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May 18 2017

The Complicated Economics of Women and Work

via National Review
by Carrie L. Lukas

Bloomberg has a piece out today warning that economists are “worried” about the economic implications of women’s decisions about how to balance work and family. Women’s workforce participation has dipped since its peak two decades ago, and encouraging more women to work outside the home could boost our economy. Torsten Slok, chief international economist at Deutsche Bank, has some advice for the U.S.:

“To keep women and men productive in the labor market, it is a good idea to have supporting institutions that can ease some of the burdens of both single parents and married couples with children.”

That’s certainly sound advice. We should focus on how to help families and make sure our institutions support them. Those institutions ought to include extended families, neighbors, and communities.  And, of course, it should also include workplaces and the government should create public policies that help in that process. Childcare is certainly more expensive than it needs to be, and we should consider how to make it easier for businesses to create more jobs and provide greater flexibility to workers.

Yet those aren’t really the institutions or policies that these economists or Bloomberg’s report is referring to. They want America to embrace the European approach and have the government provide or require businesses to provide extensive paid leave and other benefits.

Americans ought to be aware of the downsides of embracing Germany’s approach to supporting parents. For example, Germany’s extensive paid leave benefits for new parent can make life easier and encourage women to stay connected to the workforce, rather than dropping out when their baby is young. But it also has considerable downsides.  While Germany’s labor force participation rate is higher than the United States’ for women of childbearing age, German women are far less likely than U.S. women to be professionals or in leadership positions.

Having lived in Germany, I wrote about the very real drawbacks to these policies, which undoubtedly are well intended, but certainly create the perception that women are likely to disappear from their jobs for long stretches of time, making them less attractive business leaders. It’s also worth noting that Germany’s wage gap remains about the same as the United States.

Working families and particularly working women do need more support, but they also need policymakers to carefully consider the full impact of the policies that they promote in their name.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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