Equal Pay For Women Is A Growth Accelerator!

By Neal St. Anthony
Star Tribune (Minneapolis)

WWR Article Summary (tl;dr) A new report from Mckinsey & Co. reveals the economic empowerment of women is good for a company’s bottom line! The study of 366 companies found that companies add 1 percentage point to operating profits when they increase management diversity by 10 percent–adding one woman or a person of color for every 10.

Star Tribune (Minneapolis)

Kweilin Moore Ellingrud is the co-author of a just-released McKinsey & Co. report that found “gender parity,” or paying women equally to men, is not just fair. It’s an economic growth accelerator.

“Across 95 countries that we studied, the U.S. is the most gender equal,” said Ellingrud, managing partner in McKinsey’s Minneapolis office. “But even here, it’s a $2.1 trillion opportunity, a 10 percent increase in U.S. gross domestic product [GDP].

“That’s the equivalent of the GDP of the state of Texas.”

Moreover, related research by McKinsey found that “companies in the top quartile for diversity tend to outperform their peers across all geographies.”

A McKinsey study of 366 companies found that, basically, companies add 1 percentage point to operating profits when they increase management diversity by 10 percent — adding one woman or a person of color for every 10.

Companies that employ, including in the executive ranks, minorities and women in numbers that at least approach their representation in the population tend to perform better because they attract more talented job applicants; improve decision making through different perspectives and backgrounds; motivate employees who see that people other than white males can advance, and improve a company’s popularity.

This is important when our economic growth increasingly depends on expanding the pool of trained employees as baby boomers retire.

Ellingrud’s study, published in April by the McKinsey Global Institute, found that the U.S. could increase economic output by $2.1 trillion over the next decade by increasing the female rate of participation in the labor force, their hours and their participation in higher-value jobs, as well as ensuring that they are paid as are men for the same work.

“The intent was never to [characterize the study] as something that shrinks the opportunity for men,” Ellingrud said. “Rather, it is to increase the economic pie overall for everybody, including women and families.”

In Minnesota, the economic opportunity stands at $39 billion, to increase state economic output, and wealth, by 9 percent by 2025.

Ellingrud, 39, is kind of the walking embodiment of the emerging American economy.

She is the daughter of a doctor from northern Minnesota and a Malaysian-born immigrant mother, who started a chain of successful restaurants in Seattle. Ellingrud was encouraged since she was a girl to wonder, explore and learn.

In addition to earning a graduate degree from the Harvard Business School, Ellingrud traveled and studied in China, Japan, Ecuador and France, living with local families and learning the languages and customs at ground level.

Married and the mother of three daughters, she also knows the big inhibitors to women’s economic progress: lack of skills and education; teenage pregnancy and single motherhood, which tends to keep women in poverty; violence against women, and underrepresentation in politics.

Ellingrud also serves on the board of the Minneapolis YWCA and the Jeremiah Project, which works to educate, house and advance single mothers. These outfits, starting with the YWCA and young girls, empower women to learn-and-earn at their highest levels, partly by surrounding them with accomplished, empathetic mentors.

Ellingrud took a two-year break from McKinsey a decade ago to work for Boston’s Center for Women & Enterprise, a not-for-profit organization that helps women entrepreneurs start and grow businesses. She created a low-cost microloan program for low-income female entrepreneurs who start businesses around their skills as cooks and cleaners, as well as budding accountants and contractors who otherwise could not raise capital.

Ellingrud also serves on the board of College Possible, a nonprofit that helps low-income students achieve college and success, partly by supporting them with mentors and other services during what can be a daunting time for underprivileged girls without support networks.

Diversity is to be embraced, not feared, if we want to advance as a culture and an economy. As we have, sometimes haltingly, since the 1960s.

The nation discovered during World War II that women could be trained to work in factories, riveting steel and aluminum as well as flying airplanes. Over the past 40 years, women have become the majority in college, and they have advanced in law, medicine, business, engineering and the trades.

Meanwhile, the American economy outperformed the world.
And there is still opportunity. That’s whether to help a 22-year-old high-school dropout with a child and no support earn a high-school equivalency job and get the training to become a $22-an-hour computer-support jockey. Or to graduate from college and join an accounting firm or McKinsey.

The McKinsey study is important because it recognizes that the world could be $12 trillion richer, and the U.S. $2 trillion, if we focus on enabling women and rewarding them appropriately. The male-female gap may never completely disappear. That’s partly because women are out of the workforce more caring for children and elders, and they tend to work lower average productivity sectors such as hospitality, education and social work.

Regardless, maximizing diversity and opportunity means a better, fairer society, as well as a bigger economic pie.

“This opportunity is a glass half-full,” Ellingrud said.

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