Corporate America is fixated on the wrong headline risk. While boardrooms debate model updates and AI guardrails, the more immediate threat is hiding in plain sight: the quiet hollowing out of the workforce—and the middle class that underwrites it. In just three months of 2025, 1.147 million foreign-born workers disappeared from the U.S. labor force, nearly a third of them foreign-born women. Over the same quarter, nearly 300,000 Black women were pushed out of the workforce. Those aren’t statistical blips; they’re structural alarms.
Look under the surface, and the picture sharpens. Black women’s labor force participation fell 2 percentage points in three months—a swing so abrupt that it took 16 years for prime-age women’s participation overall to fall just 4 points. Meanwhile, foreign-born women continue to have a participation rate of around 56%, which is significantly lower than the 77% rate for foreign-born men and slightly below the 57.8% rate for native-born women. Many of these women are funneled into caregiving, hospitality, food service, and domestic work—sectors that are undervalued, underpaid, and highly exposed to volatility. Layer on credentialing barriers, visa restrictions, wage theft in informal jobs, and chronically unaffordable childcare, and the result is predictable: talent exits.
Why these exits weaken balance sheets
These exits distort the dashboard. When people stop looking for work, unemployment improves on paper even as productive capacity erodes in reality. A shrinking labor force means fewer people building, caring, coding, teaching, and selling—and fewer paychecks supporting local businesses, bank deposits, and insurance premiums. The institutions most dependent on steady payrolls, consumer banks and insurers, quietly destabilize.
Banking strategists have been blunt about it: a transforming workforce and slowing population growth are among the greatest long-term threats to banks, with demographic and labor shifts poised to have long-lasting impact if leaders fail to act. Insurers are flagging similar pressure points as aging and a thinner middle class reshape risk pools.
The losses are not theoretical. Barriers that keep foreign-born women out of good jobs cost the U.S. approximately $132 billion in GDP. Part of that is direct pay inequity: foreign-born women earn about $0.85 for every $1 earned by native-born women. Part is misallocation: college-educated immigrant women working below their skill level; clearing credentialing barriers for immigrant professionals would unlock $19 billion in GDP annually (versus GDP for the entire United States of $29 trillion in 2024). The three-month, 300,000-worker exit of Black women shaved $37 billion from GDP. Bring Black women and foreign-born women back into the labor force at equitable pay and opportunity, and the multiplier effect ripples outward through retailers, banks, health systems, and local tax bases.
The middle class under pressure
All of this lands on a middle class already stretched thin. Since 1971, the share of Americans in the middle class has fallen from 61% to 51%, while the upper tier grew from 11% to 19%. That modest shift in household share delivered a disproportionate gain in income: the upper tier’s slice of U.S. income jumped from 29% to 48%, while the middle class’s share fell from 62% to 43%. The result is a barbell economy—thinner in the middle, heavier at the extremes—where prosperity is concentrated at the top and fragility mounts at the bottom. For every $1 increase in middle-class wages since the early 1970s, U.S. households faced approximately $2.30 in higher education costs, $2.10 in housing, and $1.50 in healthcare—effectively neutralizing wage gains. That is fragility in macro form.
The corporate reflex: consolidation
When organic growth stalls and customer bases thin, many firms reach for consolidation. If demand is soft, merge to cut costs and gain pricing power. If talent is scarce, merge to capture it. We’ve watched this play out across sectors: airlines, media, regional banks, and beyond. But consolidation is a short-term salve with long-term side effects. Layoffs to remove duplication suppress local demand. Increased employer concentration dampens wage growth. Fewer competitors mean more pricing power but often less innovation. The pie doesn’t get bigger; slices just shift, often away from households that drive broad-based spending.
There’s also the regulatory reality. U.S. antitrust enforcers have made it explicit: when an industry trends toward concentration, any new deal faces a higher bar. The DOJ/FTC Merger Guidelines emphasize how mergers that entrench dominance or worsen consolidation are presumptively harmful. The landmark Google search Antitrust case—the most consequential monopoly trial in decades—illustrates the moment: prosecutors argue Google spent billions to lock in defaults and foreclose rivals, putting every dominance-as-strategy playbook on notice. In this environment, a growth plan that leans on M&A over market expansion courts antitrust risk: years of litigation, blocked deals, forced divestitures, reputational drag.
The real hedge: equity is an operating strategy
If the story of a shrinking workforce ending in lower demand, corporate consolidation, and antitrust crackdowns sounds grim, it doesn’t have to be the ending. There is another path forward. The antidote to an eroding middle class (and the surest route to sustainable corporate success) is investing in people. In other words, pursuing equity as a business strategy. Expand the labor pool. Bring sidelined groups back into well-paid, upwardly mobile jobs. Remove barriers, including inequitable pay, biased promotion systems, and outdated immigration and licensing rules.
The payoff is enormous. Closing gender labor force participation gaps would inject $1.9 trillion into the economy, according to my proprietary analysis of BLS/Census labor-force data and standard GDP growth modeling. Even incremental moves pay: a 10% increase in intersectional gender equity in companies yields a 1 to 2% revenue lift.
From a corporate finance perspective, equity is a resilience strategy. In its most recent statement, the Federal Reserve warned of stagflation, with the economy slowing, job gains softening, unemployment creeping higher, and inflation staying elevated. In that environment, companies that embed equity at the core of their business strategy see, on average, a 50-point advantage in stock performance compared to the broader market. That’s because inclusive teams don’t just perform better in good times—they deliver higher returns on equity, strengthen governance, and lower the risks of fraud and insolvency when volatility hits.
What an equity strategy looks like
- Smart immigration reforms. Help fill shortage roles by fast-tracking skills translation and work authorization for internationally trained talent【Katie Couric Media】.
- Ensure fair pay and advancement. Ensure equitable pay at the moment decisions are made. Ensuring equitable pay for women would add $512B to the U.S. economy.
- Tap underutilized talent. 1M+ college-educated foreign-born women are unemployed or underemployed. Recognize foreign credentials.
- Build inclusive pathways into growing occupations. Expand access to skilling and transparent hiring in tech and innovation occupations where future growth is concentrated.
The growth choice ahead
Historically, women’s earnings have powered the middle class: more than 90% of middle-class income growth from 1979 to 2018 came from women’s increased earnings. Since 1970, female entry into the labor force has added $2 trillion to the U.S. economy.
Rebuild labor force participation and pay today, and you stabilize the core pillars of growth: demand (more customers with spending power), finance (deeper deposits and steadier credit performance), and insurance (broader, healthier risk pools). You also lower your regulatory temperature, because dynamic, expanding markets are less likely to trigger antitrust intervention. Equity, in this sense, is an antitrust-mitigation strategy. It grows the pie instead of re-slicing a shrinking one.
This is not an argument against AI. Used well, AI can augment human work and boost productivity per hour. But no algorithm can compensate for too few workers or too little pay. Build strategy on a shrinking labor base and a thinning middle class, and even the smartest models will optimize you into a smaller future.
Boards have a clear choice. Engineer earnings via consolidation and accept higher antitrust exposure while your addressable market narrows. Or expand your market by pulling women, foreign-born workers and especially foreign-born women back into good jobs, paying them equitable, and promoting them on merit. The first path buys time. The second builds resilience.
Antitrust doesn’t have to be your next big risk. Ignore the workforce that underwrites your business, and it will be. Rebuild the middle class and you rebuild sustainable growth. That isn’t a social agenda. That’s corporate strategy, at scale.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
Politics8 years ago