November 13, 2018 / 6:11 PM / a month ago

Need more workers? Improve parental leave, Fed paper says

(Reuters) - The United States economy could add as many as 5 million workers to its labor force by improving conditions for women workers, including offering better parental leave, a paper published by the San Francisco Federal Reserve Bank on Tuesday found.

Worker shortages have become an increasing concern for U.S. companies now that unemployment has fallen to 3.7 percent, and part of the problem has been a decline in the rate at which working-age people participate in the labor force.

The San Francisco Fed paper, whose lead author is the bank’s new president Mary Daly, analyzed Canada’s track record of a rising participation rate, and found that most of the difference can be attributed to policies like childcare subsidies and parental leave policies that make it easier for Canadian women to remain in the workforce after they have children.

“The contrast between the incentives Canada and the United States offer prime-age workers to remain attached to the labor force is clear,” Daly and her co-authors wrote. “By reversing the trend in participation of prime-age women to catch up with Canada’s labor market participation rate, the United States could add as many as 5 million prime-age workers to its labor force.”

Reporting by Ann Saphir; Editing by Chizu Nomiyama

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