Yellen Says Family-Friendly Work Policies Can Boost Economy -- Update

By Harriet Torry Features Dow Jones Newswires

Janet Yellen, the first female chief of the Federal Reserve in its more than 100-year history, highlighted the economic benefit of government policies that boost women's participation in the workforce, an unusual instance in which she has spoken on gender issues.

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If obstacles such as the gap between men and women's pay, the struggle to combine work and family and other factors continue to discourage many women from working, "we will squander the potential of many of our citizens and incur a substantial loss to the productive capacity of our economy," Ms. Yellen said Friday in a speech at Brown University.

Her comments come as President Donald Trump faces calls to enact family-friendly workplace policies from another high-profile woman in Washington: his daughter, Ivanka Trump, a top White House adviser. Ms. Trump has promoted issues concerning women and children as part of the administration's plan to revamp the tax code.

The White House released last week a list of principles for the overhaul that included unspecified tax relief to help families cover the cost of child- and dependent-care.Top economic advisers promised more details in a coming legislative proposal.

Since Mr. Trump's election, Fed officials have talked down the need for government tax and spending programs aimed at juicing short-term economic growth, calling instead for policies that would raise the economy's long-term potential growth rate -- the fastest pace it could expand without fueling too much inflation. Several have recommended efforts to accelerate the growth of productivity, or output per labor hour, through investment in research, education and infrastructure.

Ms. Yellen said Friday that enabling more women to work has boosted U.S. economic growth in the past and could help overcome long-term challenges such as an aging population and slow productivity growth.

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"We, as a country, have reaped great benefits from the increasing role that women have played in the economy. But evidence suggests that barriers to women's progress remain," she said.

The U.S. is an outlier among wealthy nations in its comparative lack of government support for child rearing, leaving paid parental leave largely to employers' discretion.

According to the Organization for Economic Cooperation and Development, the U.S. is the only developed country of its 35 members that doesn't offer government-mandated paid leave for new parents.

Ms. Yellen said if the U.S. had the kinds of family policies common in Europe -- such as paid leave, greater availability and affordability of child-care and increased availability of part-time work -- more women would work.

The U.S. labor-force participation rate for women aged 20 years and over -- the share that hold or seek jobs -- was 58.5% in April, compared with men's 71.7% rate, the Labor Department said Friday.

Ms. Yellen cited a study estimating that increasing the female rate to that of men would raise U.S. gross domestic product by 5%.

Mr. Trump unveiled a tax break for child-care expenses as well as policies to shore up federally funded maternity leave during last year's presidential campaign. Tax experts on both sides of the political spectrum criticized the initial proposals as poorly targeted.

Republicans have resisted the idea of having the U.S. emulate other countries' paid-leave programs by raising concerns over the costs of the measures as well as new government mandates on employers. But proposals to increase the size and reach of existing child-care tax credits have received bipartisan interest in recent years.

Ms. Yellen didn't comment Friday on the Fed's plans to raise short-term interest rates this year.

--Nick Timiraos contributed to this article.

Write to Harriet Torry at harriet.torry@wsj.com

(END) Dow Jones Newswires

May 05, 2017 16:50 ET (20:50 GMT)