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The Fastest Way To Stimulate The U.S. Economy? Get More Women Into The Workforce

But first, we need to address the obstacles. Canada already has.

The Fastest Way To Stimulate The U.S. Economy? Get More Women Into The Workforce

It’s tempting to think of the United States as a powerful behemoth that towers over its neighbor to the north, especially when it comes to economic metrics. The U.S. labor force and GDP dwarf Canada’s; California and Texas alone had larger individual GDPs than Canada’s $1.5 trillion in 2016. But Canada has the U.S. beat when it comes to a measurement that more economists are recognizing is critical to economic growth: the participation of women in the labor force.

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Both countries have seen more women moving into the workforce over the last 40 years, with 74% of Canadian women and 66.2% of American women holding jobs today. However, in Canada, the participation gap between working men and women in the workforce has been shrinking, while in the U.S., that gap has remained stubbornly wide for more than a decade. It sits at about 11% today, only slightly less than it was in the mid-1990s.

A new report by Citi Global Perspectives and Solutions (GPS) examines women’s contributions to the global economy and the potential benefits of women’s economic empowerment. Chief among those benefits: explosive growth.

But at a time when growth is a huge part of the national political conversation, creating favorable conditions for women in the workforce is still not a policy priority in Washington. The U.S. remains something of an outlier among developed nations, and ranks lower than most of its cohort when it comes to gender equality in the workforce, sitting 45th on the United Nation’s Gender Equality Index, well below Canada at 18th.

Why does the U.S. sit so low on the list? According to Tina Fordham, Citi’s chief global political analyst and a co-author of the report, “These are relative rankings. Other countries, including Canada, started making a real effort to level the playing field decades ago. The United States did not institute any of these kinds of policies. So we fell.”

Dana Peterson, North America economist with Citi Research and another co-author of the report, explains: “In Canada, they’ve actively tried to improve access to full-time paid work for women and have made a number of government interventions, such as guaranteed paid-family leave, tax benefits for families with children, and pay equality legislation. And, at the corporate level, there’s been a concerted effort to make sure that women are being compensated adequately for the same types of work.”

American women, especially those tasked with caring for children or elderly relatives, confront sizable barriers to full participation in the workforce. Beyond the tax penalties second earners often face (also known as the “marriage penalty”), the high cost of childcare and unstable working conditions keep many women sidelined.

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“Especially among the low-wage sectors, a lot of the work is part-time and uncertain,” Peterson says. “You don’t know what your hours might be from week to week. For many women, facing a choice between having very erratic working hours and income, and caring for a child or a dependent adult, they make the choice to not work.”

Overcoming these problems isn’t simply a “women’s issue,” says Fordham, “but a challenge for the workforce as a whole. “The key is to frame this issue as gender neutral. Things like flexible work schedules, parental leave, the ability to get back into the workforce after taking some time off, these are all things men want as well, especially younger men,” she says. “It’s an argument for making it easier for people of childbearing age to be successful in the workforce.”

Failing to close the gender gap, whether from an absence of political will or a broader lack of urgency, is a major missed opportunity for the U.S. economy. “When you increase female labor force participation, and especially when you increase the amount of time that women are working throughout their lifetimes, it can generate faster growth for the economy,” Peterson says.

The report estimates that among countries in the Organization for Economic Cooperation and Development (OECD), GDP would, in theory, spike 20% over the next 10 or 20 years if women’s participation in the global economy were equal to that of men’s. A more realistic narrowing of the gender gap—say, 50% of participation in the workforce–would yield an estimated 6% rise—a boost worth trillions of dollars.

The key to sparking action from a bitterly polarized government may lie in those economic numbers. As Fordham says, “Why do we get changes in policy? There needs to be a political upside for leaders. And that’s why the growth argument is so important. The kinds of policies that could help close the gender gap are not radical ideas. They should be nonpartisan, politically neutral. But they have not been presented as part of a package that can help lead, not only to growth, but to competitiveness, to greater well-being.”

The recent uptick in the number of women entering politics at the state and local level could very well prompt changes in the labor market. “If we’re going to make progress, says Peterson, “it’s really important that more women have a seat at the table, and raise these issues in a way that says, this isn’t just about fair or unfair, but about improving growth, and making our country better.”

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Adds Fordham, “Short of a critical mass of women entering office, we need a senior person to lead the agenda. And we need leadership from men as well. It’s not a Republican or a Democrat issue. Frankly, I think it’s low-hanging fruit for the taking, a huge opportunity for leaders in the U.S.”


This story was created for and sponsored by Citi.

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