Two recent studies from S&P Global point to the possibility of a dramatic increase in global markets through increased use of women in the United States workforce. The first study, from 2017, highlighted the potential impact to U.S. markets. The latest one expands that to global markets.
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The Premise
The two papers do an excellent job of presenting their cases. The gist is that bringing women’s participation in the U.S workforce to levels found in other economies affiliated with the Organization for Economic Cooperation and Development (OECD) would lead to a series of economic changes.
The authors indicate that women’s increasing participation in the U.S. workforce could add $455 billion in output and $2.87 trillion in U.S. market capitalization across the next decade.
The U.S. is the world’s largest economy. As the U.S. goes, so goes the world, though to varying degrees.
Some economies would receive greater benefit than others, depending in large part on our trade relationships. The cumulative effect the authors illustrate is $5.87 trillion added to global markets across the next decade.
Why Specifically American Women in the Workforce?
The U.S. economy has an outsized impact on other economies. While increased workforce participation by a variety of groups could increase U.S. output — and thus global markets — there are specific factors to consider with American women.
For one, they lag behind their counterparts in developed countries, placing 20th in terms of workforce participation levels. The authors attribute U.S. women’s comparatively lower participation to policy, citing the U.S. as the only OECD country that does not legally mandate income support during maternity leave. This makes American women, as a cohort, potentially easier to influence via policy to increase workforce participation.
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Potential vs. Reality
When discussing potential, it’s important to contextualize the numbers. The numbers are often limits that can't be reached. This is not one of those cases. The authors detail the impact of increasing women’s participation in the U.S. workforce to match the levels of other OECD economies. It’s not outside of the scope of reality to believe this is possible. It’s not only possible, but also doable and important. However, as always, nothing changes if nothing changes.
Policy vs. Markets
Well-crafted policy can work wonders to influence significant change. Markets can likewise influence change. Their influence on change can be accomplished relatively quickly, but not necessarily to a specific result. They can cause dramatic change, but it’s not always the most beneficial kind.
Currently, the U.S. is enjoying a new level of low unemployment — the lowest in many years. This includes an unprecedented low unemployment rate amongst minority groups.
That said, workforce participation is not anywhere near its peaks, though continued growth should keep pressuring non-participants to re-enter the workforce. Market pressure can cause some positive change.
The problem with market pressure is that while it produces results, they are necessarily the results that we design.
Policy can be targeted — perhaps, for example, to influence the number of women entering into relatively higher-paying STEM careers. A hybrid approach — taking advantage of continuing growth in the U.S. economy, coupled with introducing policy initiatives to influence the direction and magnitude of change — could have the greatest result.
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All Change Matters
There are a number of ways to influence policy. They don’t, however, tend to be quick. Politicians respond to noise, and it doesn’t seem that many of them will move to address this issue quickly. But we should bring pressure, and to the largest extent possible. Collectively, our voices can reach a volume that's impossible to ignore. Every voice matters, each building upon the last.
Institutions can also lead change. Educational institutions can have a great impact on who pursues — or doesn’t pursue — a STEM career. Organizations hire and promote, and they can be held accountable: held responsible for poor behavior and rewarded for excellence.
Institutions can also lead change in new directions. There are other options to consider, as well: working from home, job sharing, specific career tracks designed to offset time taken for beginning a family, and more. Technology is also a potential asset in providing nontraditional options for women to enter and remain in the workforce.
Some times are ripe for change. This change is long overdue, and conditions have never been better.
