Canada a world leader in growing female workforce participation

The head of the U.S. Federal Reserve’s regional bank in Richmond, Va., was in Ottawa this week, doing the rounds of policy-makers at a delicate time for that country’s central bank.

The Federal Reserve (Fed) is grappling with an economy besieged by risk. The U.S. trade war with China is moving toward a pivotal point. Consumer confidence has taken a dive. And Fed chair Jerome Powell is in the crosshairs of U.S. President Donald Trump, facing threats from the president to cut rates or else.

But Tom Barkin, the president of the Federal Reserve Bank of Richmond, wanted to talk about daycare.

Of course he did. Because that’s where the seeds of economic growth can be found. Once we look through all the political noise and daily international upheaval that central banks are grappling with these days, that’s what the United States, Canada and many a mature, developed countries are not seeing much of in their future.

To be sure, Barkin was also in town to share ideas on monetary policy and economics more generally. But he came armed with a pile of data and research on how Canadian women have come to be so much more active in the workforce than their American counterparts, and he was asking lots of questions.

If American women were to have the same rate of participation in the workforce as in Canada, there would be an extra 5 million prime-age workers available in the United States, Barkin has noted.

“That would be a significant boost to our potential growth.”

With retirements and aging, workforces in many advanced economies are not growing much — if at all. So, governments and employers are looking hard at how to bring more people into the workforce, through immigration, raising the de facto retirement age or better accommodating workers with disabilities. But sheer numbers point to women being the big solution.

Female participation in the workforce in both Canada and the United States grew quickly and steadily through the 1970s and the 1980s. But then in 2000, women’s participation in the United States stalled, and then even dropped back. Canada’s has levelled off too, but at a higher level. By 2017, Canada’s participation rate for women was eight percentage points higher than in the U.S. — enough to catch the eye of American researchers.

But Barkin is not heading back to the U.S. about to recommend the federal or state governments get heavily involved in funding daycare or implementing oneyear or 18-month parental leaves. Instead, he looks to the private sector and employers themselves as the best prospects.

With more stable scheduling at work, flexible hours, and family-friendly policies in workplaces, companies — especially those who are desperate for more qualified workers — should be able to find their own ways to pull women in from the sidelines.

“There’s a huge opportunity here for people to get innovative,” he says. “I think creative business people are going to figure out ways to close the rest of that gap.”

That’s advice that Canadian employers should pay attention to.

Before we in Canada get all righteous about our superior participation rate, it’s notable that neither country has equal participation between men and women. In Canada last month, 91.4 per cent of primeage men were either employed or actively looking for work. For women, the comparable rate was 83.4 per cent.

Plus, Canada is thirsty for new sources of economic growth. Even with more women in the workforce than the United States, we are still facing growth rates below 2 per cent for the foreseeable future — not quite enough to fund all the social supports we are used to or to maintain our standard of living.

Economist Lindsay Tedds at the University of Calgary is tickled to see female workforce participation become mainstream at the Fed and elsewhere.

But she points to prohibitive costs for daycare in Canada’s largest cities and lower wages for mothers returning to work as serious detriments that need fixing.