Transformative Caregiving Proposals would increase GDP by at least $330 billion

By Katherine Gallagher Robbins and Anwesha Majumder

The transformative investments proposed by the Biden-Harris administration — a national paid family and medical leave program, $425 billion for child care and early education, and $400 billion for home- and community-based care services — are critical not only for women and families’ economic security, health, and wellbeing but also for the country’s economic growth.

Our recent analysis estimated that the American Jobs and Families Plans would increase women’s labor force participation by at least 2.2 percentage points in the first year alone. Using a simple calculation, we conservatively estimate that this increase would grow the nation’s GDP by more than $330 billion (1.5%) — roughly $1,000 per person.* While caregiving has historically been seen as an individual responsibility, mainly placed upon women to provide paid and unpaid care, this estimate demonstrates the potential power of these investments to accelerate the economy and begins to reverse generations of systemic sexism and other barriers to economic mobility.

This increase in GDP — due to at least 3 million women currently constrained by caregiving responsibilities joining the labor force — is not the only way these proposals would boost the economy. Palladino and Lala estimate that these caregiving investments would create 2.1 million new jobs, 1.6 million of which we estimated would be filled by women. These new jobs and growth in labor force participation would increase the nation’s tax revenue and increase our international competitiveness with other countries where women’s labor force participation is substantially higher — due in part to their more robust supports for caregiving.

Research shows that increasing women’s labor force participation does not just improve the economy in general; it also supports workers directly. For example, Economist Amanda Weinstein’s work shows that, accounting for a number of factors that impact women’s labor force participation, “every 10% increase in the female labor force participation rate in a metropolitan area is associated with a 5% increase in median real wages — for both men and women.” If that finding held true across geographies, our estimated growth in women’s labor force participation would be associated with a nearly 2% bump for the typical worker, roughly $800 per worker annually.

Women’s labor force participation is critical for women’s and the economy’s success. Prioritizing caregiving policies and increasing women’s labor force participation in the economic response to COVID-19 — and in proposals to transform the nation’s economy — is vital. Doing so requires centering women in economic policymaking and dismantling generations of racist and sexist norms that have kept women from achieving their full potential. The Biden-Harris administration has proposed transformative caregiving policies that center women and grow the economy. Now Congress must act to ensure these policies become reality.

*Methods note: To estimate the increase in GDP due to the increase in women’s labor force participation, we follow the same simple method as the Brookings Institution’s paper “Lessons from the rise of women’s labor force participation in Japan” (see their technical appendix for details) and employ data from the Current Population Survey and the U.S. Bureau of Economic Analysis). An alternative method for estimating GDP increase based on labor force participation increase yields a larger result, indicating that our findings are conservative. This analysis focuses solely on the impacts of caregiving proposals on women’s economic contributions. For a comprehensive macroeconomic analysis of the Build Back Better agenda, see Zandi and Yaros.

For more on why caregiving supports are so essential for women, read our recent report, “Women’s Work: Key Policies and Paradigms for an Inclusive Post-Pandemic Economy.”