Report: The economy needs more working women

Written on Jan 03, 2018

Standard & Poor's chief U.S. economist says the U.S. would be in much better shape if women’s participation in the workforce hadn’t stalled in the 1990s.

In a podcast, Beth Ann Bovino said the U.S. economy could be much larger and more productive if it just kept adding women to the workforce at the same pace Norway has since the 1970s. She said addressing the issue would add much more to economic growth than the tax cut plan adopted in December.

“If the participation rate of women in the United States kept at the same pace as what happened in Norway, we would have today, as of 2016, an economy that is $1.6 trillion larger,” she said. “That means $5,000 for every man, woman and child in the U.S. It seems like it would be worth it.”

The pace of women joining the workforce in the U.S. slowed for many reasons, Bovino said. High among them: the lack of mandated paid maternity and paternity leave.

“The U.S. is the only country in the OECD that doesn’t provide income support during maternity and paternity leave,” she said, referring to developed countries in the Organisation for Economic Co-operation and Development. “If it costs a lot as a woman who is taking care of children, you are going to do a cost-benefit analysis and say: 'Is it worth it to get that paycheck when over 50% goes to child care? Maybe I’ll just stay at home.’”

Bovino, one of Wall Street’s leading economic forecasters, said finding ways to increase participation among women will be especially key in the coming decades as the baby boom generation retires.

“At a time when we have baby boomers leaving the workforce at a very sharp pace, having those women in the workforce over the next few decades, the productivity gains and the competitive edge that we would have, would grow the economy by leaps and bounds, by 5 to 10% going forward.”

On the public policy front, Bovino suggested adding a formal score, such as those done by the Congressional Budget Office, to every major piece of legislation, assessing how it would impact women in the workforce.

“Think about it as kind of a cost-benefit analysis on the decision to work, taking into account child care costs,” she said. “This is something that the CBO has done, or something similar, when the Affordable Care Act was being enacted.”

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