As the U.S. economy continues its over eight-year expansion, analysts at S&P Global say they have an answer as to how to boost GDP growth along with labor force participation and productivity. The answer is women.
In a report titled “The Key To Unlocking U.S. GDP Growth? Women,” S&P Global says it believes that an effort of increasing entry and retention of more women to the American workforce, particularly those professions traditionally filled by men, represents a substantial stronger opportunity for the U.S. economy.
“Under our scenario analysis, by actively engaging more women, there is the potential to add 5 percent to 10 percent to nominal GDP in just a few decades,” said U.S. Chief Economist Beth Ann Bovino. “Based on our research, if we were to accelerate women’s participation, the U.S. economy would be $1.6 trillion larger than it is today.”
The report says that the resulting productivity boost from more women in the workforce couldn’t come at a better time. In contrast to the preceding decades, the labor-force participation rate–now near a 40-year low–has increasingly become a drag on growth since the turn of the millennium.
Because of this prolonged drag on growth, S&P Global U.S. Economics recently lowered its estimate for the potential long-term average annual economic expansion to just 1.8 percent–one percentage point lower than its 2.75 percent estimate of 15 years ago.
At the same time, the ongoing debate in Washington about the need for stimulative economic policy, specifically tax reform that promises to promote corporate investment, job gains, and an increase in Americans’ disposable income, continues.
Against this backdrop, S&P Global views increased education and advanced training for both women and the overall workforce, particularly in the face of increasing automation, as a key factor in achieving this.
S&P Global also supports a Congressional Budget Office (CBO)-like “score” that would measure the potential cost of the impact of legislation on women and their workforce participation, which S&P beleives would help provide guidance as to how to spark this potential economic catalyst.
“Adding more women to the U.S. workforce would also help to offset the currently expected drag to growth from retiring Baby Boomers,” Bovino said. “If we want to spur the pace of growth in the world’s biggest economy to its potential, underutilization of our greatest economic resource is no longer a viable option.”
Source: S&P Global: The Key To Unlocking U.S. GDP Growth? Women
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