May 10, 2023 - Economy

The U.S. has fallen behind when it comes to women in the workforce

Change in women's labor force participation rate for select countries
Note: *Current refers to latest available data, which is Q4 2022 for European countries and Q1 2023 for others. Data: Moody's Investors Service, OECD; Chart: Axios Visuals

When it comes to getting more women into the workforce, the U.S. has fallen behind other countries with advanced economies.

Why it matters: The U.S. is facing a labor shortage that could worsen over the next decade as the population ages — and increasing the share of women in the workforce is one way to counteract that, as Moody's Investors Service said in a note last week.

Zoom in: Improved policies around child care and maternity leave have helped push up labor force participation rates in advanced economies— eliminating key barriers to keeping women attached to work.

But the U.S. lags. Though a few states offer paid parental leave, the country has no universal policy. And though there are some subsidies for child care, it's generally more expensive here than in other countries, as the IMF notes.

  • The U.S. tax code also inadvertently penalizes the "secondary" earner — typically a wife — in a married couple, per the IMF report. That means if a couple files taxes jointly, they're taxed at a higher rate.

Go deeper: Japan has made extraordinary strides in women's labor force participation partly due to "womenomics," the moniker coined decades ago by Goldman Sachs, and then used to describe a raft of policy changes implemented by former prime minister Shinzo Abe.

  • Australia, with the third largest leap in participation, implemented government-funded paid parental leave in 2011 and expanded it in 2013.
  • In Germany and Australia, higher rates of women's labor force participation have offset "demographic drag," i.e., the problem the U.S. faces of the workforce shrinking as the population ages, Moody's reports.

The bottom line: Across the globe, women's labor force participation is still lower than men's. Fiscal policy can only go so far — as the IMF notes, "social norms" also play a big role in keeping women out of the workforce.

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