The latest data from the federal government shows that over 900,000 jobs were cut nationwide in July. Combined with rising vaccination rates, the blockbuster gains are largely due to shifting incentives. Twenty-six states prematurely ended extended federal unemployment benefits, which has motivated more Americans to return to work.
Economic improvement looks promising, but much remains to be done. More than 5.7 million people who had a job in February 2020 don’t now have one. And in June the number of job vacancies reached a record high.
In short, while Americans are falling back into the nine-to-five grind, companies are struggling to attract employees – especially small ones. Working on a skeletal staff makes it all the more difficult to recover from the pandemic. According to the latest survey by the Job Creators Network Foundation’s Monthly Monitor, only 1 in 10 small businesses managed to break out of the financial void on their own.
To encourage further recovery, entrepreneurs and policymakers should adopt strategies that encourage more women to enter the labor market. Compared to their male colleagues, it is a group that is full of untapped economic potential.
Historically, women have followed men in the labor market. Before the pandemic, the labor force participation rate (LFPR) of women was nearly 60 percent. At the same time, almost 70 percent of men either had a job or were looking for one. The coronavirus and the associated lockdowns have hit the work situation hard for both demographics. Both have not fully recovered.
Some of the inequality can be traced back to traditional gender roles. Even in modern times, an overwhelming proportion of women stay at home to look after the children instead of going to the office. Priorities are important, but at least women need to be comfortable with what they can do. We have made a lot of progress as a society since the Leave it to Beaver days, but those undertones are still there.
So what can we do to fill the gap?
The ability to work remotely or to allow more flexibility in the workplace could bring more women out of the sideline and into the labor force. The pandemic forced employers to experiment with working from home guidelines, so this is already a well-known exercise. While there are advantages to being physically in an office, technology makes the option to work remotely possible in some professions in the long term. If the opportunity arises, parents no longer have to balance careers and expensive childcare.
Promoting entrepreneurship is another way for women to become more involved in business. Running your own small business or franchise can be a challenge. But it comes with all of the perks of being your own boss. Civil servants should streamline the path to entrepreneurship and make it as attractive as possible. In other words, politicians just have to get out of the way.
Unfortunately, there is currently no shortage of public sabotage.
Newly proposed federal labor regulations will crowd out the lives of would-be small business owners. One of the most popular avenues to entrepreneurship is through the franchise model. While branding is borrowed from the parent company, franchisees are responsible for hiring employees, distributing compensation, scheduling hours, and various other operational decisions. The PRO Act, currently under consideration by Congress, could dry up those business opportunities.
The planned tax hikes also threaten the expansion of Main Street. For example, a bill was recently introduced in the Senate that removes a 20 percent tax deduction for small businesses. It was the cornerstone of the 2017 Tax Cut and Employment Act that sparked the strongest economy in half a century before the pandemic. In particular, it created a small business friendly environment that encouraged more Americans to explore entrepreneurship.
Building the incentive mechanism right when we need small businesses to thrive the most is like shooting yourself in the foot.
The economic recovery is in full swing, but we still have a long way to go. Encouraging more women to enter the workforce and incentivizing female entrepreneurship is exactly the cocktail we need to kick off the stormy 2020s.
Elaine Parker is President of the Job Creators Network Foundation.