If the economy starts looking up in the next couple of years, you’ve got women to thank. At least, that’s according to a new report from Ned Davis Research (NDR). From job participation and employment, through to the stock market and GDP, a new study titled The Rising Influence of Millennial Women found that women currently in their late twenties and early thirties are emerging as the silver bullet to many of the economy’s woes.
The global investment research company did a deep dive into women’s participation in the labor market and found the prime-age female job participation rate hit record highs in a handful of developed economies in 2023.
Among the nations where women are now having an outsize impact on the economy was the U.S., Australia, Japan, Italy, South Korea, and Germany.
The difference in change in labor activity between men and women (between the ages of 25 and 54) was most noticeable in Australia, where women’s participation has shot up by more than 3.25%, while their male counterparts sat at 0.25%.
In the U.S. the change was not as stark but still significant, with women’s activity increasing 0.5% while men’s was relatively flat.
Not only are women outpacing their male counterparts when it comes to becoming more active in the labor market, they’re also employed in more productive roles because of their higher education levels.
The report, penned by NDR chief economist Alejandra Grindal and senior analyst Patrick Ayers, found that across 19 major economies, women between the ages of 25 and 34 are more likely to have a higher level of education beyond high school than men.
Indeed in 2022, Pew Research found that in the final quarter of 2019, women overtook men to make up for more than half of the college-educated employees in the workforce, and the trend has stayed.
The study found, similar to Grindal, that while the number of college-educated men (age 25 and older) in the workforce grew from 29.1 million in Q4 2019 to 30.5 million in Q2 2022, the rise during the same period was more pronounced among women—29.1 million to 31.3 million.
As a result, 50.7% of college-educated talent are now women.
Grindal explains the correlation between education, employment, and productivity, writing: “The unemployment rate tends to be lower among people with higher education, which helps explain the greater take-up of women in the workforce. People with greater education are also more likely to have full-time jobs and to be employed productively.”
Women’s tertiary employment is one piece of the puzzle, but Grindal notes there’s been another major change in the labor market that has benefited women: hybrid and remote work.
While the shift has been felt by both men and women, Grindal writes it has had an “even greater impact on women, especially those with children.”
Millennial women’s spending power
Grindal goes on to look at what women do with their wages now that they’re participating more widely in the workforce—and it’s good news for the economy as a whole.
While American women between ages 25 and 44 tend to have lower incomes, they outspend their male counterparts by $1,000 to $2,000 a year.
The Bureau of Labor Statistics’ consumer expenditure survey found women spend more on apparel, particularly compared to men between 35 and 44, and significantly more than men on personal care items.
Grindal also notes: “Single women are more likely to own a home, specifically in the 35–44 age group, with homeownership at 40%, vs. males at 36%. This likely helps explain why female millennials tend to spend more on furniture and other home-related purchases compared to males.”
As well as edging onto the property ladder—despite current barriers to entry—Grindal writes women are also securing the economy of the future, explaining: “Females also have a greater tendency to spend money on educating their children, which leads to more productive generations down the road.”
The overall impact, the report found, is that if more women continue to enter the workforce this could offset the downsides of the globe’s aging population.
If the female labor force participation rate stood at 60%, for example, the GDP of the U.S. would increase by 3%, according to the report’s calculations.
This is at the smaller end of the scale. India’s GDP could be increased by more than 40% while Egypt’s would balloon by more than 50%.
This, of course, has a knock-on effect on Wall Street.
“The premise is that when the economy has a large proportion of maturing population, workers are more productive, and incomes are higher. This ultimately results in greater spending and investment in equities, hence driving up the price,” Grindal concludes.
