EASY MONEY

If the US treated women more like Norway it would be $1.6 trillion richer

In the US, the proportion of women participating in the workforce peaked in 2000 and has been drifting lower ever since. As the country tries to figure out ways to boost productivity growth and improve living standards, a report by Standard & Poor’s argues that the solution can be found in an underused economic resource: women.

If women entered and stayed in the workforce at the same rate as they did in Norway, the US economy would be $1.6 trillion larger than it is today, according to economists at S&P.

After the Second World War, women joined the US labor market in droves. In the 1970s, the US and Norway both had female labor participation rates just below 45%. By 2016, that figure grew to 76% in Norway, but it was just 67% in the US. Had the US followed Norway’s path from the 1970s, S&P estimates that every person in the country would have an extra $5,000, which doesn’t even include the economic gains that might have come from higher productivity growth, given women’s education and work experience.

According to S&P, if more efforts were made to include women in the American workforce, particularly in professions traditionally dominated by men, the US could experience a 5% to 10% increase in GDP in the next few decades. This would also help offset a shrinking labor force due to an aging population. Overall, labor force participation has recently fallen to a 40-year low.

There are some signs of improvement. For example, there have been increases in women studying STEM subjects and working in male-dominated fields. However, there are still major hurdles. Part of the reason why the US has such a low rate of female labor force participation is because it is the only country in the OECD that doesn’t provide income support during maternity or parental leave by law. A 2013 study by the Pew Research Center found that 27% of mothers said they had quit their job at some point for family reasons, compared with only 10% of men.

The authors of the S&P report say they aren’t advocating that the proportion of women in the workforce necessarily needs to be equal to the rate for men. Instead, a “cultural shift to a more welcoming and equitable work environment” would help close the gap. There would also be positive side effects from women boosting their personal incomes, as studies have shown they are more likely to spend household budgets on children’s education and healthcare.

The report also includes some practical suggestions policymakers could take to speed up efforts to promote gender equality in the workforce. One is to have a dedicated “score” from the Congressional Budget Office. Right now, the CBO’s scores are used to assess how proposed legislation will affect the federal budget, but S&P suggests including another score that shows how laws would impact “the economic feasibility and accessibility to the workforce for women.”

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