America's female labour force needs a new deal

It is not often that companies as dissimilar as Walmart and Apple sing from the same corporate hymn book. When they do, politicians take notice. US business's rapid and near unanimous response to recent anti-gay legislation in Indiana and Arkansas achieved instant results. In the face of threatened boycotts, both states rewrote laws that would have allowed businesses to deny service on the basis of customers' sexual orientation. Corporate America rightly took umbrage. Anything that narrows workforce diversity, or shuts off avenues for employee creativity, is bad for the bottom line. As they say, you can do well and do good at the same time. It is high time they took the same approach to women's workplace conditions in the US.

Women account for half the potential labour force yet still lack some of the most basic protections. Alone among developed countries, the US provides no maternity or parental leave for employees, such benefits are at the sole discretion of the employer. The US is also an outlier on paid vacations, sick leave, workplace child care and protections for pregnant employees. Federal law is mostly silent. Some US employers have taken steps to fill the vacuum. For example, Microsoft recently said it would require its contractors to offer paid sick leave to their employees. But too few corporate leaders are following suit. There is evidence to show that companies gain from offering proper benefits to female employees. Such measures boost productivity by reducing absenteeism and employee turnover - a huge cost for businesses. Too few have taken heed.

America's backwardness on gender employment is also a macroeconomic problem. Since 2000, the US female labour force participation has fallen following decades of steady improvement. Economists are divided as to why because it has coincided with an overall drop in the US rate. Yet the fall in female participation has coincided with a continual rise in other countries. At 56 per cent, the share of eligible women who are active in the US labour force is now considerably below that of most advanced economies, and continuing to head in the wrong direction. There can be little doubt that weak maternity benefits and lack of childcare facilities are big disincentive to re-entering the labour force. As long as most US employers view work and family life as a zero sum trade off, this is unlikely to change. The longer it remains so, the higher the economic costs to society and businesses.

At some point this year the US Federal Reserve is likely to raise interest rates. Unemployment has been falling rapidly but America's labour force participation rate has barely shifted. The most obvious way to improve that ratio, and thus lift the rate at which the US economy can grow without triggering inflation, would be to attract more women into the labour market and keep them there. Indeed, there are few more efficient ways of lifting America's longer-term growth rate. Given the impasse in Washington, it is unlikely Congress will update US workplace protections in the near future. Women will have to look elsewhere for the rights that are now routine in countries such as Canada, Germany and Sweden.

This is where big US brand names can make all the difference. Last week, Tim Cook, Apple's chief executive, said he wanted to ensure workplace anti-gay discrimination was a thing of the past. He was right - and courageously so. Too few of the big Silicon Valley names have taken a similar stand for their female employees. Unless, and until, they take the lead, companies in less advanced sectors of the US economy are unlikely to change their ways.

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