Let’s talk Womenomics: At a professional conference a few years ago, the speaker presented a black and white picture of three prominent founding men of the conference’s science. He named them in order, providing a brief description of their contributions. As he readied his pointer to click on the next slide, an audience member raised their hand and asked loudly, “Who is the woman in the picture?” As he began to answer that he wasn’t sure, another audience member shouted over him, “Someone’s wife!” A roaring laugh from the audience followed.
Women’s labor contributions, outside of domestic care, have long been overlooked. Relegated to the bottom right hand corner of the frame, peeking over the shoulders of men whose names have been etched into history, her role nameless except in relation to her domestic position. And yet, when a country focuses on increasing the participation of women in the national workforce, the economy as a whole improves. This idea is coined Womenomics and reflects how the economic empowerment of women positively impacts the economy.
Womenomics was first used in 1999 by a Goldman Sachs research report describing the link between Japan’s gender employment gap and gross domestic product. In a more recent report analyzing the impact of focusing on women’s participation in the workforce, Goldman Sachs stated, “gender diversity in the workforce is no longer an option, but an economic and business imperative.” The argument for prioritizing women’s inclusion and promotion within the labor force is not social or cultural. It is simply economic.
By focusing on barriers preventing women from contributing to the workforce, Japan has maintained and grown their Gross Domestic Product* (GDP) by an estimated 10% since 1999. Even with a shrinking workforce population. The country’s leadership enacted specific economic stability and growth policies like parental leave, flexible workplace dynamics, and business incentives promoting gender equality. The result was an exponential growth in women’s workforce participation, surpassing other countries’ percentage rates, including the United States.
Domestic Workforce Participation
Within the United States, women have joined the workforce at increasing rates since the 1950s. In 1990, 74% of working aged women were employed and by 2009 women held 48% of all jobs. This increase in participation is attributed to about a quarter of the current national GDP. Meaning if this growth had not occurred, our national economy would be 25% smaller.
Even as the women’s labor force has increased, there remains unrealized potential. In the decades since record setting numbers in the 90s, women’s labor participation and professional advancement have plateaued. While other countries have seen a steady increase in the number of women joining and remaining in the workforce, the percentage of women’s participation in the overall workforce in the United States has fallen more than 3% since 2000. A ranking of global data evaluating women’s labor contributions saw the US fall from second, in 1985, to 23rd. Barriers preventing women from joining, remaining, and fully participating in the workforce are also barriers to national economic growth.
McKinsey & Company is a trusted advisor to many of the world’s most influential businesses and institutions. It predicts that if all 50 states matched the percentage of women workforce participation of the top 10 states (at 84%), the United States economy would grow by as much as 4% GDP, greater than the nation’s historical growth rate.
Barriers to Participation
A significant factor preventing women from joining the workforce is related to child care. Including benefits for maternity leave and access to affordable daytime care for their children. Japan’s policy initiatives noted the combination of these factors as the “M-curve.” They addressed the barriers to increasing a woman’s return to work following the birth of their first child and women’s overall sustained employment. Data indicates focusing on just these two aspects resulted in a 12% increase in women returning to work and an almost 50% increase in women sustaining employment.
Considering domestic data in the United States, a similar trend emerges. Due to challenges with child care, almost 40% of women took significant time to care for their children. 25% of them quit their jobs to remain at home. This trend was only exacerbated by the COVID-19 pandemic, with about half as many women returning to work following the pandemic as men.
Roadblocks to Career Advancement
Working-age women hold more than 50% of the population’s higher education degrees, but their professional positions do not align with this educational marker. As women gain experience within their careers, barriers to leadership positions prevent women from advancement and even result in them leaving the workforce entirely. At each stage of the corporate hierarchy, the percentage of women represented decreases, resulting in women holding only 2-3% of Fortune 500 CEO positions.
Prioritizing women’s advancement into leadership roles can result in more than a quarter difference in return on investments. Companies with at least 19% women representation on their board of directors saw a 26% difference in return on invested capital compared to companies with zero women represented. Yet, less than 20% of board seats were held by women in 2016 — meaning more than 80% of companies left unrealized gains on the table simply by leaving women out of the board room.
Realization of the Gender Pay Gap
Women continue to be left behind when negotiating compensation. The equal pay gap in relation to their male colleagues remains above 15% — meaning that for every dollar their male colleague earns, a woman earns about 85 cents. Relative to the median salary in the United States, women are paid about $10,000 less per year than men holding the same position.
Even while making less overall, women are 14% more likely to participate in an investment or savings plan than their male counterparts. They are also more likely to invest in their children’s education. Therefore, closing the compensation gap for women would result in additional income for women and their families, as well as contribute to long-term economic stability.
S&P Global, a leading provider of financial information services, states a “shift to a more welcoming and equitable work environment would go a long way toward narrowing the difference — thus empowering women and spurring the economy that has struggled to grow equitable.”
A Hundred Years of Progress
Over the past century, the women’s labor force has made tremendous growth. The women’s workforce participation rate was about 35% in 1948, compared to about 75% within the last few years. Women are fully-employed in positions that require valuable skills and higher education. They are leading companies and holding seats on boards of directors. Women are slowly increasing their presence in fields previously dominated by men, and the gender pay gap shrinks every year.
For every achievement women have made in the workforce, the national economy has benefited. To continue this growth and reach new goals for women’s participation in the workforce, addressing barriers specific to women entering, sustaining, and succeeding within their careers is essential for economic sustainability.
There’s work to be done ladies!
*Not quite sure what Gross Domestic Product (GDP) actually means? It’s basically a measurement that determines how well (or how badly) a country’s economy is doing within a specific period of time.