The growth rate for the U.S. has averaged around 2.5% through the economic recovery, but if Washington wants to see it accelerated it should focus on policies that help women at work.
A recent report from S&P Global argues that promoting the entry and retention of more women in the workforce, particularly in STEM fields, could create a “substantial growth opportunity,” with the potential to add 5% to 10% to nominal GDP in a just few decades.
For the study, economists at S&P Global compared the U.S. to different countries. They highlighted Norway as an example and found that if the U.S. hired and retained women at a pace in line with the Scandinavian country the US economy would be much larger today.
“In the early 1970s, Norway and [the] the U.S. were about the same in terms of female participation rate. Norway took off. The U.S. slowly kept up, but barely,” S&P Global chief U.S. economist Beth Ann Bovino told Yahoo Finance. “And what we found is if women entered the workforce at the pace of, say Norway, what we’d find is the U.S. economy today would be $1.6 trillion bigger than it is right now. To put it in perspective, that’s $5,000 in each man, woman, and child’s pocketbooks today.”
The US has stagnated
Last year, then-Fed Chair Janet Yellen pointed out that the labor force participation rate of prime working-age women in the U.S., those between 25 and 54, was near the top for the 22 advanced OECD countries in the early 1990s.
“By then, the share of women going into the traditional fields of teaching, nursing, social work and clerical work declined, and more women were becoming doctors, lawyers, managers, and, yes, professors,” Yellen said. “As women increased their education and joined industries and occupations formerly dominated by men, the gap in earnings between women and men began to close significantly.”
Since then, however, the U.S. has stagnated, and other countries have outpaced it. As of 2016, the U.S. was close to the last place, ranking 20th out of the 22 countries for prime-age female labor force participation, the S&P report noted.
Roadblocks for US women
The S&P economists looked at the barriers many women face, with childcare being the main one.
“For those women who want to work, how do we make it easier for them? What we found for them is the biggest roadblock is the burden of childbearing and rearing,” said Bovino.
Presently, the U.S. is the only OECD country that doesn’t mandate that companies provide income support during maternity or parental leave. What’s more, approximately 39% of mothers take significant time off after having kids, and more than 25% of women leave the workforce altogether, the report noted.
Women also often find that they can get penalized for taking time off because they’re not networking or at the table. That’s why flexible work schedules are important, Bovino said.
“Another factor that is a roadblock for women, and men for that matter: We talk about just the three months [after] having a child, but it doesn’t stop there. Five years, ten years, kids going to school, all those things. How do we factor in flex time?” she adds.
One proposed solution to help change all of this is a Congressional Budget Office–like score for legislation to measure its potential economic contribution, including the impact on unemployment, labor force participation and productivity.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.