U.S. economic growth fundamentals for the 21st Century
What’s the difference between a policy that reduces economic growth and one that enhances it? When discussing labor and employment policies, those that support the long-term growth and stability of the U.S. economy are ones that make it possible for people to find and keep good jobs and then show up ready and able to put in their best work.
Alas, the workplace rules in place today that dictate workers’ time on the job largely assume incorrectly that a family includes a single breadwinner who works and a stay-at-home caregiver who does not. This outdated assumption about families with single breadwinners dates back to the prevailing views during the Depression, when the Fair Labor Standards Act set out a minimum wage, a standard workweek at 40 hours, and required employers to pay overtime to many of those who put in more hours per week.
These same assumptions also are embedded in the Social Security Act. Since its enactment in 1935, policymakers have put in place programs that support families when a breadwinner cannot work or is not expected to work due to old age, disability, or being involuntarily unemployed. But the law does not include the need for paid time off to care for children or the elderly.
This is not the world we live in today. Women now make up nearly half of all workers. Mothers are breadwinners, too, in both single-parent and dual-earner families. As late as 1960, most families up and down the income ladder had a full-time stay-at-home-caregiver. Today most do not. Now, in two-thirds of U.S. families, a mother is a breadwinner either on her own or in tandem with a spouse or partner. This is a remarkable change over the second half of the 20th century. In 1960, the share of families with a full-time, stay-at-home-caregiver was 57 percent in low-income families, 71 percent in middle-class families, and 79 percent in professional families. Today, those numbers are 22 percent, 28 percent, and 28 percent, respectively.
Women’s higher employment rates have been good—very good—for economic growth. According to estimates by myself with economists Eileen Applebaum and John Schmitt, between 1979 and 2013, the added hours of women meant that U.S. gross domestic product 11 percent higher than it would have been. This is roughly equivalent to what our nation spends on Social Security, Medicare, and Medicaid, combined, in a single year. To encourage long-term growth, it is important to ensure that workplace policies reflect the needs of today’s working families.
Despite this economic boost provided by women in the workforce, as I describe in my book, “Finding Time: The Economics of Work-Life Conflict,” families up and down the income ladder are putting in these added hours without the support they need to make daily life manageable. All the “stress” that we hear about is in no small part due a U.S. labor market that doesn’t match the way families live and work today.
When working people have to constantly juggle work with childcare—and increasingly eldercare—and day-to-day activities such as grocery trips and doctor visits, it means a they’re stretched thin on each aspect, especially without the ability to rely on a stay-at-home caregiver. The result is less productivity on the job or lower labor force participation.
There are policies that can ease this day-to-day stress on employees, and boost productivity and family incomes—and the economy—in turn. These include policies for when a worker temporarily needs to be at home, instead of at work, to care for a family member. Policies such as paid sick days and paid medical and family leave have been proven to support employment through making it easier—and sometimes simply possible—for workers with care responsibilities to keep their jobs.
It also is important to recognize that having some control over one’s time can make all the difference as to whether a worker can navigate around work-life conflicts. Today, many workers have unpredictable schedules or put in long hours—while some continue to struggle with too few hours—either three of which can make paying for and scheduling childcare or eldercare virtually impossible. A cared-for workforce means a more productive workforce.
Similarly, because the cost of care is borne mostly by families, creating good jobs for the care workforce has been difficult to achieve. This directly affects the quality of care. Research shows that the quality of childcare—and eldercare—is directly related to the quality of the jobs in the care workforce. Yet, families cannot afford to pay for this all on their own, especially those with young kids who need to access care but may not be at the peak of their earnings potential.
All of these mismatches between today’s outdated labor market practices and effective policies that could make our labor force more efficient points to the conclusion that maintaining U.S. economic competitiveness into the 21st century requires policymakers to acknowledge these work-life conflicts and work to remedy them. Getting talented workers into good jobs and laboring at their highest productivity requires resolving work-life conflicts that constrain today’s labor supply, which in turn keeps down family incomes and slows growth in aggregate demand in the economy. A work-life agenda that matches the needs of family breadwinners today would go a long way toward supporting strong and stable economic growth.