The Secret to $2 TRILLION More Dollars
Photo credit: McKinsey Global Institute
Most people know that women make up roughly half of the population and workforce but what’s reported less often is the exact mix of jobs that women have.
Last week, a McKinsey study was released showing that women in the United States are responsible for 42% of full-time jobs and 64% of part-time jobs. In other words, women are more likely to work part-time jobs than men, which means the pay they take home will be correspondingly lower. Moreover, women also tend to work in sectors where economic output (i.e. gross domestic product, or GDP) per worker is lower than men. For example, women disproportionately work in low GDP-per-worker sectors such as health-care services and education, as compared to men. (This mix of part-time vs. full-time work as well as the industries women work in are also one of the main reasons behind the gender pay gap statistic, i.e. the oft-cited fact that women earn on average, 76% of what men, on average, earn.)
McKinsey’s study on gender equality makes the case that somewhere between $2-4 trillion in GDP (representing a 10-20% increase) could potentially be added to the American economy by 2025 if we tackled gender inequality. Their GDP projections essentially assume that 3 things happen:
- More women participate in the workforce;
- More women work full-time as opposed to part-time; and
- A higher percentage of women work in higher GDP-per-worker sectors than they currently do.
The reason for the wide range of economic projections in McKinsey’s analysis is that they make different assumptions for what it takes to get to these larger economic targets. The $2 trillion (10% increase) figure assumes that all U.S. states match the rate of gender equality in the fastest-improving large states (e.g. New York) over the past decade on a bunch of different metrics (more on this below). The $4 trillion figure, on the other hand, represents an assumption that more jobs would be created than the U.S. Bureau of Labor Statistics currently estimates will be available by 2025 and that those jobs come from high-GDP productivity sectors such as professional and business services, information and manufacturing.
Getting more women to participate full-time in the labor force in the highest-productivity sectors obviously doesn’t just automatically happen without larger changes in the world. Therefore McKinsey’s analysis discusses the pre-requisite conditions of gender equality in society before we can hope to reach those outcomes. Specifically, they focus on 10 different indicators where improvement would translate into higher and more remunerative economic workforce participation for women (and thus economic results for all):
- Male/female ratio in the labor-force participation rate
- Male/female ratio in professional and technical jobs
- Male/female ratio in leadership and managerial positions
- Male/female ratio in unpaid care work
- Percentage of families with children that are led by single mothers
- Rate of maternal mortality
- Male/female ratio in higher education
- Rate of teenage pregnancy
- Male/female ratio in political representation
- Rate of violence against women
Clearly we believe that gender equality and improvements in these 10 areas is the right thing to do. We also know that some of us need more than a moral argument to believe there should be improvements in gender equality. What McKinsey has set out to do is to show that there’s an economic and business case for gender equality in society and the workplace, and that improving the lot of women generates a very big number: $2 trillion dollars, to be exact.
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