A large pool of skilled potential workers could be encouraged to join the labor market with the right set of policies, according to a report published by the Federal Reserve Bank of San Francisco. Citing Canada's success with subsidized childcare and parental leave, research suggests that the U.S. "could add as many as 5 million prime-age workers to its labor force."
The participation of U.S. men and women ages 25 to 54 in the labor force has been on the decline for almost 20 years, contributing to the tight talent market with which employers are struggling. But Canada hasn't seen quite as serious a decline, partially because of the relationship women have with the labor force, the report said. Canada reduced the marginal tax rate of a second earner in a household to encourage more women to work. It has an extensive parental leave policy and has subsidized childcare, too. The authors concluded that Canada's parental leave policies are an incentive to remaining in the workforce, and that parents out on leave maintain a continuous relationship with their employer.
- The authors estimate that the U.S. could add as many as 5 million workers to its workforce if it adopted measures like Canada's to encourage women to enter and stay in the labor pool.
It seems Canada's parental leave policies benefit both its families and labor force, even with policies differing among its provinces. The U.S. remains one of the few industrialized nations without a national parental leave policy, which researchers say could attract and keep workers, specifically women, in the labor force. States, municipalities and a growing number of employers have stepped in where the federal government has declined to legislate with paid parental leave policies of their own.
Many women remain the primary caregivers in families and therefore leave the labor force to raise children. A study published in the Journal of Applied Psychology found that managers consider women who take lengthy maternity leave as less committed to their jobs. Consequentially, women are sometimes passed over for promotions or development opportunities.
Employers must go beyond adopting parental leave policies if they want to retain these workers; they must keep new parents engaged. Extended, paid leave for fathers could allow dads more time to bond with their newborns and relieve working mothers of their role as sole caregivers.
Similarly, "keep in touch" policies that give new parents updates on their job and company activities while they're out on leave can make the transition back to work almost seamless. PwC, for example, offers new parents a phased return-to-work program that allows them to work 60% of their regular schedule at 100% of their wages for four weeks after returning to work. Based on this most recent research, innovative programs like these could raise U.S. labor participation while providing new parents with the support they need.