By Ella Ceron
Providing childcare and paid leave to parents of young children would be a boon for the U.S. economy, according to a new report by Moody’s Corp.
The research, released on International Women’s Day, projected that policies such as paid family leave and universal pre-kindergarten could result in a $1 trillion boost to gross domestic product by 2028. Moody’s, best known for its sovereign credit ratings, forecasts U.S. GDP could reach $23 trillion by 2028 without changes, but could top out at $24 trillion if women between the ages of 25 and 54 were able to participate in the workforce at the same rate they do in countries that have those support systems in place, such as the U.K., Germany, Sweden and Australia.
There is renewed urgency around keeping women employed after the Covid-19 pandemic reduced female participation in the workforce. Globally, more women exited the workforce between March 2020 and September 2021 than men did; they were also more likely to report leaving school, as well as needing to care for others than their male counterparts. Women also took on three times as many hours of childcare as men did during 2020, the first year of the pandemic.The caregiving responsibilities that disproportionately fall on women are made more burdensome by the meager social safety nets in place in the U.S. Only about 19% of American workers have access to paid family leave through their jobs, forcing many women to skip paychecks when they need time off to give birth or care for a sick relative. An estimated 3.8 million leaves are taken by women each year without pay, according to research released this month by the Center for American Progress, a progressive think tank, which said the burden is particularly high for women of color.”There’s a lot of churn in the economy going on when people have to look for a new job, and it’s very costly, not only to the worker, but to the employers to have to recruit, interview, hire, and train,” said Marisa DiNatale, a senior director of economic research at Moody’s Analytics. “If you can keep people at least engaged or somewhat tethered to their job, then you forgo a lot of those sort of frictional costs.”
In the past three decades, the cost of child care has risen at more than twice the rate of inflation. In some states, it can cost more than college tuition, and only seven states and Washington D.C. currently offer some form of universal pre-kindergarten to 4-year-olds. An eighth state, California, began implementing its transitional kindergarten program last year.
Expanding access to affordable high-quality child care could increase the number of women with young kids working full-time by 17% and boost the lifetime earnings of those already in the workforce, the National Women’s Law Center, an advocacy group, said in a fact sheet this month. Investments in child care could lead to a combined $23.6 billion increase in annual earnings for moms with young kids, according to the Century Foundation, a progressive think tank.
More stories like this are available on bloomberg.com.
