A Labor Market that Works for Women
This International Women’s Day, we highlight three labor market innovations that are driving unique benefits for women.
Today, we’re celebrating International Women’s Day by recognizing how the labor market has evolved to better support women of diverse backgrounds and needs. The Labor Policy team at Mercatus is a team of three women who benefit from a dynamic labor market in different ways. Our team Director Liya is a working mom of two young children, our pre-doc Researcher Revana is an immigrant, and I’m the Program Manager, supporting my husband through grad school, while also managing my own academic pursuits.
While our needs and wants from the labor market are different, all three of us rely on an innovative, flexible, and dynamic labor market to help us balance the unique trade-offs we face at work and in our personal lives. Today, we want to highlight three major innovations that are distinctly benefiting women (ourselves included): artificial intelligence, flexible work, and portable benefits.
Artificial Intelligence
In a 2010 TedTalk, Statistician Hans Rosling gives the “magic washing machine” as an example of how economic growth and technological innovation have dramatically improved people’s lives. He says proudly, “to my grandmother, the washing machine was a miracle.”
While we have all grown accustomed to the washing machine, Rosling emphasizes an important point: technological innovations have been making work inside and outside the home easier since the Industrial Revolution. The advent of email, spreadsheet software, and video conferencing were all major innovations that we now consider a mundane part of our day at work.
We are experiencing the next technological innovation with the explosion of artificial intelligence. AI has made our team more productive through big things like improving our coding abilities and small things like taking meeting notes. Overall, the data points to AI improving worker productivity – one study showed that access to AI tools increased worker productivity by 14% and increased productivity for novice and low-skilled workers by 34%.
Increased productivity isn’t the only valuable economic benefit from AI. AI also helps increase women’s employment and attachment to the labor force. A study published in NBER found that exposure to AI, especially in occupations more susceptible to AI enabled automation, increased the share of female employment by 2.2-2.9% overall. This effect is higher in countries with higher female educational attainment and where women’s labor force participation rates are already high. AI has the potential to greatly enhance women's economic opportunities and help close gender gaps in professional and technical fields.
While there are concerns about how automation can replace jobs, it appears that, so far, AI is proving itself to be more of a complement to the labor force than a substitution.
The washing machine was so incredible because it freed up women’s time. No longer were women forced to scrub their clothes on a washing board, they could put clothes in the wash and walk away. The same is true for artificial intelligence. Workers can delegate tasks to AI and focus their attention on more complex, cognitive skills which in turn increases their productivity. For women, this results in better labor market outcomes. Indeed, all three of us with the Labor Policy project use and greatly benefit from AI, experiencing firsthand how these tools enhance our productivity and professional development.
Flexible Work
Flexible work arrangements make it easier for moms to juggle parenting and their careers. Years of economics research show that women tend to self-select into more flexible jobs, largely because work needs to be structured around taking care of children. The rise of part-time and intermittent work contributed to the growth of women in the labor force throughout the 1980s and 90s.
Women value flexibility so much that many women would take a pay cut in order to get more flexibility at work. Work flexibility may also help moms move back into the workforce. One survey found that nearly two-thirds (62%) stay-at-home mothers said that they would need work flexibility in order to go back to work.
Flexible work also makes it easier for young couples to decide to have children. During covid, when many young couples were working from home, the fertility rate for young women rose with many women citing their unique ability to adjust to the changes a baby would bring in the age of forced remote work. Flexible work may also increase the number of children families have. Indeed, 33% of young moms feel that their desire to work combined with inadequate childcare support contributes to not wanting to have more children. Accessibility to flexible work arrangements – which young workers are less likely to have – can help bridge the gap between childcare and desire to work.
Not every woman demands flexibility in their work, but for some women it is a benefit they can’t manage their work and personal life without. This is why a dynamic labor market generating a diversity of jobs is so important – dynamism allows women, and all workers, to pursue jobs that work for them and their families.
Flexible and Portable Benefits
While work-from-home is one important type of flexible work, the growth in nontraditional work like freelancing, app-based, or self-employment, is providing another important avenue for women. Today, anywhere from 11 to 60 million people work in the independent workforce and many of those workers are mothers of young children. Many women have chosen to leave their traditional 9-to-5 jobs to pursue independent work, mainly because they prefer flexibility and work autonomy. There is great diversity in what these women choose to do – some women may choose to shop for groceries with Instacart or set up online shops on Etsy or provide technical services on Fiverr. But all are examples of women making a living in the independent workforce.
However, our labor policies are not set up to support these types of work. Laws that tie benefits like health insurance or retirement plans to W-2 employment go back for decades. When these laws were created, the majority of workers were traditional employees. But now, our antiquated labor laws create a conundrum for women and other independent workers: take an inflexible job with benefits or a flexible, independent job without benefits.
To address this, state and federal policymakers have championed the idea of flexible and portable benefits – or benefits tied to the worker, instead of the employer. In 2023, Utah was the first state to pass a law that removed the presence of benefits as a condition to determine if someone was an independent worker or a W-2 employee. This allowed organizations like Shipt and Lyft to provide benefits to workers in that state. Copycat bills have popped up across the country and a similar bill has been introduced at the federal level by Rep. Kevin Kiley.
Portable benefits remove the false dichotomy between work flexibility and access to benefits. This can be an especially powerful tool to meet the needs of working moms.
The Future of Work is Female
The innovation and dynamism of the labor market are worth celebrating, but it’s especially worth celebrating this International Women’s Day when we think about how much these changes have benefited women. Rarely do academics get to feel so closely connected to their research, and we all feel that it's a privilege to study and walk in the shoes of women in the workforce.