How Working Women Help the Economy

If someone asked you to name the most important economic trends of the last 30 years, you would probably respond with rising inequality, increasing globalization and fast-paced technological change.

But there’s another trend that has led to sharply higher economic output, and one that goes largely overlooked. That is the flood of women into the full-time workforce: Since 1979, the proportion of working-age women with a full-time job has surged to 40.7 percent from 28.6 percent. For mothers, the effect is even more striking: The proportion has climbed to 44.1 percent from 27.3 percent.

Those statistics come from a new report from the Center for American Progress, a left-of-center Washington-based research group. It finds that if women’s employment patterns had remained unchanged for the last three decades, the economy would be about 11 percent smaller, translating into $1.7 trillion in lost economic output in 2012, roughly equivalent to government spending on Social Security, Medicare and Medicaid.

The report also looks at the hours women worked, regardless of whether they were in full-time or part-time jobs. The median number of hours worked by women has climbed by 739 hours a year, to 1,664 hours; for mothers, hours worked has increased by 960 hours to 1,560.

The ultimate effects are richer families and a larger economy. Compare the United States to Japan, for instance. Tokyo has failed to jolt the Japanese economy out a generation-long slump, and the failure of the country to integrate women into the workforce is a major cause, according to researchers at institutions including the International Monetary Fund.

For cultural and economic reasons - Japan has a yawning gender pay gap - many Japanese women choose not to work. The female employment rate is 25 percentage points lower than the male employment rate, versus 14 percentage points in the United States and 5.7 percentage points in Sweden.

The United States could be yet stronger if more women worked, the authors of the Center for American Progress paper say. But there remain structural reasons that so many women stay home. Right now, about a third of all women and one quarter of all mothers do not work, they said.

Policies that would help women include regulations to foster greater flexibility in hours, mandatory paid family and medical leave and mandatory paid sick days that could be used to care for a child, they argue. “Even as mothers and women are making significant contributions to the U.S. economy, they continue to do so within a set of institutions that too often do not provide them with the kind of support that they need to do this successfully both at work and at home,” the authors write.