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Women in the economy
Report

The 51%: Driving growth through women’s economic participation

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Introduction

The U.S. economy will not operate at its full potential unless government and employers remove impediments to full participation by women in the labor market. The failure to address structural problems in labor markets, tax, and employment policy that women face does more than hold back their careers and aspirations for a better life. In fact, barriers to participation by women also act as brakes on the national economy, stifling the economy’s ability to grow. The lives and fortunes of women in the workplace affect us all.

The evidence for these arguments is strong. The evidence also speaks decisively for the proposals in this volume, backed by decades of research, which will allow labor markets to make the best use of women’s skills, and permit women, families, and the broader economy to prosper as a result.

Since the turn of the century, American women’s labor force participation has declined. Today, large gaps remain between men and women in the jobs they hold, the wages they earn, and their overall economic security. We don’t have all the answers to explain this recent trend. But we do know some of what limits American women’s labor market opportunities. It is inflexible rules at many workplaces, which require long hours and penalize the wages of women who must balance demands at home. It is the failure of the United States to adopt national policies on paid leave for mothers following the birth of their children. It is the choice women are forced to make between child care and paid employment, or between child care and educational success.

It is the majority of workers who lack access to paid sick leave in order to deal with their own or a family member’s health. These and other failures to address the conflicts between work and family impel many women to leave employment entirely. These problems are compounded when they become disabled, lose their spouses, and face economic insecurity late in life.

The U.S. economy does not have to function this way.

Instead, we can adopt evidence-based public policies that will provide better outcomes for women, make work pay, and help women restore control over their lives so they can meet their obligations and contribute to the economy amidst the conflicts of work and life. Public policy can do that. Making the optimal use of women’s talents and drive must become an active and urgent concern for those with a stake in America’s economic success.

To address these issues, the following policy papers were published on October 19th in conjunction with the joint Hamilton Project, LeanIn.Org, and Stanford Law School event, “Policies to Promote Women’s Economic Opportunity.”

While women’s labor force participation has increased substantially in the U.S. over the second half of the 20th century, this growth has stagnated and reversed since 2000. This pattern persists across women of varying races and ethnicities, educational backgrounds, ages, and marital statuses, and for women with and without children alike. Black, Schanzenbach, and Breitwieser note that this decline seems to be moving directly against the trends observed in other major OECD economies.

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Business People Having Board Meeting In Modern Office.

The gap between wages of men and women has fallen over the past several decades, reflecting women’s economic progress. Successive generations of women have obtained more education and received higher wages, entering a broader range of occupations that had previously been male-dominated. However, a significant gender wage gap remains. Nunn and Mumford point out that occupational segregation, differences in academic specialization, difficulty in balancing work and household responsibilities, and wage discrimination—among many other factors—likely underlie much of the remaining gender wage gap.

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Young woman moving boxes in a warehouse.

Women now make up almost half the U.S. workforce, and more than half of the U.S. population. Despite the central role women play in the economy, our labor laws and institutions do little to address the various ways in which women are held back at work. This not only hampers women’s economic well-being, but also has implications for U.S. productivity, labor force participation, and economic growth. In this paper, Ansel and Boushey propose policies aimed at boosting women’s economic outcomes: paid family leave, fair scheduling, and combatting wage discrimination. They show how enacting carefully designed policies will better address the challenges of today’s labor force, enhance women’s economic outcomes, and provide benefits for the national economy.

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The mother of a woman with a baby cooks the food in a pot on the stove.

The Earned Income Tax Credit (EITC) is a refundable tax credit that promotes work. Despite the strong evidence for the effectiveness of the EITC and recent bipartisan expansions, the maximum EITC has been frozen in inflation-adjusted terms for most families since 1996, so the 25 million EITC families with fewer than three children have not seen a real increase in more than 20 years. The authors propose to build on the successes of the EITC with a ten percent across-the-board increase in the federal credit. This expansion would provide a meaningful offset to stagnating real wages, encourage more people to enter employment, lift approximately 600,000 individuals out of poverty, and improve health and education outcomes for millions of children.

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Ordinarily, the progressive income tax system acts to mitigate differences in before-tax earnings. However, the tax treatment of married couples tends to raise the tax rate faced by the spouse who is the lower earner in a couple. This group of spouses, often referred to as secondary earners, is still predominantly female. Consequently, the current tax treatment of married couples reduces wives’ labor force participation and creates other inefficiencies. LaLumia proposes a new second-earner deduction equal to 15 percent of the earnings of a lower-earning spouse. The proposed deduction would raise the after-tax return to work for many wives, encouraging an increase in married women’s labor supply, and would reduce marriage penalties on average.

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Popular commentary often points to the lower lifetime earnings and longer expected life spans of women relative to men as a reason to be especially concerned about the economic risks women face as they age. Indeed, women aged 65 and older are twice as likely as their male counterparts to live in poverty. Disability and widowhood are major drivers of economic insecurity for women later in life. To reduce the risk of economic insecurity among older women, the authors propose to allow Social Security beneficiaries to forgo some benefits when claiming to finance greater benefits in the event of widowhood, disability, or both. The proposed changes would be voluntary and self-financing.

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Female Neighbor Giving Senior Woman A Lift In Car. iStock/Highwaystarz-Photography

The rapid growth of the older population in the United States will dramatically increase the need for elder care, most of which will be provided at home by family members. Supporting an older person sometimes comes at the cost of leaving the labor force, particularly for caregivers in jobs with an inflexible work schedule. This paper proposes a federal earned sick leave mandate guaranteeing one hour of flexible, multi-purpose sick leave for every 30 hours worked. By helping workers periodically adjust their work schedules to accommodate intermittent and urgent caregiving activities, paid sick leave would increase both home caregiving and employment, as fewer workers would be forced to choose between these activities.

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Father At Home Sitting And Holding Newborn Baby Son.

Despite widespread public support for paid parental leave, the United States is the only industrialized country without a national policy providing mothers with rights to paid leave following the birth of a child. Ruhm proposes a national paid leave program that entitles both mothers and fathers to 12 weeks of paid time off work. The proposal includes job protection during the leave, broad eligibility, and income-tiered wage replacement rates. The program would be financed by general revenues and administered by a new office established within the Social Security Administration, with program evaluation scheduled three to five years after initial implementation.

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Preschool children in a classroom for story time.

Child care is a necessity for working women with young children. However, the costs of high-quality center-based child care in the United States—particularly for children under age five—are prohibitively high for many families. In this proposal, Elizabeth Cascio describes a multifaceted approach to child-care policy that reduces the financial burden of child care, encourages maternal employment, and supports child development. The proposal would replace existing federal child-care tax policies with a single refundable federal child-care tax credit that is more generous to lower-income families and families with children under the age of five. To address child care quality, Cascio proposes investments in Quality Rating and Improvement Systems and in expansion of universal preschool for four-year-olds. State and local governments could pursue these investments on their own or with federal assistance.

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Women have surpassed men in college enrollment. This trend is particularly pronounced among nontraditional students, including part-time and older students—two groups that face significant challenges in higher education. For the 4.8 million college students who are parents, high-quality, reliable, and affordable child care is essential. Long proposes building on the Child Care Access Means Parents in School (CCAMPIS) Program to structure an institutional grant program that better supports the availability of high-quality child care for parents pursuing postsecondary credentials (student-parents). Compared with the existing federal program, the proposed program would be larger and better targeted to address the substantial needs of low-income student-parents.

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