“We have an opportunity to add 5%-10% to nominal GDP by attracting more women to the workforce.” That’s the conclusion of The Key to Unlocking U.S. GDP Growth: Women, a recent paper released by S&P Global Ratings.
In 1990, 74% of women ages 25–54 were in the U.S. workforce. This placed the U.S. 7th among countries in the Organization for Economic Co-operation and Development (OECD). By 2016, only 57% of U.S. women were in the workforce, ranking the U.S. 20th out of 22 OECD countries.
“If women entered, and stayed, in the workforce at a pace in line with Norway, the U.S. economy would be $1.6 trillion larger than it is today,” states the paper. The authors also mention less quantifiable benefits: Women are more likely than men to participate in job-related savings plans and to invest a large percentage of their household income in their children’s education.
The S&P Global Ratings paper isn’t the first to look at how women in the workforce can increase GDP. A February 2017 report from UBS Financial Services drew the same conclusion on a global basis: “If women participated and were paid in the workforce at ‘best in region’ rates, global GDP would climb 11%.”
Women’s Biggest Obstacle
The S&P Global Ratings paper suggests the biggest challenge for working women is bearing and raising children. The U.S. is the only OECD country that doesn’t legally require paid maternity or parental leave.
“For single mothers, full-day care for an infant requires 41% of median income.” Yet, only 5% of workers in the bottom 25% of income distribution have an employer that offers paid family leave, according to the Bureau of Labor Statistics (BLS). Thus, most lower-income workers have to choose between taking care of a child and keeping their job.
Paid parental leave was an issue addressed by the 72nd UN General Assembly in a high-level discussion in September 2017: “Unequal pay, disproportionate burden of unpaid care work, and lack of paid parental leave for women and men, are ultimately holding back women in the world of work… Paid parental leave is not only a matter of rights, but smart for the economy.“
Public policies can make it easier or more difficult for women with children to enter or stay in the workforce. The S&P Global Ratings paper states the importance of rethinking policy (and policy tools) in a way that breaks through the structure of short-term politics and looks “beyond simply supporting women with family obligations.”
The paper’s takeaway: “If we want to spur the pace of growth in the world’s biggest economy to its potential, underutilization of our greatest economic resource is no longer a viable option.”