Markets Wired

Letter to Treasury staff on the end of Women’s History Month.

Dear colleagues,

Today is the last day of March, which means it’s the last day of Women’s History Month.

I began the month by discussing women in the economics profession.  I wanted to end the month, though, by looking at the bigger picture, with some thoughts about the recent economic history of women in America.

When I came to Washington in the early ‘90s and re-joined the Fed, there was a revolution happening in the economic data. American women were finally taking their place in the workforce – and in big numbers.

In between when I had left college – 1968 – and when I came to Washington, 31 million women had joined the labor force (compared to 22 million men). A higher percentage of American women worked than our counterparts in almost any other developed nation. Out of the 22 wealthiest countries, we ranked 6th in labor force participation. 

Of course, the picture was far from perfect. Women were paid less for the same work. (They still are.) And underneath the numbers, there was a widespread and intolerable culture of workplace discrimination, particularly for women of color. Still, no one could deny: My generation of women was economically better off than my mother’s. Progress was on the march. Until it wasn’t.

Something started to happen around the turn of the millennium. Smaller and smaller cohorts of American women started joining the labor force – and more left it altogether. By 2010, American women no longer ranked 6th of 22. We were 17th.

In fact, if you somehow transported economists from the 1980s to 2021 – and just showed them the labor force data – they would be hard-pressed to see that anything had changed. Even before 2020, the percentage of working women was near its 40-year low, and then, COVID-19 dropped it to its nadir.

This Women’s History Month, women’s economic history seems to be flowing backwards. 

What’s happening?

In some ways, there is such a frustrating irony at work in our labor markets. The country has certainly awoken to the reality that sexual harassment and discrimination are enormous problems. In this respect, the #MeToo movement was a pivotal moment for women already in the workplace. And yet, we seem to have a harder time getting and keeping women there.

One obvious reason is childcare. A study looked at how much each wealthy nation spends on social programs like paid-family leave and subsidized childcare. The United States was near the bottom of the list, but the study found if we had been in the middle – and spent just the average world amount on those programs – American women wouldn’t be 17th in labor force participation anymore. We’d be 11th. Still not great, but better.

The pandemic has turned the childcare problem into a crisis for mothers. We know that, unlike the fathers who left the workforce early last year, most of the moms haven’t come back yet. Will they return? I hope so. But if that happens it probably won’t be because we sat idly by; it will be, instead, because we used the powerful tools at the federal government’s disposal.

This month, The American Rescue Plan began that work through a big expansion of the child tax credit and the most significant direct investment in childcare since World War II — $25 billion – which will go directly to daycare centers and other providers. The pandemic has really hurt these businesses, and we want them to be there on the other side of the pandemic when Americans go back to work.

This is just the start for us.

As always, thank you for your dedicated and tireless work. I am so proud to be your colleague.

Sincerely,

Secretary Janet Yellen

 

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