potential value of subjective well-being data for public policy. She discusses with the Institute of New Economic Thinking what we’ve learned about what workers need during the pandemic, changing attitudes towards work, and why investing in early child care is crucial to the economy.
Lynn Parramore: We’ve heard a lot about shifts in the job market during the pandemic, with many people, especially women, leaving the workforce. There’s been talk of a “Great Resignation” to describe a recent uptick in high levels of turnover, with women leaving at higher rates than men. What’s going on? How much of this is about child care?
Betsey Stevenson: There are actually a couple of different phenomena here. One is the question of how many people are in the labor force and whether they’re coming back. Women left more than men primarily because the jobs lost during the pandemic were disproportionately jobs that women held — education and health services, leisure and hospitality, retail sales. The numbers through August showed that women were returning to the labor force at roughly the same rate as men, but they have a bigger hole to climb out of, so there’s still a bigger gap.
We did see a special slowdown for women in August and September, and I think that it’s because women’s employment tends to be more susceptible to the virus. Two out of three caregivers of adults are women, so it’s not only about child care. When Covid cases are surging, people are not going to want to do some of the in-person stuff where women tend to work, so that’s one reason why women lost more jobs. That’s a labor demand story, not a labor supply story. On the labor supply side, there’s the craziness of the school situation. If you are a woman who quit your job during the pandemic for child care reasons, and you sent your kids back to school this fall, you might be nervous because your kid is one classmate away from being sent home for two weeks. Are employers going to offer flexibility? Can they get time off? Even unpaid time off is better than losing your job. Employers will have to realize that this stress isn’t going away soon. Parents can’t give sick kids a Tylenol and send them to school like they used to.
Is child care preventing some from going back? Yes, I think that it certainly is. The share of workers who have kids who are child care-age is relatively small in terms of the whole U.S. macroeconomy, but that doesn’t mean that child care and issues around taking care of children aren’t shaping the labor market beyond the effect on who works and who doesn’t.
The Great Resignation is a separate thing because most of the people who are quitting right now are quitting not to leave the labor force but quitting to take a different job.
I did a survey where I asked parents if child care affected their ability to do their job. The answer wasn’t so much about quitting, it was turning down promotions, cutting back training, switching to more flexible work that would allow them to manage their child care a little bit better. Then, I asked parents if they planned to do something different than what they were doing prior to the pandemic, and a very high share of fathers — not just mothers — said that they planned to work less or that they wanted to find a more flexible job or some form of better job. What you saw was just a large number of parents looking for something different.
I think that we sort of miss how much pressure that’s putting on the economy. If we only focus on the question of whether to work or not to work, we miss the fact that there’s a whole bunch of other decisions people make in terms of what industry to work in, what kind of occupation to have, how many hours to work, and so on. What I showed in a report I did for Brookings, “Women, Work, and Families: Recovering from the Pandemic-Induced Recession,” is that we’re seeing an increased number of people, and particularly parents, changing industries compared to prior to the pandemic. That is even more true for mothers than for fathers.
Lynn Parramore: So maybe instead of the “Great Resignation” we should call it the “Great Reassessment” – people rethinking the work/life balance.
Betsey Stevenson: It’s funny you say that because I’ve been calling it the “Great Reallocation.” I think of it as a game of musical chairs. We decided we didn’t like the chair we were sitting in, so we all stood up and now we’re running around trying to find a different chair. It takes time. Or here’s another analogy a lot of us can relate to – it’s like we discovered during the pandemic that our spouse wasn’t a great fit for us, so a bunch of us got divorced. There would be new partners out there, but it would take some time to find them and figure out who’s a good match. This is happening in the labor market. I think there’s been a big reassessment, as you said, and that reassessment is leading people to change industries, and that’s reallocating workers across the economy. It’s showing up in people finding new jobs, and if they’re already in a job, of course, they have to quit in order to find a new job. So we’re seeing an increase in quits, and some of what’s fueling the increase in quits is that there are more opportunities out there. We might have had reassessments in the past, at least at the individual level, but people didn’t find good opportunities to make a change. Now we have the combination of opportunities along with people who want to make a change.
Lynn Parramore: What kinds of changes do people want to make? What do parents want?
Betsey Stevenson: Workplace flexibility. Parents have always wanted it but it was really hard to convince companies that it wouldn’t be very costly. COVID actually proved the value proposition of flexibility and working from home. Companies were forced out of necessity to give people the ability to work from home, and a lot of them found that people were even more productive. They weren’t spending an hour and a half a day commuting, so some worked longer hours. From the company’s perspective, they’re getting more work out of you. From your perspective, you have more free time because commuting time was just dead time.
When I worked in the Obama administration, we tried making the point to companies all the time that they should give people more flexibility to work from home at least one or two days a week because you’ll save them personal time and commuting time that they’ll really value, and you’ll reduce the stress and hassle of that daily get-up-and-commute. Companies were just so nervous about it. How would it work? What if we had a meeting on that day? Well, now we’ve learned that it’s nice to see your colleagues but you don’t really need to see them five days a week. And now everyone has adopted technologies like Zoom. I think even telemedicine will stay, which has its own set of efficiencies. You can see more patients, you don’t need to be bringing them into the building and cleaning up the room after them. So I think there’s been a lot of permanent changes there.
One of the most interesting things I’ve seen in the data collected by Pew, which actually matches some of the data I’ve been collecting prior to the pandemic, is that fathers were the ones who were most likely to say that work/life balance was a struggle and that work was getting in the way of their family time. Pew showed that fathers were much less satisfied than mothers with the amount of time they got with their children prior to the pandemic.
Interestingly, during the pandemic, fathers became more satisfied with the time they were getting with their children. Mothers actually didn’t become more satisfied. I think that a lot of mothers like being with their kids, but you kind of like them going to school! If you were the one picking them up from school or dropping them in the morning, you were already getting a ton of time, so the fact that they’re home all day for school didn’t feel like a real bonus. But many dads felt like they left for work in the morning and got home at night and rarely saw their kids. I think what’s really going to be the driver of change over the next couple of years is that fathers don’t want to completely go back to the way things were when they had very time with their children. That movement by dads will shape what’s available for moms. The problem in the labor market was the idea that this was a mom thing.
Lynn Parramore: Is this part of the demand for gender-blind parental leave, the idea that parenting is not just, as you put it, a “mom thing”?
Betsey Stevenson: Exactly. If we have a labor force where women get flexibility and maternity leave, and men don’t take any of those things, then we have two tiers of workers. We have one worker whose primary focus in life is the job and another worker whose focus is split between home and work. That’s been our vision of women in the labor force for a long time. We came into the pandemic with a situation in which women were the majority of college-educated workers in the U.S. economy. When we look at people’s workplace experience, women had as much experience as men. Women were increasingly in managerial positions. Something that’s counterintuitive, and a lot of people don’t realize, is that we have had declining birth rates each year, but that doesn’t translate to each generation having fewer kids. In fact, women in their forties today have more kids than women of the same age had ten years prior. Health technology and expectations have changed. You had this generation of women who might have been in their early twenties in the mid-eighties and felt that if they really wanted a career they would have to give it their all and because people in their generation had had kids at slightly younger ages than currently, by the time they hit 40 they weren’t going to push to have a kid. But I think we’ve seen an increasing willingness to both try to get pregnant and to use technology to help.
Because the kids were born at older ages, women in their forties were also more likely to have younger kids. I think that really shapes the pandemic. You have a situation where you have more women in their forties with a lot of work experience and school-age children at home. They’re saying, ok, I’ve worked really hard in my career and I went into parenthood full-steam ahead, but maybe I should have slowed down a little. I think that’s happening at the same time that we’re also seeing workers at the bottom end of the income distribution demanding higher wages, better treatment, more control over their schedule. There’s also a lot of mothers in that group trying to figure out how they support their kids and afford childcare. This is a problem because we’re in a really intense child care shortage. It’s becoming increasingly unaffordable.
Market conditions have pushed up wages in all sorts of occupations that child care workers could choose instead. Amazon warehouse pays $18 an hour. Unless parents are high-income, they have a hard time paying a child care worker $12 an hour. In my district here in Michigan, they just discontinued before-school and after-school child care programs. You think you don’t need child care anymore because you have school-age kids and they can just stay after school in a program for two hours while you finish your workday. But without after-school programs, juggling work and kids becomes a lot harder. My school district found the whole ordeal of providing affordable programs to be more than they wanted to take on well before the pandemic. That was a combination of feeling like it was hard to staff, hard to know how much to charge parents. We’ve got teachers who are unionized and well-paid and have tenure so there’s little turnover and you don’t have to spend a lot of time hiring people. That’s not true in a child care program. And we need to pay child care workers more like teachers.
Lynn Parramore: Should we be looking at child care as a public good instead of putting so much of the cost burden on parents?
Betsey Stevenson: I think we should be looking at it the same way we look at K-12 education. The pandemic taught us that child care and education are two sides of the same coin. We send our kids to school in kindergarten. All of a sudden they’re getting educated and looked after for seven hours a day. When we send them to preschool, they’re getting educated and looked after, but not every state provides it. So it’s on the parent to pay for it. When we send them to a program at two years old, we hope they’re being educated and looked after because there’s a lot of important developmental stuff that’s happening in their brains. We have this artificial separation where after five it’s education and before five it’s just child care. The truth is, the whole thing is education and child care. The same thing is true of before-school and after-school child care programs. What we really need to be doing is thinking about how we provide a safe learning environment for children in which they’re looked after while parents work. That means thinking about government support for child care that runs 12 months out of the year and more than six or seven hours a day. It runs from the beginning of their life until they complete the twelfth grade or university, depending on how we think about education and where we want it to end. What I do know is that we haven’t been starting it early enough.
How can we be asking parents to pay for child care when high-quality, center-based care can cost as much as college tuition? Before the pandemic, we were talking about whether parents could afford college, but if you can make it through the first five years of child care, college is nothing.
Lynn Parramore: And of course kids are not likely to be able to go to college if they don’t have proper care at the development stages.
Betsey Stevenson: Exactly. Higher-income parents on the hook to pay for child care and college get a respite during the K-12 years when they have a government-funded public school system. But other parents can barely make it through the early years and then they’re broke or have to curtail their careers in ways that have permanent long-term consequences that they didn’t intend at the time. Then it’s harder to pay for college. We really need to help parents pay for that early child care and education because that’s foundational and it’s also when we struggle the most to pay. We don’t have as much time to plan. We have 18 years to plan for our kids to go to college. Some people only have two or three months to plan for the early time.
We know the economics. We know that investing in kids early on has a big payoff later in life. We know that for the most vulnerable kids that payoff is huge. For every dollar the taxpayer spends, they get eight, nine, ten dollars back. Even just on the basis of dollar-for-dollar, it’s worth doing. We should stop worrying about the price tag because investing in kids pays back. Right now we are for sure underinvesting in our children. It’s causing all sorts of negative consequences in terms of their wellbeing as kids, the outcomes as they grow up, and their parents’ ultimate ability to earn a living.
Lynn Parramore: To touch on another workplace concern, is safety still on the minds of people hesitant to go back to work?
Betsey Stevenson: Yes – it’s hard to know whether it’s labor demand or labor supply, but you do see in surveys that as the Delta variant crept up, people’s willingness to do in-person activities for pleasure or work went down. People don’t want to do an in-person job where people are sick. Another somewhat gendered issue is that women are disproportionately likely to be essential, frontline workers. They’re asking people to put a mask on, asking for a vaccine card, and we’ve seen an increase in the aggressive and belligerent way that customers are treating workers. That is disproportionately affecting women.
Economists think about the disutility or the displeasure or cost of doing a job. If a job is less pleasant, people will demand higher wages to do it. We would expect a decline in the labor supply to jobs like this, with employers needing to push the wage up. If people don’t change their behavior, it will impact how many people are willing to do these jobs. If people have to be paid more to do the jobs, that impacts how much customers have to be charged. It changes customers’ experiences. I find flying more stressful now. If people are less likely to fly, it can spiral in a way where you end up having fewer workers in these types of service jobs. I don’t know where we end up. Some people feel so much anger about masks and vaccines, and others don’t want to be in a place where they feel unsafe.
Lynn Parramore: You’ve tweeted recently about how important it is for people to have positive narratives about their work. How do you see this in the context of Covid?
Betsey Stevenson: There’s an even bigger story here. It used to be that you could start in the mailroom and work your way up. But increasingly, the mailroom is an outsourced company. There are a lot more dead-end jobs because there’s a lot more outsourcing. You’re in a job where there’s nowhere to go. Even if you might like your job and not necessarily want to move up to something else, it’s optimistic to know that you could and that you see people around you doing it.
We’ve created a bifurcated labor market where there aren’t a lot of career paths at the bottom. It creates a lot of frustration. People feel mistreated, without opportunities for growth. The jobs where people are getting abuse now are often the jobs where people didn’t feel valued to begin with. A lot of employers at the bottom of the labor market have treated workers as if they were disposable. They would tell people who show up for work—who arranged child care to do it – that, oh, we don’t need you today. The person says, wait, am I not going to pay for the child care now that I’m not getting paid? That kind of behavior is something people are just super-frustrated about.
Lynn Parramore: What about the careers of child care workers? What kind of path or advancement should they be able to expect for doing this vital work?
Betsey Stevenson: Great question. In education, there’s a path. Not everyone is going to become an assistant principal, but there is a path. With child care, we can have people start without a lot of training, but they can apprentice with somebody who has more experience, maybe more formal education, and more knowledge about curriculum-based early child care education. Good centers use a curriculum. When you have a room full of two-year-olds, you want more than one child care worker in the room, so some of these could be more junior workers earning less pay, and others can be more senior. The junior person in the room can work their way up to being the senior person. The senior person in the room can become the senior person at the center. People could move up from working with one and two-year-olds to learning the curriculum for four-year-olds. So even if your expertise is young children, maybe you could end up as a kindergarten teacher.
The problem is we’re not credentialling child care workers and we’re not paying them like we pay teachers. We should be looking to create a combination of community college and apprenticeship programs to allow people to move into those positions of early childhood-trained workers. There’s a potential for that path, but it does involve higher wages.
