The United States is viewed as one of the most advanced countries in the world on gender parity. Indeed, women make up 46 percent of the labor force. But on closer inspection, significant inequality still remains, and not just when it comes to pay. Consider that there are just 66 women for every 100 men in leading business positions. Women still do around double the unpaid care work including household chores and caring for children and the elderly as men do. And there is one incident of sexual violence for every two women.
This has serious human costs, for sure, but also considerable economic costs. Bridging the US gender gap in work entirely would produce an estimated $4.3 trillion in additional GDP in 2025. Even a scenario in which all US states matched the progress toward gender parity of the fastest improving state would net the US economy an additional $2.1 trillion of GDP in 2025—10 percent higher than would be the case with no action on gender. Annual GDP growth would be 0.8 percent higher—a considerable prize in an economy still searching for robust growth in the aftermath of the 2008 recession. To put the economic opportunity in stark terms, the United States could add an economy the size of Texas in less than a decade.
Every state and city can make further progress toward gender parity and add at least 5 percent to their GDP, and half of US states can add more than 10 percent. The 50 largest metropolitan areas in the United States could increase their GDP by between 6 and 13 percent by 2025. MGI has measured the distance from gender parity of all 50 states and the 50 top cities using two new scoring systems: the State Parity Score and the City Parity Score.
The economic potential is so large because, despite a great deal of progress on issues such as education, the United States still has very high gender inequality both in work and in society. MGI looked at ten indicators and inequality is high or extremely high on six of these. They are women in leadership and managerial positions in business; the unequal sharing of unpaid work (if this work were counted as GDP, it would be valued conservatively at an estimated $1.5 trillion a year; violence against women; the representation of women in politics—the United States is one of the worst-performing developed nations in the world; single mothers, and teenage pregnancy. The United States has one of the highest share of single parents in the world—one in four US families is headed by a single mother living in poverty according to the OECD. The teen birth rate is still high compared with rates in other developed countries, and is estimated to have cost the nation nearly $10 billion in 2010.
About 40 percent of the economic potential would come from more women joining the labor force, around 30 percent from closing the gap between men and women on working part time and full time, and the rest from women shifting into jobs in higher productivity sectors of the economy. On average, a woman in the United States works 89 percent of the paid work hours of a man, due in part to the fact that women do 42 percent of the full-time jobs but 64 percent of the part-time jobs. And women are more likely than men to be working in lower-productivity sectors such as health, social work, and education, and less likely to be employed in higher-productivity sectors such as manufacturing and business services. Achieving this potential would require about $475 billion more capital investment in 2025 to help create the 6.4 million jobs to secure the boost to GDP and improve productivity.
So how can the United States move forward and capture this considerable economic prize? The answer is to do more of what is already being done by replicating best practice.
One government measure that can lower the barrier to women taking paid work if they choose is the provision of paid parental leave. The United States is still one of only nine advanced OECD economies that do not offer this at a national level. Yet four US states—California, New Jersey, New York, and Rhode Island—plus the District of Columbia do provide publicly funded paid leave. The private sector can weigh in here. Many employers offer flexible options to their employees irrespective of whether this flexibility is needed to care for a child or an elderly person. Fannie Mae offers similar flexibility alongside benefits such as assistance for adult day-care programs.
Companies can do much more to boost the share of women in management positions. Some have done so. Lockheed Martin initiated its women accelerating tomorrow program in 2009, and today one-third of the board is female. Representation in politics is another area where significant progress can be made and where there are examples of success. Training of female candidates is important. The Center for American Women and Politics finds that half of the women currently in political positions have been through some type of campaign training prior to their election. The Women’s Campaign School at Yale University provides a curriculum that is both designed by, and targeted at, women, and aims to address the cultural challenges faced by women in politics.
Collaboration between governments, non-profits, and companies can be highly effective. The National Campaign to Prevent Teen and Unplanned Pregnancy works with popular television shows targeted at the teen market and with TV networks such as MTV to embed messages in programs. The National Survey of Family Growth partly attributes the decline in US teenage pregnancies since 2008 to such efforts.
There are examples of effective action on all aspects of US gender inequality: the challenge is to replicate those efforts. The very large economic--and human--gains on offer should prove sufficient incentive.
Kweilin Ellingrud is a partner and leader of McKinsey & Company’s Minneapolis office. James Manyika and Jonathan Woetzel are directors of the McKinsey Global Institute and senior partners at McKinsey. They are authors of The power of parity: Advancing women’s equality in the United States.