Where the Great Resignation, the Gig Economy and Pay Inequity for Women Collide

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Pay inequity between men and women in the workplace was never adequately addressed by past administrations. Men still earn more than women in most professions and the labor force is not equipped to deal with an additional crisis that could compound the problem. One such crisis has been the Covid-19 pandemic and how it has impacted labor.

The Great Resignation

There has been quite a bit of coverage on the shortage of skilled labor that resulted from the pandemic, also called the Great Resignation. Large employers are finding that the lockdowns gave many people who were furloughed or laid-off time to find alternate work and to re-evaluate their work-life-balance.

For the millions who were fortunate enough to continue to work, many did so remotely. It also opened their eyes to a new way to think about work-life balance. As with those who left their jobs, they found conveniences they perhaps had not noticed before.

For example, they spent more time with their families. They appreciated not having to commute to work. They noticed that excessive consumption could be reduced – eating outside the home became less common and shopping less of a regular pass-time. Finally, despite the misgivings of managers, they found that they could be more productive working from home.

Now that lockdowns are being lifted, many people are opting not to return to their old jobs or to remain remote. For companies across the US, this is creating a significant shortage of qualified and present labor. Their workforce is not returning to pre-pandemic levels, and this is then also further impacting economic recovery.

The Gig Economy

It should be no surprise that the Great Resignation is in turn swelling the ranks of the gig economy. Many workers who were laid off turned hobbies into businesses to make ends meet. Others re-honed their skills to be able to continue the work they did for their old company, but now they did it for themselves. Even those who continued to work remotely took on side-jobs because they had extra time to do so.

In short, they became part of the gig economy. While the gig economy was already growing before the pandemic, the lockdowns put that growth into overdrive. Many highly skilled former employees also found that in addition to the freedom afforded by working for themselves, they were also able to charge more for their work.

This is now like a candle that burns on both ends, because as companies are now short on labor, they are willing to pay even more for that labor. So supply meets demand, especially in high-skilled fields like engineering, medicine, law, accounting, and tech/computing. Obviously, these new members of the gig economy are asking themselves a very pertinent question: should they return to their old jobs?

Obviously, many people will. After all, running a business is additional work on top of the skilled labor that is involved. Those old jobs are now also being offered with higher salaries, bonuses, and more benefits than before. On the other hand, many people will not return. It is still too soon to tell what the final ratio will be.

What we do know is that the gig economy is growing much faster than before the pandemic. This is a trend and one that is changing the entire discussion about labor in this country, and not just in management. There is a soul-searching happening with workers everywhere about what their labor is worth.

This is question not just for labor, but it also impacts what goods and services are worth – it is a paradigm shift in the economy. If these questions are also coupled with previous questions about labor, this becomes a very universal development. Before the pandemic, there were questions about the environmental impact of our means of production, the way it influenced conflicts around the world, as well as the very real question about labor equity.

Gender Equity

Considering this paradigm shift in our understanding of labor, we can look closer to home to see what is happening with one specific aspect of labor equity, and that is pay equity. We can look at this because it is something that has been discussed quite a bit already, it has been researched and there are some very important trends that we already have available to us.

Without citing the myriad sources, we know that women are not paid the same as men by large employers. Our failure to address this more aggressively has raised the awareness of this disparity and it is not in question. So how will this collide with the Great Resignation and the growth in the gig economy?

For one, because more men were in higher-paid and skilled positions before, it follows that more men were laid off, furloughed, or sent to work remotely from those jobs; it’s a direct correlation. It is just a fact that in the US more women stayed home before the pandemic.

As these laid-off, furloughed and remote workers joined the gig economy to make ends meet, it is likely that women in those households started to take a more active role in those businesses to help with expenses. It is also likely that many women formed new businesses on their own to help.

The economic difficulties of the pandemic were shared by all in the household… but inevitably so were the benefits of being in the gig economy. Both men and women acquired new skills to make ends meet. However, what was likely to be a status demotion for the men, this was a status upgrade for the women.

There are many ways we can evaluate status, but let’s just focus on pay. Whereas the men likely found a pay deficit by switching to the gig economy – an inevitability when starting a business – the women found a pay surplus. For many women who had not been in the workforce, this was now an opportunity to earn income.

Statistically, women working from home were already a large part of the gig economy before the pandemic, but the lockdowns created a drastic need to grow these “side-hustles” into much more prominent businesses. It was a forced upgrade, you might say.

Another aspect of this trend is that because of the economic need that the lockdowns created, these women also acquired new skills and did so faster than before. Not only did those skills helped grow the business, but it also creates a new skilled labor force that was not there before.

How all three factors will collide

It seems that news media prefers to discuss The Great Resignation, the gig economy, and the Gender Pay Gap in isolation, conveniently into small digestible stories that exist on their own. However, that is not reality – trends cannot be understood in isolation because they collide with each other. This is also the case here.

The women who previously stayed home are now more skilled. While many of them will continue in the gig economy, there will also be many who will be attracted to the higher salaries now being offered by employers desperate to fill open job positions.

Many of those employers will even offer more flexible hours, more remote work opportunities and different benefits that compare to those seen in the gig economy to attract these employees. They may even lower the skill requirements, thus opening the opportunity for more people to apply.

While many men will also be applying for their old jobs, this will create more competition for those jobs. More skilled workers to fill each job should help reduce demand over time, so the situation for employers is not as bleak. However, what will change is that more women will be entering the workforce at larger companies than before. While we can’t yet know the new ratios of men-to-women, the trend is there.

For their part, many men may opt to stay in the gig economy. It may not even be a choice either, since the job market will become more competitive with more applicants, but the longer that they are not working in that position, the more their own skills will become outdated.

In the end, they may prefer becoming the stay-at-home parent. The many benefits of being a gig worker may outweigh the advantages of working for an employer. The decision also becomes an economic one for the whole household. With the woman either earning more than before in the home business or working for an employer at a higher salary, the lower salary of the man may not be as difficult to bear for the entire household.

The result is that if current trends prevail, more women will be employed at larger companies in the future. This should generate more interest in promoting gender equity in the workplace, should be accompanied by more salary equity, and most importantly should alleviate the labor shortage over time and continuing the economic recovery we all would like to see.

Conclusion

I realize that these are very general observations based on trends culled from the very popular media that I deride for being a bit siloed in their perspective. Moreover, the description of women and their role is very traditional, and some might even say offensive. This doesn’t even scratch the surface of gender roles as they relate to gender self-identity, issues that are well beyond the scope of this article.

As such, I do not deny those criticisms.

Like trends, however, they do have considerable truth to them. Women are being paid less in the workplace, they are not compensated for traditional home-related work, and they represented most people doing side-hustles and part-time work. None of this is fair and it should be corrected.

My hope is that the current trends help bring about those changes over time. Perhaps it is an exasperation that government has not brought about enough change for women in the past. If so, these trends might help level the playing field, which should be good for companies as well.

It is not yet clear how much these trends will change the nature of labor. It is not even clear how much they will change the discussion about labor. It’s quite possible that the change will occur slowly and without much fanfare at all. We may not even notice anything.

If so, that would be a pity as well. We need to be talking about these trends. Likewise, savvy companies as well as gig workers need to understand these trends so that they can better prepare for where they are headed. These trends will impact everyone at some level, even if it’s just because a Starbucks Latte will cost twice in a few years than it did before the pandemic.

It is difficult to see a sea change when riding on top of the wave, but it doesn’t mean you aren’t moving forward very fast.