Immigration, productivity, inflation: Why finding the pandemic’s ‘missing women’ could be the solution to almost every challenge facing the U.S. economy today
In the face of sticky inflation and a persistently tight labor market, policymakers and economists have proposed various solutions, from adjusting interest rates to encouraging immigration. However, one often overlooked strategy could significantly mitigate these economic challenges: increasing women’s participation in the labor force.
The potential for women to invigorate the economy and alleviate labor shortages is substantial yet underutilized. Despite making up 51% of the population, women’s labor force participation in the United States has plateaued and, in some cases, regressed, primarily due to systemic barriers such as inequitable pay and advancement practices. For instance, while women are 58% of college graduates, they represent 47% of the labor force and only 10% of Fortune 500 CEOs. And that 10% is an all-time high.
The pandemic has exacerbated these issues, with millions of women exiting the workforce. As of April 2024, there are still 377,000 women missing from the labor force since the beginning of the pandemic. Given that we currently have a 2.4 million person gap between the number of jobs open and the number of people looking for jobs (approximately 1.4 jobs for every job seeker), we could close that gap by 16% if we had the same number of women in the labor force that we did at the start of the pandemic.
A $1.9 trillion opportunity
The departure of women represents a loss of potential economic output and exacerbates the labor shortages many industries face, contributing to inflationary pressures as businesses increase wages to attract scarce workers.
Studies have shown that increasing women’s labor force participation rates to match men’s could significantly boost GDP. Between 1970 and 2016, women added $2 trillion to the U.S. economy through their increased labor force participation. Currently, increasing women’s labor force participation in the United States could add another approximately $1.9 trillion to the U.S. economy.
Women also bring diverse perspectives and skills to the workforce, further enhancing productivity and innovation. Additionally, my research across 4,161 companies in 29 countries found that companies enjoy a 1-2% increase in revenue for every 10% increase in gender equity.
And contrary to the short-term relief that immigration might provide, boosting women’s participation in the labor force represents a long-term, sustainable solution to labor market tightness. It focuses on tapping into the domestic talent pool and correcting gender inequity that has hindered economic progress.
Implementing solutions
To realize this potential, there are two critical solutions. Embedding equitable pay practices and ensuring fair career advancement opportunities represent more than just ethical imperatives—they are untapped economic opportunities. In embracing these principles, we’re not just doing what’s right but strategically positioning our organizations at the forefront of economic transformation and resilience. Pay equity alone would unlock $512 billion in economic value for the U.S. and help us tangibly measure progress toward a more equitable world.
Equitable skilling also provides women with tailored opportunities, focusing on those re-entering the workforce, to learn the necessary skills that can help them thrive in sectors currently experiencing labor shortages. By addressing the unique challenges and gaps that women face in employment, equitable skilling programs aim to prepare them for in-demand roles, thereby facilitating their successful integration and progression within the workforce and bridging the labor market’s needs with a skilled and inclusive talent pool.
As we navigate the complexities of a post-pandemic economy with historically low unemployment and a 23-year high of the federal funds rate, it is imperative to adopt inclusive economic policies that harness the workforce’s full potential.
Increasing women’s labor force participation could provide a sustainable solution to some of the most pressing challenges facing our economy today. By implementing supportive policies and breaking down systemic barriers, we can unlock a powerful tool in combating inflation and alleviating labor market tightness, paving the way for a more resilient and equitable economy. It’s time we make the economy work equitably for everyone, including women. There’s a $3.1 trillion upside when we do.
Katica Roy is the CEO of Pipeline.
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