A new report from S&P Global suggests that increasing female participation in the workforce could pay big dividends
Women could be the key to making America’s economy great again.
President Donald Trump raised the eyebrows of some economists when he boasted that he could grow the United States economy by a higher-than-average 4% a year. That jury is still out, but a new report from S&P Global concludes that America will need more females in the labor force if those sort of growth levels are to be attained.
“A dual-pronged effort of increasing entry and retention of more women to the American workforce, particularly those professions traditionally filled by men, represents a substantial opportunity for growth…with the potential to add 5%-10% to nominal GDP in a few decades,” the study’s authors wrote. The U.S. economy grew at an annualized rate of 3.3% in the third quarter of this year, but long-term expansion is forecast to be significantly less due to low productivity and a shrinking labor force as baby boomers retire.
The authors add that if American female labor participation had grown in line with that of Norway between 1970 to 2016, the U.S, economy would be $1.6 trillion, or around 9%, larger today. About 57% of adult American women are active in the workforce, down from a peak of 60.3% at the tail end of the dotcom era, data from the Bureau of Labor Statistics show. In Norway, the figure is comfortably above 60%. (The report does note the higher propensity of women to be employed part-time in countries with more flexible policies—a double-edged sword that could make it harder for women to return to more financially lucrative, full-time work.)
The benefits of having more women in the labor force aren’t a secret. As the financial analytics firm notes, women are more likely to invest in their children’s education than their male counterparts—an act that seeds growth for the future. S&P Global also cites a Vanguard study that notes females sock more money away in their retirement funds than men—a finding that relieves the economic burden on younger people (That said, men typically have more stored away in defined contribution plans because of their larger incomes.) And of course, there’s the risk of letting a potential genius—Alberta Einsteins and Carla Sagans, the report tritely terms them—slip away when the potential of half the country’s population isn’t tapped.
There are some concrete steps that would be taken, without great difficulty, to realize these benefits. These include some that are being advocated by Trump administration power brokers like Ivanka Trump, such as instituting generous parental leave policies, which make it easier for women to return to work, and encouraging more girls into lucrative STEM careers. S&P also advocates that the nonpartisan Congressional Budget Office score legislation based on the impact that it would have on women in the workforce; a measure with echoes of recent moves in New York State.
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