Who’s Watching Junior? Benefits of Better Childcare Support Post COVID-19

Thirty-six million Americans have filed for unemployment benefits over the past two months.  While these are disproportionately less wealthy Americans, many high-profile companies have been laying off or furloughing their workforce as well, among them major hotel chains, airlines, clothing manufacturers, and retail stores.[1]  For those of us still lucky enough to be working, our offices are now co-located with our families.  Two questions frequently arise: when will this be over and what will working look like post-COVID-19?  While we have little control over the answer to the first question, the second one is important for us, especially employers, to consider.  A post-COVID world should reflect what we’ve learned about people and what they need to flourish.

A New Narrative for the Working Parent

One of the narratives that COVID-19 has disrupted is one about working parents, especially professional women/mothers/caretakers.  The narrative says that women can wear multiple hats – be power players at work and nurturers at home, and thus live to their full potential.  For this to be true, however, women need to be sure that the dual life is indeed worth it.  That might be harder than you expect.  (A Gallup poll in 2015 showed that 56% of women with kids under 18 would actually prefer to stay at home, if they were free to do so.[2]) 

In order for both parents to work outside the household, a decision is needs to be made: is it more valuable to be home with family and forgo a paycheck, or to be out of the  home and pursue a career?  COVID-19 has made it clear that this choice is not limited to how much we make, but the risk we are undertaking to pursue careers that limit the time spent at home or caretaking for family members.  This tension interferes with work quality, timeliness, and worker engagement. These are issues that we research frequently, lumped under “Social Determinants of Health” (SDoH), but they are largely discussed as they relate to the working class, immigrants, and the poor.  COVID-19 has shown that it is not limited to these groups at all.  In fact, the need for better support for employees/caretakers/women/mothers/fathers crosses race, class, and income levels.  Employers need to think critically about how to provide for employees with these needs if they hope to get their workforce back to work, both in body and in mind. 

There are two points that I’d like to make related to solving for the upended narrative of working parents.  First, when more women work, economies grow,[3] and so does the value of the companies they work for.  It is in employers’ best interest to find ways to support women in having careers to add to the value of their organizations.  Second, raising children is the most important of several jobs that some women have, but the ability to juggle multiple roles and to create value for employers is dependent upon the ability for mothers (and fathers for that matter) to be certain that their children are in a safe and healthy space and that the value of the work outside the home somehow improves the overall value of the family. 

Employers have made significant changes due to COVID-19.  This has allowed many to continue working remotely, from the home.  Even better, colleagues, employees, and clients have gotten used to hearing the sounds of home life in the background of work calls.  It has ripped up the guidebook for parents who work and, shockingly, it hasn’t disrupted work either – or at least not on the surface.  Many companies have made the move to telework semi-permanent and others are closing offices and preparing for the office of the future – the home.  But what does this mean for parents?  Is this the best way to support employees to achieve the greatest value at home and at work?

I argue that it does not address the central thesis of the narrative – the tension of the dual job: wanting to be there for Junior and for the employer. 

Parents May Need More than Simple Remote Work Policies

‘Who is watching Junior’ is a central point.  Parents who work need more than just the flexibility to choose where to work.  They need their children to be in a safe place while they are working, ideally not the same place as they are working.  Practically speaking, however, nearly half of licensed childcare centers will likely close within weeks without government funding, according to the National Association for the Education of Young Children (NAEYC).  But, even if childcare facilities reopen, how many parents feel like the second paycheck is not worth the risk?  And, for those who do continue to work, what is the plan for the next large health crisis?  It seems clear that employers should think carefully about what childcare looks like and to prioritize it just as much as laptops and healthcare for each employee.

Interestingly, this is not the case.  In a Greenwald survey conducted with The Insiders, our proprietary benefits broker panel, 64% of brokers said that they and their clients believe that work-at-home policies and supplies are important to reduce business interruption.  Only 3% feel that childcare resources and support are important to reduce business interruption. 

Work-from-home policies seem to be how companies want to address the upending of the narrative of working parents, but simply providing the option to work from home when one’s children will be underfoot will not create the greatest value for the company, nor for the employee.  There need to be better, more creative solutions if employers are to make returning to the workforce attractive.  Flexible work arrangements, support for affordable childcare options, and promotion of a culture that supports a healthy life outside the office are all good starts, but I’m anxious to see what other solutions employers invent. 

[1] Bureau of Labor Statistics, May 8, 2020.  https://www.bls.gov/news.release/pdf/empsit.pdf

[2] https://news.gallup.com/poll/186050/children-key-factor-women-desire-work-outside-home.aspx

[3] International Monetary Fund (2018). Pursuing Women’s Economic Empowerment

COVID-19 and the Markets: For Advisors, this is Not 2008

Over the past several months, our markets have experienced both volatility and an extremely low interest rate environment.  These occurrences, especially in combination, certainly present challenges to advisors and their clients.

Despite some reopening, the economy is facing a great deal of uncertainty. Unemployment is still high, having reached levels not experienced since the Great Depression.  Some expect major sectors of the economy, such as restaurants, airlines, hotels and commercial real estate, to be deeply affected long term, with some major companies failing to survive.  One of many challenges to investors is that the course of the economy is tied to the course of the pandemic, something that is extremely hard to predict. 

In recent weeks, Greenwald Research has conducted in-depth interviews with advisors to better understand their current approach to investment and income strategies, particularly for those approaching and in retirement.  Following the events of 2008, we conducted hundreds of interviews with advisors.  Our experience with this research suggests that the reaction to the current crisis among advisors is fundamentally different. 

In 2008, there was a widespread crash of the real estate and equity markets.  The prevailing advisor focus during this time was to prevent clients from panicking and selling their investments at a loss.  Because the loss was so deep, advisors did not report succeeding all the time. In the years following the crash, the market showed a steady rise and advisors reported that those who used a growth strategy were rewarded over those who attempted to blunt gain a little to provide a smoother ride or mitigate loss.

This market is has unfolded differently so far.  One reason is the impact of health concerns of Americans on spending behavior.  Some companies are not harmed by and may even benefit from COVID-19, such as Amazon or technology companies.  Other companies have suffered from COVID-19, but are valued lower than they should be or are in an area that could bounce back quickly. 

Because of this, we have seen some advisors who feel that rather than abandoning the market, this is an ideal time for active investment management among various sectors affected differently by COVID-19. 

Furthermore, there has been a different reaction among the older client base.  These clients have been through 9/11 and 2008 and have drawn some lessons from those experiences. On balance, advisors have seen as many or more of these clients that want to buy more equities as want to sell them. 

We see this environment having several different effects on the investment climate and potential strategies and products:

  • There could be further growth in target date funds and other forms of managed accounts because these accounts often use automatic rebalancing regularly. In a time of volatility, the advantage of this mechanism grows in importance.
  • We could see the comeback of risk mitigation strategies, such as alternative investment funds that incorporate non-correlated assets and hedging strategies or annuities that offer income guarantees or boundaries to limit losses. Compared to the steady growth environment over the past 10 years, the case for these products that provide a smoother rise should become much stronger.
  • There may be a growing interest in Smart Beta funds that adhere to a strategy that works in a COVID-19 world. For example, Smart Beta Funds reflect the beliefs of some advisors about the value of dividend weighting or weighting on earnings or book value rather than market capitalization.
  • Income may also be subject to more active management as advisors need new approaches to generate enough income for clients and as some sources of income, particularly stock dividends, decline.

Clearly, not all market downturns are the same and not all market downturns require the same adaptations.  This is especially true of the current economic decline, totally integrated in a health crisis.  Our research suggests that neither advisors nor investors have fully thought through the issues or how to respond or even if a new response is necessary.  As the health crisis unfolds, and the economic impact is resolved, investment strategies will have to adapt.  It is the role of the financial industry to develop new strategies in the interim that will protect advisors’ clients and give them an opportunity for a necessary level of return: a daunting task.