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Driving Growth Through Women's Economic Participation THE % THE 51 51 % Driving Growth through Women’s Economic Participation Edited by DIANE WHITMORE SCHANZENBACH and RYAN NUNN The 51% Driving Growth through Women’s Economic Participation Edited by Diane Whitmore Schanzenbach and Ryan Nunn OCTOBER 2017 ii Acknowledgments The Hamilton Project wishes to thank members of its Advisory Council for their valuable contributions to this book. In particular, the Project is grateful to Roger C. Altman, Penny Pritzker, and Robert E. Rubin for helpful discussions and insights. The contents of this volume and the individual papers do not necessarily represent the views of individual Advisory Council members, nor do they necessarily represent the views of the institutions with which the papers’ authors are affiliated. The Hamilton Project is also grateful for the expert feedback provided by participants at the May 2017 authors’ conference held at the Brookings Institution. We appreciate the contributions of everyone who participated in that meeting. The editors appreciate insightful comments from Jay Shambaugh as well as the outstanding work of The Hamilton Project staff on this book. Kriston McIntosh provided expert guidance on all aspects of production. Lauren Bauer, Audrey Breitwieser, and David Dreyer contributed substantially to the development of the book. Patrick Liu, Megan Mumford, Greg Nantz, and Becca Portman provided superb research assistance. We also gratefully acknowledge the contributions of Karna Malaviya, Carmel Steindam, Alison Hope, Brianna Harden, Vesna Asanovic, Anna Rotrosen, and Melanie Gilarsky. The policy proposals included in this volume are proposals from the authors. As emphasized in The Hamilton Project’s original strategy paper, the Project was designed in part to provide a forum for leading thinkers across the nation to put forward innovative and potentially important economic policy ideas that share the Project’s broad goals of promoting economic growth, broad-based participation in growth, and economic security. The authors are invited to express their own ideas in policy papers, whether or not the Project’s staff or advisory council agrees with the specific proposals. These policy papers are offered in that spirit. iii Table of Contents Foreword 1 SECTION ONE Women and the Modern American Economy 3 The Recent Decline in Women’s Labor Force Participation 5 Sandra E. Black, Diane Whitmore Schanzenbach, and Audrey Breitwieser The Incomplete Progress of Women in the Labor Market 19 Ryan Nunn and Megan Mumford SECTION TWO Policies to Support Women from Career through Retirement 33 Modernizing U.S. Labor Standards for 21st-Century Families 35 Bridget Ansel and Heather Boushey Making Work Pay Better Through an Expanded Earned Income Tax Credit 57 Hilary Hoynes, Jesse Rothstein, and Krista Ruffini Tax Policies to Encourage Women’s Labor Force Participation 71 Sara LaLumia Increasing the Economic Security of Older Women 81 Jason Brown and Karen Dynan SECTION THREE Policies to Address the Needs of Caregiving Women 91 Expanding Access to Earned Sick Leave to Support Caregiving 93 Nicole Maestas A National Paid Parental Leave Policy for the United States 107 Christopher J. Ruhm Public Investments in Child Care 123 Elizabeth U. Cascio Helping Women to Succeed in Higher Education: Supporting Student-Parents with Child Care 143 Bridget Terry Long About the Authors 157 iv 1 Foreword he Hamilton Project has published this book of economic research and public policy Tproposals to get across one core idea: 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 findings 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. These proposals are an effort to accelerate progress that has already occurred in the last half of the twentieth century. As Ryan Nunn and Megan Mumford remind us, when educational and labor market opportunities opened up for women, “tens of millions of American women attained postsecondary degrees, entered the labor force, and earned wages that have grown over time.” The economic value of this development is simply staggering. According to a report by the Council of Economic Advisers in 2015, the economy is $2 trillion larger than it would have been had women’s participation and their hours worked remained at their 1970s levels. Put another way, without the growing contributions of women to the labor force, the authors report that “national income per capita would have been at least 14 percent lower than it actually was.” With the fuller use of women’s talents came greater labor market efficiency which, in turn, enhanced economic growth. However, sometime around the turn of the century, as Sandra Black, Diane Whitmore Schanzenbach, and Audrey Breitwieser write, growth in women’s labor force participation reversed. By contrast to their counterparts in France, Canada, the United Kingdom, and Japan, American women have lost ground. 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 2 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. Since its inception, The Hamilton Project has worked to understand and offer evidence- based solutions for precisely the types of challenges described in this volume. The Hamilton Project offers these ideas with confidence in the evidence behind them and in the efficacy of the approaches on which they are based. Reversing the decline in women’s workforce participation is vital for economic growth. By acting to remove barriers to women’s participation, we can realize stronger economic growth that will be more broadly shared by the American people. ROGER C. ALTMAN PENNY PRITZKER ROBERT E. RUBIN 3 SECTION ONE Women and the Modern American Economy 4 5 The Recent Decline in Women’s Labor Force Participation Sandra E. Black, University of Texas at Austin and the Brookings Institution Diane Whitmore Schanzenbach, The Hamilton Project, the Brookings Institution, and Northwestern University Audrey Breitwieser, The Hamilton Project Abstract 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, with women’s labor force participation falling by 3.5 percentage points. This pattern persists across women of varying races and ethnicities, educational backgrounds, ages, and marital statuses, and for women with and without children alike. Interestingly, this decline seems to be moving directly against the trends observed in other major OECD economies. In order to facilitate economic growth in the United States, policies should be directed toward enabling and encouraging women to participate in the labor force. Introduction Over the past half century, women have made substantial progress in the labor market. One place this is most visible is in the growth of women’s labor force participation: between 1962 and 2000, women’s labor force participation—defined as the percentage of women ages 16 and older either working or actively looking for work—increased dramatically, from 37 percent to 61 percent. This increase in women’s labor force participation was enough to offset the declining labor force participation rate of men, which had been steadily falling for more than 60 years, so that overall labor force participation was actually increasing until 2000. The economy has benefited greatly from this increase in labor force participation among women. Estimates suggest that the economy is $2.0 trillion, or 13.5 percent, larger than it would have been had women’s participation and hours worked remained at their 1970 levels. Women’s income also accounts for the majority of the increases in family income since 1970 (Council of Economic Advisers [CEA] 2015). However, beginning in 2000, the positive trends slowed and even reversed: women’s participation fell from 60.7 percent in 2000 to 57.2 percent in 2016.
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