By MILLIE MUROI, Economics Writer
COVID-19 changed the way we work, the skills we seek, and the types of jobs going around. But in the years since the pandemic, one of the biggest changes has been a leap in employment – especially for young women.
Since the pandemic, the unemployment rate of women under 35 has averaged about 1 percentage point below that of men the same age (the largest gap, in either direction, in two decades). And over the past decade, the gender pay gap per hour has narrowed from 11.5 per cent to 8 per cent.
We already know Australian women are finishing university at higher rates than men. But research by e61 economist Matthew Maltman reveals the boost in women’s job prospects and wages are largely driven by reasons linked to the expansion of the care economy, including childcare, aged care and disability care.
While the mining investment boom in the late 2000s and early 2010s led to more men than women climbing out of unemployment and into work, the growth in Australia’s care sector since the pandemic has seen young women be more successful than young men at securing work.
Since the National Disability Insurance Scheme (the third-largest program in the federal government’s budget, aimed at providing funding and support for those with permanent disabilities) was launched about a decade ago, the care economy has expanded sharply.
As Maltman points out, the care economy has been the biggest source of Australia’s economic growth over that time. And because it’s a sector that is labour intensive — meaning it relies on relatively large amounts of human work as opposed to work done by machines — it has also been the biggest driver of employment growth.
As demand for workers willing and able to provide care has soared, so have job opportunities in caring roles.
The people who have jumped to fill these opportunities, however, have tended to be women, and especially those who are relatively young.
Maltman notes young people tend to enter the field for two main reasons. First, care roles tend to offer a pathway for those in entry-level positions such as hospitality and retail to enter into more stable and better-paid work.
Second, while care jobs tend to pay less than the average job overall, that’s not the case for younger workers. Since the pandemic, the average hourly wage for 20-to-24-year-olds in the care economy has been about $3.50 higher than the average for workers of the same age across the economy more broadly (and $5 higher than in male-dominated sectors such as construction).
Women have also been more eager to take on these jobs. Caring roles — both in formal workplace settings such as hospitals and aged care facilities and informally at home — have long tended to be filled by women. And Maltman says that trend has continued.
Young women who weren’t previously working have moved into care roles at sharply higher rates since the pandemic, while only a slightly higher number of young men who weren’t previously working jumped into those same care roles. “While men face no formal barriers to working in care, and many already do, deep-seated gender norms and social factors have been slow to shift,” Maltman says.
This uneven uptake of care roles has contributed to a clear improvement in employment outcomes for young women compared with young men. While the care sector has morphed into a major destination for young women looking for work, the research notes there hasn’t been a similar industry or growth area that has appealed to young men.
The boom in the care economy, and growing demand for workers in the sector, has also led to higher wages — much of which has flowed to women who make up a majority of care workers.
Not only has the hourly gender pay gap narrowed over the past few years, but women now earn more than men per hour worked, on average, from age 15 to their early 30s.
Decisions made by the Fair Work Commission to significantly lift wages in the care sector (largely to make up for the historical undervaluing of care work) over the past few years has helped to boost wages for nurses and social workers — many of whom are women. And the rollout of the NDIS has led to a surge in demand for workers, resulting in shortages in labour and pushing bosses to boost wages in a bid to keep their workers.
Broadly, the health and social services sector (which includes the care economy) has had the highest wage growth of all sectors since the pandemic.
Maltman finds rising wages in the care sector account for about 15 per cent of the overall shrinking of the hourly gender pay gap.
Thanks to the expansion of the care sector over the past decade, the average full-time woman (across all sectors) is $440 closer to earning the same amount as an average full-time man per year.
Women becoming more educated explains a further 15 per cent of the improved hourly pay gap.
But a boost in the number of working age women in jobs (and those looking for jobs) has been about twice as important in narrowing the gap — part of which could be explained by the rise of work from home.
Over the past decade, the share of women working (and looking for work) has jumped, especially among those aged 30 to 40 – a time when earnings tend to start peaking, but also a time in which many women have historically had to reduce their professional work because they are taking care of family.
But Maltman says there are also other factors that have helped shrink the hourly gender pay gap — some of which are harder to put exact numbers on. That includes improved transparency in how much people are being paid and a continued fall in sex discrimination, but also what’s known as “spillover” effects.
That is, the growth in the care economy — and higher demand for workers — probably has knock-on effects for other sectors. More job opportunities for women in the care sector means they have greater bargaining power, not just in caring roles but also across other sectors as bosses fight to keep their workers (and maintain gender diversity in their workplaces), often through pay rises.
But it’s not all good news.
The hourly gender pay gap measures income per hour of work, and because women still work fewer hours than men on average, the annual pay gap for 25-year-olds was still about 12 per cent in 2022 (although that’s down from 16 per cent in 2016).
And while their pay may have increased, work satisfaction has been relatively low for some care workers — especially those in aged care.
There also tends to be fewer opportunities for earnings growth and career progression in the care economy after the age of 25 than in many other industries. Maltman points out if young women currently in care work stay in these jobs, they may end up earning less than their male counterparts in other industries over time. That means 10 to 20 years down the line, the gender pay gap may end up widening again for these workers.
While care work tends to offer job stability, it’s also a sector in which workers do not tend to change roles or workplaces very often. That can slow down productivity growth (our ability to achieve more with our limited resources) because workers might be less able or willing to move to jobs that suit them — and their skills — better.
And while growth in the share of women in jobs (and their pay) is welcome, Maltman points out the lack of adjustment by men — especially young men — to the changing structure of the economy is concerning, with a growing number of young men choosing not to participate in work or education.
