The United States government is about to borrow and spend an unprecedented amount of money to revitalize an economy staggered by a global pandemic, in the hopes of lifting a nation at odds with itself. There is one sure path to increase the investment’s payoff: spend it on women and girls.
While the Biden administration and Republicans in Congress wrangle over the stimulus’ scope and whether to spend it on bridges and tunnels or electric cars and eldercare, they should also focus on closing the gender pay gap and address America’s wealth inequality problem. When stimulus is viewed through this lens, massive growth will be balanced with environmental gains, a more vital small business community, better health care, enhanced public safety, and greater trust in public institutions.
And you will create more jobs. Many, many more. Why? Helping women and girls improves every part of an economy and will do so faster than any other path. In fact, PwC Strategy Consulting’s annual Women in Work Index, which evaluates women in work in the Organization for Economic Co-operation and Development (OECD) member countries, estimates that raising women’s labor participation rate of all OECD countries to that of Sweden would add $6 trillion annually to the collective GDP of OECD countries.
National wealth and creating more of it
According to a 2016 study by the McKinsey Global Institute (MGI) titled, “The power of parity: Advancing women’s equality in the United States,” the U.S. could boost GDP by $4.3 trillion by 2025 if women attain full gender equality in the workforce. Similarly, in a 2016 Harvard Business Review article, MGI concluded that from state to local economies, every municipality in the U.S. could add 5% to their GDP by advancing the economic potential of women. What’s more, half of the states could add more than 10%, and the 50 largest cities could increase GDP by 6% to 13%. Keep in mind, this study was completed prior to the pandemic; growth rates coming out of a massive recession would likely be even higher.
Investing in Black women and girls could have the fastest impact
Investment in Black women and girls would likely generate a more immediate benefit to America’s economic growth. Black households own 90% less wealth than the median white household, according to Goldman Sachs 2021 paper “Black Womenomics”. This number is even worse when comparing single Black women to single white men.
These figures are the product of deep and troubling systemic racism in this country, which have resulted in Black families not being able to build wealth over the past several centuries. The Brookings Institute’s Hamilton project found that by 2016, the net worth of the average white family in America was 10 times that of the average Black family.
Economic stimulus provides an opportunity to redress this failure. The payoff will be huge: closing the massive wage gap for Black women could add up to 1.7 million jobs annually, and up to 2.1% in GDP, according to the 2021 Goldman Sachs study.
Partisan politics is an economic threat women can help resolve
A study by the NGO, U.S. Agency for International Development, found that any nation with women holding at least 30% of seats in public office is more inclusive, egalitarian, and democratic. Although rising in the U.S., the representation of women in Congress is still below the 30% threshold and far below that of the 51% female population. How do we make it possible for more women from underrepresented communities to serve in public office? Simple: spend stimulus money on access to education, childcare, and affordable housing.
Women from underrepresented communities need the help. According to the Federal Reserve’s 2019 Survey of Consumer Finances, Black families’ median and mean wealth was less than 15% that of white families (at $24,100 and $142,500, respectively). Hispanic families’ median and mean wealth was $36,100 and $165,500 less, respectively. Further exacerbating this disparity, the Goldman Sachs study found that 80% of Black mothers are the breadwinners of their households – and recall that Black women make less. Black mothers are also 35% more likely to be in poor health, without access to good healthcare, and living in homes deemed to be “unhealthy.”
A more diverse, less partisan political system may have real economic benefit. For example, ten years ago when the S&P 500 Index downgraded the United States sovereign debt for the first time, the former chair of the S&P sovereign rating committee said, “the congressional brinksmanship motivated the 2011 downgrade.” This year, Congress was stormed by rioters of the out-going President who spread false claims of election fraud, which was perpetuated by Republican members of both the House and Senate inside the building. By comparison, 2011 partisanship seems like child’s play.
The cost of capital for the United States will rise if the country continues partisan disinformation and media-aided pandering to the political base. The current political system has delivered a widening wealth gap and persistently low growth. Further, according to a Pew Research poll last November, voters believed by a 90% margin that a win by the other party would create “lasting harm” to the country. That is a Mariana Trench-deep partisan divide in the United States that clearly transcends policy. If it is broke, fix it. Spend the money to increase women of color’s representation at the table for a more inclusive, egalitarian, and democratic United States of America.
Small business: the lifeblood of the U.S. economy
Economists and politicians alike see small businesses as the U.S. economy’s lifeblood, and their impact on communities expands past the direct employment and revenue they provide. Since women-owned small businesses have been disproportionally impacted by COVID-19, they require more support now than ever.
Women are disproportionately likely to own businesses dependent on foot traffic—like salons and retail—and these are sectors have been hit hardest by the pandemic. The U.S. Chamber of Commerce uncovered that the number of female entrepreneurs who ranked their business’s health as “somewhat or very good” dropped 13% from January to July 2020. Meanwhile, in this same period, male entrepreneurs only reported a 5% drop. The study found 36% of men-owned businesses expected to increase their staff in the next year, while women-owned reported only 24%. Supporting women-owned businesses will not only help narrow the wealth gap, but will also help improve employment in their communities.
COVID-19 has spurred what has proven to be a very gendered recession, as women have an undue burden to take on increased childcare, have been more likely to lose jobs, and are more likely to own businesses impacted by the pandemic – and these issues are further amplified for women of color. But these are not new problems and, instead, this past year has exposed national, systemic issues regarding our wealth gap, lack of women in public service, and lack of support for women-owned businesses. It is not only the best for our communities but also the best for our economy to focus national investment into women and girls.