The Economic Yardstick That (We Don’t Know) We Need

Please think GDP for a moment.

Reported and revised during each quarter, GDP numbers create a reaction. If the growth rate is high, lawmakers assume their policies are working. When the numbers are lower, people wonder how to boost them.

My point?

We tend to care about whatever we measure.

Where are we going? To something else we should be measuring.

How Easy It Is To Work

A new S&P Global paper concludes that the U.S. could increase its affluence if our female workforce participation rate were as high as Norway’s:

The S&P Global paper takes readers from the need for more female labor force participation to suggestions about how. It starts with the premise that more women in the work force would help to solve U.S. productivity problems. They believe employed women could add $1.6 trillion to “the U.S. economy.”

Next, the report reminds us that a high proportion of women leave temporarily for family reasons and that women earn less than men. Reducing gender inequalities would further boost the GDP as would additional women in STEM.

Then it notes that when women earn an income, more than from men, their money goes to a child’s education. And finally, it does emphasize how parental leave policies make a difference.

As with all statistics, the paper’s numbers and many of their conclusions are debatable. But some are indisputable. The workplace could be much more female friendly. It could enable women to access and maintain jobs more easily.

How? We could change the scoring process for proposed legislation.

Our Bottom Line: Female Friendly Scoring

When new laws are proposed, the Congressional Budget Office (CBO) “scores” the impact on the federal budget. They concluded, for example, that the Senate’s tax proposals would add $1.4 trillion to the deficit by 2027.

Somewhat similarly, S&P Global suggests that the CBO project the Congress’s legislative impact on women. Debating a new law, they could be given a ratio that compares the cost of entering the workforce and the cost of remaining home to care for children and/or family.

At this point, I was reminded of the World Bank’s Ease of Doing Business Index. To convey the regulatory environment for businesses, the World Bank established 10 subindices that are further divided. The result was a yardstick that measures how easy it is to start and operate a business in 190 countries.

Now, I should emphasize that I really am not sure whether S&P Global’s indices are feasible. But I do believe that our Congress and the CBO should quantify the impact on women when they contemplate new legislation. Like the World Bank, they could create a yardstick.

The reason? We care more about what we measure.

My sources and more: H/T to Quartz for alerting me to the S&P paper on underutilizing female labor. And do look at the Ease of Doing Business Index. After reading all three, we can form our own conclusions.