When more women are part of the U.S. labor force, it boosts the economy and improves working conditions for everyone, according to Janet L. Yellen, the Federal Reserve chairwoman. But in order to make that happen, the nation must more deeply implement flexibility and other policies that encourage women to work while allowing them to maintain balance in their lives.

Yellen shared this perspective during a detailed—and quite personal—speech on May 5 at Brown University.

In a copy of the speech posted on the Federal Reserve website, Yellen cited examples from as far back the late 1800s to talk about the strides women have made “to pursue their dreams of education and meaningful work and to support themselves and their families.”

She also noted, however, that many women still can’t achieve those goals, due to a variety of obstacles like the earnings gap between men and women and job rules that don’t support balance between work and family.

“If these obstacles persist, we will squander the potential of many of our citizens and incur a substantial loss to the productive capacity of our economy at a time when the aging of the population and weak productivity growth are already weighing on economic growth,” Yellen said.

In a speech that often cited the work of economic historian and labor economist Claudia Goldin, Yellen said that women’s participation in the U.S. economy had increased over the years as attitudes and technology changed. The 1970s were especially important, as the model of the two-income family became more common in the United States, and workplace protections were enhanced.

“By the early 1990s, the labor force participation rate of prime working-age women—those between the ages of 25 and 54—reached just over 74 percent, compared with roughly 93 percent for prime working-age men,” Yellen said. “By then, the share of women going into the traditional fields of teaching, nursing, social work, and clerical work declined, and more women were becoming doctors, lawyers, managers, and, yes, professors. As women increased their education and joined industries and occupations formerly dominated by men, the gap in earnings between women and men began to close significantly.”

These changes also brought fears that women’s increased involvement in the workforce would crowd out men, Yellen said, but “the evidence shows that the rise in women’s participation has contributed to widespread improvements in the safety and productivity of our workplaces, to the health of families, and to the macroeconomic success that our country has enjoyed over the past 125 years.”

Specifically, she said, the rise in female workforce participation contributed about 0.5 percentage point per year to the potential growth rate of the real gross domestic product between 1948 and 1990. And one recent study estimates that increasing the female participation rate in the economy to that of men would raise the U.S. gross domestic product by 5 percent.

Despite this evidence of the benefits that come when women are in the workforce, challenges remain. Yellen said the participation rate for prime working-age women has fallen recently after peaking in the late 1990s. And while the earnings gap between men and women has narrowed, women working full time still earn about 17 percent less than men, on average, each week.

Another problem is the difficulty women face when trying to balance work and family.

“In fact, the recent trend in many occupations is to demand complete scheduling flexibility, which can result in too few hours of work for those with family demands and can make it difficult to schedule childcare,” Yellen said. “Reforms that encourage companies to provide some predictability in schedules, cross-train workers to perform different tasks, or require a minimum guaranteed number of hours in exchange for flexibility could improve the lives of workers holding such jobs.

“Another problem is that in most states, childcare is affordable for fewer than half of all families. And just 5 percent of workers with wages in the bottom quarter of the wage distribution have jobs that provide them with paid family leave. This circumstance puts many women in the position of having to choose between caring for a sick family member and keeping their jobs.”

In other words, women need flexibility to truly meet their potential in the workforce. And the real advantage to flex-friendly policies is that their implementation helps everyone.

“In looking to solutions, we should consider improvements to work environments and policies that benefit not only women, but all workers,” Yellen said. “Pursuing such a strategy would be in keeping with the story of the rise in women’s involvement in the workforce, which, as I have described here, has contributed not only to their own well-being but more broadly to the welfare and prosperity of our country.”

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