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Want to shrink the wage gap? Help parents care for kids.

Paths to progress

Women lose out on $500 billion annually due to the gender pay gap. But advocates and businesses are warming to the idea that more investment to help with child care could shrink the gap – and grow the economy.

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    Fans stand behind a large sign for equal pay for the women's soccer team during an international friendly soccer match between the United States and Colombia at Pratt & Whitney Stadium at Rentschler Field last week in East Hartford, Conn.
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Norway may seem like an odd subject on Equal Pay Day in the United States. But for some people, it's exactly the subject to help kick-start a move to reduce the stubborn income gap between men and women.

In the early 1990s, Norway tried something that was a first in Europe: Four weeks of mandatory paternity leave for its workers. In addition to changing the country’s cultural attitudes toward child-rearing (fathers taking several months off to care for their children is now commonplace) the now-10 weeks of “daddy leave” has had an economic side effect as well. The country’s gender wage gap has shrunk by more than half.

In 1991, working women in Norway made about 20 percent less than men, according to data from the Organization for Economic Cooperation and Development (OECD). By 2010, it was down to 8.3 percent.

Holding up any policy from Norway as a panacea for social issues in the US is problematic. Norway is smaller, more socially progressive (with a heavily subsidized national day-care system), and has a more centralized government. But as the US observes Equal Pay Day on April 12, advocates for gender equality in both the public and private realms are giving credence to the idea that supporting women at home is inextricably linked to supporting them in the workplace. 

Specifically, they’re making the case that more investment in child care could help shrink the pay gap – with the added bonus of growing the economy. According to an analysis from the left-leaning Economic Policy Institute released earlier this month, access to affordable child care would help increase the participation of women in the labor force, thereby growing the economy by an estimated $210 billion each year.

“The gender wage gap is definitely driven in part by the wage penalty faced by women because they are more likely to have an extended period out of the workforce while caring for sick relatives,” Josh Bivens, research and policy director of EPI, writes via e-mail. “By giving parents greater access to high-quality, affordable child care and early childhood education, you make it easier for those who want to work to participate in the labor force…. This increases the size of the labor force, which in turn boosts GDP.”

Some businesses and business groups agree. 

“Subsidized child care can encourage low-skilled parents to maintain their connection to the labor force or to upgrade their skills through education, thereby contributing to economic growth and productivity over the longer term,” reads a 2015 analysis of state child-care costs from the Committee for Economic Development, a nonprofit business-led public policy organization in Arlington, Va. It recommends expanding certain child-care credits for both workers and employers.

Equal Pay Day in the United States is observed every year on the day that women catch up financially to the annual pay of their male counterparts. This year’s observance falls on April 12, meaning it took American women one year and 103 days to earn what American men earned during 2015.

The day got plenty of political attention, too. President Obama dedicated a monument to women’s equality Tuesday, and Hillary Clinton took part in a panel on pay transparency that included Megan Rapinoe, one of the US women’s soccer stars who filed a complaint with the Equal Employment Opportunity Commission against the US Soccer Federation over unfair pay practices last month. 

Per Census Bureau data, women in the American workforce make 79 cents for every dollar a white man makes, and it’s worse for women of color (60 cents for black women; 55 cents for Latino women). That shortfall costs American women a combined $500 billion annually, according to a report released Tuesday by the National Partnership for Women & Families.

If that gap were eliminated, on average, “a working woman in the United States would have enough money for approximately: 83 more weeks of food for her family; seven more months of mortgage and utilities payments; 11 more months of rent; or nine more years of birth control,” the report reads.

The wage disparity between men and women has barely changed over the past two decades, says National Partnership vice president Vicki Shabo. In 2006, women made 77 cents for every dollar earned by white males, she says.

On family leave, at least, there has been small but promising movement on several fronts. A January poll found that 80 percent of likely voters, including 94 percent of Democrats, 80 percent of Independents, and 65 percent of Republicans characterized things like equal pay, paid time off, and affordable child care as “good for our nation." The issue has become a talking point for presidential candidates and politicians on both sides of the aisle. 

Three states, Rhode Island, California, and New York, as well as cities like Washington, D.C., and San Francisco, have introduced their own paid-leave rules. Major tech companies, from Twitter to Netflix to Etsy, in recent months have been all but falling over themselves to introduce increasingly competitive and inclusive paid-leave allowances for employees.

There are still obstacles, Ms. Shabo says. Just 13 percent of US workers have access to any paid leave at all, and “if you look at the states with the populations most in need, against those that have taken action, there’s a pretty substantial mismatch,” she says. “The states that need it are not inclined to make their own laws and that’s why federal action is needed.” 

Things are more challenging on the child-care front. In 33 states, outside infant care costs more than in-state college tuition. Paying for care for two children costs more than rent in most of the country, and it’s a cost that even the highly competitive tech industry has yet to address. But Shabo says that while investments in those areas are important in addressing equality, there’s a long-term benefit for businesses as well.

“It contributes to workplace retention and  helps women stay employed,” she says. “Turnover is costly. Replacing a worker can be 200 percent of a salary.” 

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