Why more women in the workforce is a win-win for employers

When it comes to more women participating in the workforce, the numbers show a double win for employers: more available talent during a tight labor market and improved favorability ratings by all employees at companies that lead in gender diversity.

These findings come from recent labor-participation rates for women who are prime work age (25 to 54), along with a recent Willis Towers Watson report, which found correlations between the company’s employee-engagement survey and data from the 2019 Bloomberg Gender Equality Index.

By the Numbers

The St. Louis Federal Reserve Bank’s economic-development figures for women show a slow but steady rise over the last nine years. In 2011, the participation rate bottomed out at 68.87% for the first time since 1988. However, by the second quarter of this year, the rate rose to 73.43%, less than a point lower than the all-time high of 74.25%, which was hit back in 2000.

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By comparison, men’s participation has risen much faster, from a low of 80.71% at the end of 2009 to 86.48% in the first quarter of 2019. The numbers showed a slight dip to 86.24% in the second quarter, even while the women’s rate rose slightly by .21 percentage points.

What’s behind the uptick in women’s workforce-participation rate? It’s a long-term gain, based on increased levels of education, women’s ability to delay childbearing until they’ve established their careers in their 20s and more policies that promote work-life balance at the employer and government levels, says Kate Bahn, director of labor market policy and economist at the Washington Center for Equitable Growth. The organization promotes ideas and policies for building strong, stable and broad-based economic growth.

Despite the rise, she notes there’s still room for considerable improvement.

“The U.S. employment system is structured in such a way that it’s really hard for women to balance care responsibilities with their jobs when there is not universal paid-leave sick days and flexible [and predictable] scheduling,” Bahn says.

RELATED: Click HERE for a preview of the Oct. 1 Women in HR Tech Summit. 

While the rise in women’s participation is a benefit for the economy–wages remain stable for both sexes, and the increased supply of labor from women avoids pay inflation, which can happen during a tight labor market–It’s not always good for women’s earning power.

Bahn notes that women continue to earn only 80% of the pay men earn. This wage gap doesn’t seem to be overtly tied to the “traditional” idea of paying men more because they are the breadwinners. It’s more related to the types of jobs prime working-age women are likely to get.

Bahn says the traditionally female-dominated fields of healthcare and education are high-growth areas for available jobs but they also represent some of the lowest-paid occupations, such as home health-aide work. “There’s still a lot of catching up to do,” she notes. That means policies and programs that reduce “occupational segregation” and give women access to different career paths and improved pay.

Good for Engagement and Retention

Willis Towers Watson’s recent report on favorability ratings of 1.7 million workers from companies in the 2019 Bloomberg Equity Index (BEI) list shows that increased gender diversity and opportunities for women to move up the career ladder have a positive overall impact on employee engagement and employer-favorability ratings.

The report matched results from BEI data on gender-diversity programs, practices and services with Willis Towers Watson’s annual employee-engagement survey data for 32 companies in the BEI and analyzed the correlations between the two data sets.

“We are seeing more and more companies making gender diversity and equality a top priority, and rightfully so,” says Laura Sejen, managing director, human capital and benefits at Willis Towers Watson. “As our analysis shows, even small steps can make a difference. Companies that are making a push toward gender diversity are experiencing a meaningful and positive impact on employee attitudes toward leadership, career development and other aspects of the workplace.”

For example, she notes that when women make up more than one-third of promotions at a company, workers gave higher favorability scores in a variety of areas, such as teamwork, performance evaluation, retention, company image and senior leadership. For the last area, favorability scores were 75% for the one-third-promotions firms, a 9-point increase over scores for companies below one-third. Similarly, teamwork favorability clocked in at 81% for the one-third-promotions firms, compared to 72% for the others. Other ratings showed similar favorability responses with other measures. Of note, the results were from both men and women, showing the positive impact of equity in the workforce.

“There seemed to be some magic around that one-third threshold when we were looking at the data,” says Sejen. “That seemed to be when the favorability scores jumped.”

She adds that “study after study has shown that [gender diversity] correlates with better outcomes ultimately in terms of financial performance,” and favorability scores reflect engagement and retention, which also drive business performance.

“It’s just another piece of research providing evidence that diversity is good for business–it’s not only is it the right thing to do, but it’s good for business,” Sejen says.

Building Gender Diversity

With gender diversity and equity being front and center on C-suite and HR agendas, what can companies do to promote both?

Aside from pay, which is always a No. 1 draw for employees, that old chestnut of promoting better work-life balance through policies and programs still holds true. These include paid time off, predictable and flexible scheduling, and affordable childcare.

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“Workplace policies that help balance caregiving is important for all workers, not just new mothers,” notes Bahn.

Sejen adds that men who have caregiver responsibilities in homes where women are the breadwinners also benefit from improved work-life-balance options.

A 2017 Center for American Progress report co-written by Bahn demonstrated the benefits from California’s Comprehensive Paid Family and Medical Leave program. People who cared for family members other than new children increased their labor-force participation from 8% in the short run to 14% in the long run when they had access to paid leave.

“Having these types of programs allows workers to balance work and their personal lives and match to better jobs,” says Bahn. “They’re more productive in those jobs, which means there’s more economic growth, and [that growth] can be shared with workers. A basic tenet of labor economics is that, if employers are concerned about being able to find, hire and retain workers, [then they should] pay them more.”

She concludes that if companies are profitable, retention can be improved if they “share their growth with workers in the form of higher paychecks.”

That is a bottom line that can benefit men and women and their employers in the long term.


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Maura C. Ciccarelli
Maura Ciccarelli is freelance writer based in Southeastern Pennsylvania. She can be reached at [email protected].