Paying Men and Women Equally Could Add $4.3 Trillion to US Economy
Gender pay inequality isn't just unfair — it's also a missed financial opportunity.
Women with full-time jobs still make $0.78 for every dollar a man makes, according to the White House. Just in time for Equal Pay Day, the McKinsey Global Institute released a report estimating the economic impact of balancing gender ratios across sectors, with women working as many hours as men and being paid the same rate.
The results are, frankly, astonishing.
It helps the economy to pay women more. According to the report, the U.S. is on pace to grow its annual gross domestic product to $22.1 trillion by 2025 — an increase of $4.9 trillion from 2014. However, if the U.S. erases the gender gap in the workplace by awarding women equal hours, pay and positions, it stands to add an extra $4.3 trillion to the GDP by 2025 — a total of $26.3 trillion in annual GDP.
Social change takes time, so it's unlikely this level of gender parity will happen in the next 10 years, according to the report.
But it does offer a more achievable scenario: If every U.S. state takes steps to lower gender inequality — steps that match the state with the fastest improvement rate over the past 10 years — then the U.S. might be able to land an additional $2.1 trillion in annual GDP by 2025. This could mean reducing teen pregnancy or creating more job opportunities.
Gender inequality by state: To understand each state's gender disparity, MGI developed the State Parity Score. Each state is given a number based on how it performs on 10 indicators: gender equality in access to leadership and managerial positions, professional and technical jobs and higher education; teenage pregnancy rates; percentage of single mothers; women's share of unpaid family and child care; maternal mortality; women's participation in the workforce; how well women are represented in regional governments; and statistics on rape and violence in each area.
All states in the U.S. show "high" rates of gender inequality — a sign of how far we have to come to reap those economic benefits.
Of all the factors affecting State Parity Scores, the one with the greatest impact on GDP was women's workforce participation, the report found. Injecting more women into the workforce accounted for 38% of the potential GDP increase.
Getting there means breaking down existing barriers to job acquisition.
Lowering teen pregnancy rates: High teen pregnancy rates negatively affects a state's chance for employing more women, according to the report. With less access to education and more hours devoted to child care, teen mothers may struggle to take on full-time work or access training for higher-paying work.
There are already working solutions for lowering teen pregnancy. Shows like 16 and Pregnant and state and local campaigns advocating against youth pregnancy have proven pretty effective in steering teens away from getting pregnant, according to the Centers for Disease Control and Prevention. But states could do even more — like make contraception more available. MGI cites a Colorado program that made long-acting birth control, like intrauterine devices, available for low or no cost, and teen pregnancy rates dropped faster than in any other state.
Splitting domestic roles more evenly: An unfair distribution of at-home labor, like caring for children and cleaning house, keeps women out of more senior roles in the workplace, according to the report.
"Women may still face the 'double burden' syndrome of juggling work and domestic responsibilities, worsened by society's expectations, and indeed their own, making a leadership role an unattractive option for some," it says.
While couples should certainly try and balance the workload themselves, workplace leave policies can sometimes make that difficult. Not all companies in the U.S. have paid parental leave policies. Without paid parental leave, some women are inclined to leave their jobs to raise a child, the report says.
Even when companies do offer parental leave, it's disproportionally offered only to women — which means men can't take on equal child-rearing roles. An expansion of parental leave policies and child care opportunities would help more women stay in the workforce while also having a child, MGI says.
We need more jobs for women: Once those barriers to entry are lowered, there will need to be more jobs for women. That'll require investment in job creation.
It's not just the private sector MGI calls on to foster new jobs, but the government, too. The public sector can help by creating affordable access to training for high productivity work, it says.
Chill out, dudes: No, more women in the workforce does not lead to a decline in men in the workforce.
"We do not expect higher female participation to drive down male participation; this is in line with historical trends," the report says. "According to [Bureau of Labor Statistics] data, the participation of prime-aged women in the United States increased from 36% in 1950 to 76% in 2000, while the participation of men stayed over 90%."
Let's hope this report kicks off a broader discussion about how we can finally offer women a more equitable role in the U.S. economy.
