As the U.S. Congress rushes to approve a new tax bill that its proponents say will boost the American economy and bring more prosperity to its citizens, analysts say another method can ensure long-term economic growth. Economists say look no further than better policies to include women in the workforce for additional revenue.
A better work participation rate among women alone can increase the gross domestic product by up to 10 percentage points, a new Standard & Poor’s report shows. The New York-based financial service company looked at data from the 1990s to 2016 for countries from the Organization for Economic Co-operation and Development (OECD), a group of developed nations that promotes world trade and democracy.
The report’s findings: The U.S. economy would be $1.6 trillion larger today if American women entered and remained in the workforce at the same rate as women from Norway. Another way to conceive of the increase: $1.6 trillion would translate to roughly $5,000 more for every American.
“Women’s talents can be used in a whole variety of ways and there have been very large benefits from their inclusion in the workforce [in many other places in the world],” says Ryan Nunn, policy director for The Hamilton Project, an economic initiative of the Brookings Institution in Washington, D.C.
Finding the answer to increased female participation in the workforce is complicated, say analysts, and ties into re-examining education, as well as public policy in areas such as maternity leave and tax policy.
In the early 1970s, female work participation in America was below 45 percent. While men’s participation declined, women seemed willing to join the workforce and saw a rapid increase in their participation. By 2000, 59.9 percent of women in America were part of the workforce, a consistent increase from the 37.7 participation rate in 1960, a report of the non-partisan Pew Research Institute shows.
Decades of fluctuating figures later, the United States in 2016 reported a labor participation rate of 67.3 percent for women aged 15 to 64. Norway, which reported similar work participation levels in the 1970s as the U.S., today reports a work participation rate of women at almost 76 percent, one of the top five marks among OECD countries.
“Our labor participation rate for women was near the top in 1990 of about 22 OECD economies, but in 2016 we are near the last place,” says Beth Ann Bovino, U.S. chief economist at Standard & Poor’s.
The explanations for a decrease in the female workforce in America may be tied to cultural reasons and economic incentives, analysts say. Once they enter the labor market, research shows women in the United States also have a harder time compared to women in other developed countries. For instance, a study done by Pew in 2013 shows that women in America believed they were paid less than men for the same job and that it was harder to rise to management positions. Additionally, they quit their jobs more than twice as often as men because of family issues. What’s more, the U.S. is the only country in the OECD that hasn’t passed federal legislation that forces employers to provide paid maternity leave. Laws do exist at state level in places like California, New Jersey, and Rhode Island.
“One big obstacle for working women largely involves children,” says Bovino. “And of those [OECD] countries, the U.S. is the only one that doesn’t provide any income support for parental leave.”
Analysts are not optimistic about the prospects of work inclusion if policymakers don’t step in. Projections from the U.S. Bureau of Labor Statistics show that women will continue to be a minority in the workforce, peaking at 47.1 percent in 2025 and decreasing to 46.3 by 2060.
Solutions are many and untapped, analysts say. Opening up particular professional fields that have been traditionally dominated by men and draw higher incomes is one possible strategy. Careers in science, technology, engineering and mathematics – STEM – is one possible solution. Only 14 percent of the workforce in STEM careers is made up of women, but unemployment in those industries is around 10 percent.
“Promoting higher education in STEM fields and other areas conducive to careers traditionally pursued by men is the key that could unlock the earning power of American women,” reads the report from Standard and Poor’s.
Taxing married women individually instead of their household income could also increase women’s earning power and bridge the salary gap, as well as thinking about better sick leave and child care policies.
“There must be change, and all indications certainly suggest that society recognizes this time in history as ripe for a serious overhaul in relation to gender accessibility to the workforce,” the report concludes.
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U.S. Women Participating in Workforce at Lower Level Than Other Developed Countries originally appeared on usnews.com
