No Recession? Thank Women

Remote work allowed Alyson Velasquez to juggle her demanding roles as a Wells Fargo talent recruiter and as mother of two young children, including a son with special needs. The flexibility made sense both for her job, working with hiring managers across the country, and for her kids, ensuring she would be available for medical appointments and pickups. Remote work “is wonderful for working moms,” she says.

Women like Velasquez have flooded into the fulltime workplace over the past few years, spurred by newly flexible options combined with the rollback of pandemic-era school and daycare restrictions. The percentage of “prime age” working women—defined as ages 25 to 54—set a record in 2023, with moms of very young children leading the way.

These women have become the economy’s secret weapon—and one of the reasons why the recession that just about everyone predicted hasn’t happened. Despite almost two straight years of dire forecasts, unemployment remains low, consumer spending has held steady, and productivity is on the rise. Just last week (feb 20), the Conference Board, which had been warning of a recession since July 2022, finally gave up and abandoned its call. “The strong labor force participation of women workers and the strength of the economy are intertwined,” Treasury Secretary Janet Yellen told me in a recent email exchange. She attributes the employment gains for women in part to the child tax credit and other initiatives. “But also important is the increased flexibility of the workplace that came as a result of the pandemic,” she said.

That flexibility has been key for women like Laura Podesta, who left her role as a CBS television correspondent in 2022, when her sons were three and one. Her long overnight hours in the studio, along with frequent travel, “made me start to reassess what I was committing to,” she says. She pivoted to a hybrid position, overseeing communications for Fiverr, a freelance platform. “I decided to make the move in large part so I could work from home part of the week,” she says.

Flexibility helps corporate bottom lines, too, because employees are less likely to quit, recent research suggests. Replacing just one employee can cost twice as much as their salary, after factoring in recruiting and training costs, according to Gallup. Valerie Danna, a Seattle mother of five who spent years as a communications and human resources executive at companies including Starbucks, today spends part-time coaching other women who are transitioning in their careers. “Some want to switch companies…and some are looking to start their own,” she says. “But they all want hybrid.” By providing flexibility, she says, companies “retain the talent longer, which saves the company money.”

Read More: Flexible Bosses Were a Pandemic Blip

Yet now that progress is being threatened by a wave of return-to-office mandates. High-profile companies including Disney and Meta have announced mandates requiring three or more days a week in the office. Bank of America threatened employees who don’t comply with “disciplinary action.” IBM told remote workers they must move to be near a company office or quit. United Parcel Service says that as of March, all employees must work on premises five days a week. And a global survey of CEO’s found that almost two-thirds expect a full five-day-a-week return to office by 2026. 

About 40% of employees work remotely at least one day a week, according to Stanford University economist Nick Bloom, a figure that has remained steady since December 2022. But fully remote opportunities are drying up—and researchers have found that those workers are more likely to be laid off than peers who spend time on premises.

As a long-time manager of teams, I empathize with the importance of in-person work for collaboration, mentoring and culture. But at a time when women – finally! - have made historic employment gains, and are contributing to the economy’s resilience in the process, why put policies in place that will instead chase them away?

Inflexible mandates are already squeezing out women who want to stay in the fulltime workforce. Livia Fine, a litigator who worked for years at a major Manhattan law firm, moved during the pandemic to a town two hours outside the city to raise her two young children. She believes she can be just as effective working remotely—but mainstream law firms don’t agree, and she has yet to find a comparable position. In her Hudson Valley town, she says, she is surrounded by professional women in other fields who are similarly boxed out.

“These are some of the most vibrant, intelligent, community-oriented, brilliant women I’ve met,” she says. “What a waste” for companies that won’t hire them, she adds. “You’re creating a society that’s pushing us out.”

A global Gallup poll found that the majority of women want to work—including a majority of women not currently in the workforce. They boost the economy in multiple ways. Research by the National Partnership for Women and Families estimated that leveling up U.S. women’s participation would add $650 billion to GDP. A 2022 Moody’s analysis calculated that increasing U.S. female labor participation could add $1 trillion to the economy over the next decade.

Women’s economic contributions are outsized, providing “a little extra oomph” because they tend to be more educated and more productive than typical employees, says Claudia Sahm, a former Federal Reserve economist and founder of Sahm Consulting. She considers women an “untapped resource” for economic growth. And the surge in women workers has already helped tame inflation, says Boston College economist Alicia Munnell. Without it, “the labor markets would be even tighter than they were otherwise,” which would have led to wage increases, making inflation harder to get under control.  

To be sure, adding workers of any gender gives the economy a lift, by increasing goods and services as well as spending power. And current labor force participation among prime-age workers overall is strong, reaching 83.3% in January, topping even pre-pandemic levels.  But “a big driver of this is likely the ability to work from home, particularly for women and for workers with a disability who have seen some of the largest rises in working rates,” says Stanford’s Bloom. 

Indeed, employment rates for the disabled and other groups that need flexibility have also reached new heights. Employees at the Fletcher Group, a fully remote public relations and marketing firm, include a man whose autoimmune disease prevents in-office work, a father of a special-needs child, and single parents. “This isn’t ‘lifestyle with a side of business,’” stresses Austin, Texas-based founder Jennifer Tramontana. “We are hiring people who want a career,” but “who have things going on that would impair their ability to go into an office every day.”

That’s why it’s so confounding that companies are rushing headlong to dismantle flexible options. J.P. Morgan is among firms that have called back senior executives five days a week, and other employees three days a week. Chicago-based Abby Schmeling, a vice president of content strategy and mother of an infant and a toddler, was able to get permission to work remotely. But she is an outlier. “If you can't trust someone to work remotely, you made a bad hire,” she says. “Because I can tell you right now, I do better work from home, and I'm certainly working more hours without a commute.” She adds, “The landscape has changed, and it's time to rethink corporate America.”

Certainly, there are multiple other factors beyond women’s employment driving the economy’s resilience. Paul Gruenwald, global chief economist at S&P Global Ratings, credits significant productivity gains. And Harvard University Nobel Prize winning- economist Claudia Goldin told me that interconnected strands of data about female employment and economic strength can be hard to pull apart to demonstrate causality: “If women’s employment increases and we see the economy doing well, what caused what? …. this isn’t a question I would like to answer on the fly, although it does seem like the entire economy is the dog and women’s employment is the tail.”

Either way, let’s not erase women from the conversation about the economy. By not acknowledging their contributions, companies will continue to take actions that often squeeze women out. That includes Velasquez herself. The Grover Beach, Calif., mom says she was laid off from her six-figure job Wells Fargo job last year, after the bank called her back three days a week to an office three hours away. She and her husband have since put on hold their plans to buy a house and have considered cost-cutting options like selling a car or pulling their three-year-old out of preschool.

Return-to-office mandates are “pushing us out of the market, people like myself,” Velasquez says. “A lot of the moms I worked with that are still unemployed are in the same boat. What do we do now?”