Advancing women’s equality could add $12 trillion to the global GDP by 2025. Here in the U.S., it’s between a $2.1 trillion and $4.3 trillion addition to the country’s GDP in the next decade. If every state and city made progress toward gender parity, they could add at least 5% to their own economies. Half of U.S. states can add more than 10%.
No wonder U.S. Treasurer Rosie Rios says, “It is not a gender issue, it’s about the economy.”
Rios was speaking at New America’s Better Life Lab for the D.C. launch of a new report by the McKinsey Global Institute (MGI). With a nod to MGI’s 68-page “Power of Parity” report, Rios stressed the importance of data and research to achieving parity and the subsequent boost to the economy. “More women at the top is good for business,” she says. But unless you look at the detailed data, Rios contends, you won’t know where attention should be paid or applied.
With 14.4 million jobs created over the last 73 straight months, Rios underscores the importance of investing in human capital in order for business to thrive and the economy to grow. “So many facets of this report spring us to action to get real motivational change,” she says. Ultimately, Rios believes that for a democracy to do what it’s meant to do–“give voice to the voiceless”–it has to put an emphasis on inclusivity.
Jonathan Woetzel, director of McKinsey Global Institute, concurs. He sees social and economic issues as inseparable. “If you want to have gender equality in work, you have to have it in society,” he told the audience at the event.
One of the ways to get society and work to achieve parity is to examine where things stand now. The MGI report analyzed key metrics in 95 countries. The report found that among developed economies, the U.S. has the most potential for gains, especially in the short term. The rising tide of millennials hasn’t yet offset the number who are aging out. The report notes that some experts say the number of working-age people in the economy is down from from 84% in 1990 to 81% in 2015, coupled with slowing technological progress, which could also slow the growth of the GDP.
On a state-by-state level, all 50 have been shown to have either high or extremely high gender inequality right now. The states were graded according to a parity score, which is based on 10 indicators including labor-force participation rate, professional and technical jobs, higher education, maternal mortality, leadership and managerial positions, unpaid care work, single mothers, teenage pregnancy, political representation, and violence against women.
The U.S. as a whole didn’t do well on the latter six “impact zones,” notes Kweilin Ellingrud, a principal with McKinsey & Company. “For every 100 men in leadership, there are only 66 women,” she says, pointing out one of the inequities revealed by the report.
But just getting more women into the workforce could potentially have the biggest impact on the economy. Thirty-eight percent of that $2.1 trillion addition to the GDP would come from increasing labor force participation. The Bureau of Labor Statistics (BLS) currently predicts that there’s going to be a decline in the number of women between the prime working ages of 25 and 54 to 72% in the next decade due to the slowing growth of population and the number of people getting older.
Then there’s the gap between part-time and full-time work. Men are more likely to work full-time, while Ellingrud notes that women hold 64% of part-time jobs. On average, a woman in the United States works 89% of the paid work hours of a man, which works out to be a little over one hour less per day, based on a 10-hour working day.
However, women do double the amount of unpaid care work that men do. Ellingrud points out that taking care of children, loved ones, or the elderly make up only 20% of unpaid care work. The rest: shopping, cooking, cleaning, and the like are what make up the bulk of this unpaid work. The report notes that this work is counted as GDP, “but it could be valued, using conservative assumptions based on available data on minimum wages, at an estimated $1.5 trillion a year,” the authors write.
Other factors such as single motherhood and the number of teen pregnancies can also have a huge impact on the ability of women to participate in the workforce, she says.
As much as 30% of a boosted GDP could come from getting more women into higher-productivity sectors such as manufacturing instead of where they dominate: health, social work, and education. While these industries are growing, they have less of an impact on the GDP per worker, and women in those roles earn less.
“It is, however, unlikely that women in the United States will attain full gender equality at work within a decade, because the barriers hindering women from participating in the labor market on par with men are unlikely to be fully addressed within that time frame and because, ultimately, such participation is a matter of personal choice,” the report’s authors write.
But there are ways to start addressing the gap now, according to the members of a panel at the event. Barbara Byrne, a vice chairman at Barclays, emphasizes the importance of having women take on more positions that directly impact businesses’ bottom lines. “Power is where the money is,” she says, noting that women tend to drop out during the so-called VP years. “If you can get them to their 40s, they will stay,” she observes.
Alternately, it’s important to get women back into the workforce after they’ve taken a hiatus to care for a child or an elder. Byrne recalls a program called Encore that was put in place during her time at Lehman that was aimed at getting women back in the workforce. A similar program is being put in place now, she says, that will give women who’ve stepped off the career ladder a paid (in the six figures) internship for six months that can position them for a permanent role.
Wanda Walker, director of program excellence at the Jeremiah Program, which assists single mothers who are working toward earning a degree, underscores the importance of workforce flexibility and paid leave. “It is expensive to be poor,” Walker says, referring to the cost of child care when there is no supporting partner and the primary caregiver is in a low-wage job.
Debbie Walsh, director of the Center for American Women and Politics at Rutgers University, points out the impact that women can have in government where they are currently underrepresented among elected officials. “Women run to do something, men run to be somebody,” she says. Therefore women are more likely to work for a nonprofit. Walsh contends, “You need to be inside where policy is being made to make systemic change.” To counter their reluctance to run for public office, Walsh suggested that women be more actively recruited for open positions.
The panelists agree that there’s plenty of work to be done; however, the economic potential of $2.1 trillion is hard to ignore. But as Treasurer Rosie Rios says, “This is the beginning of a larger conversation.”