In his State of the Union address tonight, President Barack Obama may as well have faced the camera and said, “Ladies, this one goes out to you.”
Obama is proposing half a dozen fairly ambitious ideas to coax women back into the labor force. American women are leaving the workforce in droves: In 1999, 60 percent of civilian women worked outside the home. Today, the number is down to 56.6 percent, according to the St. Louis Fed.
In most other advanced economies, the trend is in the opposite direction. The repercussions for economic growth, when 50 million women older than 20 aren’t employed, could be serious.
No one really knows why women are opting out (the reasons are probably many), but one prevailing theory is that it no longer makes economic sense for some women to work. For starters, many can’t afford quality day care. And for two-earner parents, taxes and the cost of transportation eat up too much of the lower-earner’s paycheck (often the woman) to make the family disruption worthwhile. On top of that, for lower-income women in the service sector, the inability to predict work hours makes it difficult to take care of family responsibilities.
All of this explains why Obama said this weekend that he will ask Congress to triple the child-care tax credit to $3,000 for each child younger than 5. This would help more than 5 million families, the White House says. Obama would also give households with two people working a tax credit to offset the marriage penalty.
That’s a reasonable idea. Women are more likely to be the ones who withdraw from the job market when the economics of working work against them, which in turn exacts a toll on their future job options and earnings and by extension the U.S. economy. The problem with this proposal, though, is that the tax credit ― as much as $500 ― is too measly to make a difference.
Improving the earned income tax credit, which helps the working poor, is another tool in Obama’s family-friendly kit. He wants Congress to make permanent an enhanced credit that now helps 16 million families with 29 million children, but is set to expire at the end of 2017. Allowing these benefits to lapse would result in a roughly $1,700 tax increase for a full-time minimum wage worker with two children (read: single moms).
Perhaps Obama’s best idea is to help more women receive paid sick leave and maternity leave. The U.S. is the only advanced economy that doesn’t guarantee paid maternity leave and one of only a handful without paid paternity leave.
And while 60 percent of workers have access to job-protected sick leave through the Family and Medical Leave Act, there’s no guarantee it will be paid. Almost a quarter of workers have no paid vacation and no paid holidays. To address this, Obama calls on Congress to expand the family leave law to require businesses to let employees earn seven days a year of paid sick leave. He also wants to give federal employees six weeks of paid maternity leave.
None of these elements is a blockbuster, but they add up to a decent program. Still, Obama could do more. Missing is what the U.K. and Australia call right-to-request legislation, which permits employees to ask for flexible work arrangements and requires employers to seriously consider granting such requests. (They must justify saying no.)
That may seem like small beer, but it could help a big chunk of the country. A comprehensive report by the left-leaning Center for American Progress pointed out last week that almost 30 percent of U.S. workers have job schedules with varied daily start and stop times; 10 percent have schedules that fluctuate so much they can’t accurately predict a typical workweek.
Together, these programs could make the math work better for millions of women. That will improve their potential ― and the economy’s, too.
By Paula Dwyer
Paula Dwyer writes editorials on economics, finance and politics. She was previously London bureau chief for Businessweek and Washington economics editor for the New York Times. ― Ed.
(Bloomberg)
