Almost 90 percent of countries have at least one legal restriction impeding women’s full participation in the economy. Research has shown that when legal restrictions are removed, women’s labor force participation rises at least 5 percent within 5 years.
In a world that is facing a 40MM workforce shortage and country that is also facing a 5MM workforce shortage, where women’s participation in the labor force is dropping, removing barriers is more than an issue of fairness; it’s an issue of economic growth.
From 1960 to 2000, women’s labor force participation increased from 37.74 percent in 1960 to 59.94 percent in 2000, peaking at 60.03 percent in 1999. The increased rate of women in the labor force since 1970 added $2 trillion to the U.S. economy.
Unfortunately, the labor force participation has been steadily falling from 59.4 percent in 2006 to 56.8 percent in 2016 and it is projected to continue to fall to 56.1 percent in 2026.
We know that the United States is the only developed nation that doesn’t offer paid maternity leave (the average amount of leave among developed nations is 18 weeks), and 90 percent of women who leave when they have a child leave for reasons other than having a child, so what are some policy solutions to reverse the declining trend of women in the workforce?
Here are three: a true equal pay law, removing binding arbitration from employment agreements and ratifying the Equal Rights Amendment.
Policy #1: True Equal Pay
Pass a true equal pay law, similar to Iceland, that shifts the burden from employees to employers. While pay transparency put forth by the United Kingdom is a step in the right direction, it is not enough. We need to pass a true equal pay law that requires employers to prove — and keep proving — that they are paying equitably and face fines if they do not.
We should lift the burden off women and place it where it squarely belongs, on employers.
Some employers may push back that it’s too burdensome to report pay numbers; however, as Marc Benioff, CEO of Salesforce states, it’s easier than employers think. Plus the benefits are many, including increased talent retention and attraction, and better economic outcomes for your company.
Policy #2: Removing Binding Arbitration
Removing binding arbitration clauses from employment agreements could reverse the worsening trend of women’s equality in North America (we are the worst-performing region out of seven global regions and added 10 years to our time to gender equality, putting total time at 168 years). In a country where the gender equity gap persists, and is getting worse, cementing the use of binding arbitration in employment agreements is like putting lead on the glass ceiling.
Binding arbitration makes it mandatory to use arbitration instead of going to court with due process, and obstructs labor laws such as the Equal Pay Act of 1963, the Civil Rights Act of 1964 and the Lilly Ledbetter Fair Pay Act of 2009. As well, the use of binding arbitration has grown from 2 percent in 1992 to 40 percent today, with employees having a lower chance of winning their arbitration cases if an employer uses the same arbitrator.
Policymakers should follow the example of employers like Microsoft, who have moved away from binding arbitration in employment agreements. Doing so would ensure transparency and that women’s (and men’s) voices are heard, and stem the tide of women leaving the workforce because they believe they have a fair shot — and a transparent remedy if they don’t.
Policy #3: Equal Rights Amendment (ERA)
The United States ratified the 19th amendment to the U.S. Constitution on Aug. 18, 1920. Alice Paul, one of the main leaders of the campaign for the 19th amendment, wrote the first draft of the ERA in 1923 as the next step to ensure equal justice under the law.
The ERA was approved by Congress on March 22, 1972 and then sent to the states for ratification. Thirty-five states ratified the ERA; we were three states short until 2017. In 2017, Nevada ratified and, in 2018, Illinois followed suit. So, we’re only one state short, right?
Not so fast. The deadline for ratification has passed, but the campaign may yet resurface. Why does it matter? It matters because it would ensure the U.S. Constitution would explicitly guarantee that the rights it protects are held equally by all citizens, regardless of sex. In doing so, the United States would follow countries such as Canada, Japan, Germany, Afghanistan, Cambodia and Haiti.
How can changes to public policy increase female labor force participation?
Ensuring equal pay and the burden of it sits with employers, removing binding arbitration clauses from employment agreements and ensuring equal rights guaranteed by the U.S. Constitution individually and collectively — these changes to public policy can ensure a pathway to success for women in the workplace and stem the tide of their dropping labor force participation.
These policies also ensure that women are valued equitably and given an equitable voice in the workplace — an important step in keeping women in the workforce.
In a country that is facing a 5MM workforce shortage in less than two years and that currently has more job openings than unemployed workers to fill them for the first time in 18 years, stemming the tide of women leaving (and continuing to leave) the workforce matters to our continued economic expansion and growth.
Let’s work together to remove the barriers to women staying in — and being successful in — the workforce.