It’s time we acknowledge women’s contributions to the economy—and how much bigger a role they would play in a more inclusive economy

Women hold 49.5 percent of payroll jobs. The health of the female workforce is hugely important to the health of the overall labor force. And yet—in crucial ways—lawmakers in the United States have avoided commonsense policy changes that have been shown to make it easier for women to balance paid work and their still disproportionate share of responsibilities at home.

Policies like paid parental leave and subsidized child care increase parental labor force participation, which would boost the economy. Many of our peer nations have such policies, and, not surprisingly, their employment rates are much higher than ours. The figure below shows just how far U.S. women have fallen behind some of our international peers. The graph shows the share of women age 25–54 with a job between 1995 and 2015 in Germany, Canada, Japan, and the United States. While women’s prime-age employment-to-population ratio (EPOP) rose over that 20-year period in those peer nations, it actually fell in the United States.

Figure A

The share of prime-age women with a job has fared worse in the U.S. than in peer countries: Employment-to-population ratio of women workers age 25–54, select countries, 1995–2015

Canada Germany Japan United States
1995 69.434551%  66.360158%  63.233624%  72.189196% 
1996 69.577146% 67.220440% 63.701741% 72.770073%
1997 70.971110% 67.399584% 64.566038% 73.541046%
1998 72.183646% 68.944387% 64.036077% 73.642970%
1999 73.245982% 70.253128% 63.551051% 74.147991%
2000 73.944309% 71.210539% 63.582090% 74.213847%
2001 74.297867% 71.607431% 64.124398% 73.421299%
2002 75.348504% 71.845950% 63.863976% 72.259684%
2003 76.000458% 71.981067% 64.407421% 72.006189%
2004 76.720415% 72.129055% 65.028791% 71.848458%
2005 76.488663% 70.969949% 65.733178% 71.963537%
2006 76.984912% 72.647765% 66.614235% 72.504467%
2007 78.190906% 74.045933% 67.370518% 72.501768%
2008 78.008148% 74.744854% 67.495987% 72.301570%
2009 77.114622% 75.420875% 67.595960% 70.208609%
2010 77.075022% 76.320711% 68.157788% 69.343654%
2011 77.207691% 77.892216% 68.459240% 68.967922%
2012 77.710148% 78.235789% 69.161920% 69.196894%
2013 78.090883% 78.625264% 70.773639% 69.253713%
2014 77.444969% 78.839200% 71.835052% 69.997790%
2015 77.541653% 79.212303%  72.704612%  70.323786% 
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Source: EPI analysis of OECD Labour Force Statistics

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Higher employment among women would mean more earnings for families and more economic activity for the country. If prime-age women had the same EPOP in the United States as the average rate of Canada and Germany, 78.4 percent, there would be roughly 5.1 million more employed women in the U.S. labor force. All else equal, this would increase GDP by 3.4 percent, representing more than $600 billion in additional economic activity.1

Even if policymakers decided to address just one component of the difference in social policy between the U.S. and these peer countries and made an ambitious investment in accessible, affordable, and high quality child care, many more parents, especially mothers, would be available for paid work. If child care expenditures were capped at 10 percent of a family’s income, GDP would increase by as much as 1.2 percent, or $210.2 billion.

Figure B

Nearly all states’ economies would grow from policies that limit families’ child care expenditures: Increase in size of state economy from capping out-of-pocket infant care expenditures at 10% of income

State Increase in state economy Increase in state economy (in millions) Increase in state economy Increase in state economy (in millions)
Alaska 1.0% $562 1.9% $1,099
Alabama 0.3% $655 1.8% $3,665
Arkansas 0.8% $954 2.1% $2,518
Arizona 1.3% $3,853 2.1% $6,083
California 1.5% $33,498 2.1% $49,529
Colorado 1.5% $4,437 2.2% $6,595
Connecticut 1.2% $3,033 2.1% $5,340
Washington D.C. 1.6% $1,916 1.9% $2,246
Delaware 1.2% $774 2.1% $1,356
Florida 1.2% $10,404 2.1% $17,781
Georgia 1.0% $4,594 2.1% $10,156
Hawaii 0.3% $219 1.7% $1,321
Iowa 1.1% $1,793 2.1% $3,645
Idaho 0.9% $545 2.1% $1,340
Illinois 1.6% $11,490 2.3% $16,821
Indiana 1.2% $3,948 2.2% $6,989
Kansas 1.5% $2,177 2.3% $3,329
Kentucky 0.5% $939 1.8% $3,330
Louisiana 0.2% $625 1.7% $4,356
Massachusetts 1.6% $7,075 2.3% $10,271
Maryland 1.3% $4,378 2.1% $7,240
Maine 1.1% $623 1.9% $1,009
Michigan 1.3% $5,708 2.1% $9,284
Minnesota 1.5% $4,833 2.3% $7,237
Missouri 1.1% $3,180 2.3% $6,557
Mississippi 0.3% $290 1.9% $1,971
Montana 1.1% $472 2.0% $872
North Carolina 1.5% $7,135 2.4% $11,550
North Dakota 0.4% $232 1.7% $941
Nebraska 0.7% $771 2.0% $2,170
New Hampshire 0.9% $625 1.8% $1,252
New Jersey 0.7% $3,968 1.8% $9,931
New Mexico 1.4% $1,268 2.3% $2,122
Nevada 1.4% $1,925 2.2% $2,975
New York 1.6% $22,580 2.3% $31,736
Ohio 1.1% $6,583 2.2% $12,401
Oklahoma 0.8% $1,405 1.9% $3,429
Oregon 1.6% $3,333 2.3% $4,792
Pennsylvania 1.1% $7,560 2.0% $13,172
Rhode Island 1.5% $832 2.3% $1,230
South Carolina 0.7% $1,285 1.8% $3,351
South Dakota
Tennessee 0.4% $1,087 1.6% $4,897
Texas 1.2% $20,139 2.2% $35,942
Utah 0.8% $1,128 1.9% $2,692
Virginia 0.9% $4,176 2.0% $9,117
Vermont 1.3% $375 2.1% $623
Washington 1.4% $5,966 2.1% $8,978
Wisconsin 1.4% $4,093 2.2% $6,509
West Virginia 1.1% $787 1.9% $1,439
Wyoming

Note: These estimates use each state's median income for families with children and use Blau's (2001) finding that decreasing child care costs by 1 percent increases mothers' labor force participation by 0.2 percent.

Source: EPI analysis of CCAA (2015), U.S. Census Bureau American Community Survey, Current Population Survey Outgoing Rotation Group microdata, Blau (2001), and BEA (2016)

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A full menu of work–family policies ranging from paid family leave to affordable child care could go a long way in making it easier for women with children to enter or stay in the labor force. As a result, mothers’ labor force participation would increase substantially, helping to boost economic growth and close the gender employment gap and gender wage gaps.

1. These estimates use assumptions and methodology similar to Shierholz, Heidi (2014) “Paid leave is Good for Business” DOL Blog, December 19, 2014. Specifically, the percent change in GDP is approximated by the percent change in productivity + the percent change in average hours + percent change in employment. Assuming no changes in productivity and average hours, the percent change in GDP = the percent change in employment. If there was a large boost in employment, then it is likely that not all else would be equal; productivity and average hours worked might also change. Nevertheless, this exercise provides a back of the envelope sense of the amount of national income being “left on the table” due to the lower female labor force participation in the U.S. than our peer countries.