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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2022 Annual Theme: Stakeholder Capitalism
Market-Based Solutions to Vital Economic Issues
Kenan Insight
May 25, 2022

Could Female-Specific Benefits Bring Women Back to Work?

After making great strides in the 1970s and ’80s, female labor participation rates peaked at the turn of the century and have been in decline since. While the progression of baby boomers into retirement has played an important role, it is notable that females in their prime-age working years (25 to 54) are also participating at a lower rate. Exacerbated by the pandemic, low female participation rates have broad economic impacts that are worth exploring, especially in light of the worker shortages the U.S. is experiencing. Competition for workers has affected how businesses are attracting and retaining their employees. As females continue to lag behind pre-pandemic participation rates, we examine the context behind low female labor participation rates along with what firms are doing to attract and retain female workers, female-specific benefits, and the accompanying macroeconomic implications.


Historically, fewer females enter the labor force then men and the gap between female and male participation rates widens substantially as people move into their mid- to late 20s. By their early 30s, participation is 15 percentage points lower for females than males.

The recent effects of the COVID-19 pandemic have further reduced the female labor participation rates in the U.S.1 Females disproportionately dealt with a majority of job losses attributed to the pandemic. Moreover, research from the Federal Reserve found that labor force exits were higher in Black and Latina women and disproportionately affected lower-earning women with children.2 While female participation has rebounded, the latest data from the Bureau of Labor Statistics survey indicates that female employment is roughly one million lower compared with early 2020 at the start of the pandemic versus a drop of 400,000 for males.3 These employment losses are concentrated among lower-skilled women; in fact, employment for college-educated women is roughly 500,000 higher than pre-pandemic levels, though the number of women with college degrees has grown even faster (thus the participation rate for this group has declined). Among all groups, Black women who did not have a college degree suffered the most for both employment and labor force participation.4

Women have had a slower return back to pre-pandemic labor rates. Contributing to the slow return, research has shown women during the pandemic handled a majority of domestic tasks, child care needs and virtual schooling responsibilities when school shutdowns were prevalent across the country.2 As individuals start to return to the workplace at higher rates, there is strong incentive among firms to attract and retain their female labor talent. Benefits that are now commonly used to attract and retain female workers are expanded maternity leave, child care reimbursements, and fertility and family-planning coverage.

Participation Rates

As of April 2022, prime-age female labor participation rates were at 76.2%, with men at 88.7%.5 Female involvement in the workforce remains increasingly important for the economy and for growth and stability in various segments of the economy (health care, education, food services, advertising, human resources, fundraising, etc.) where females are the majority of the workforce.6 For example, as of 2020, 87.8% of registered nurses, 96% of dental hygienists and 73.5% of human resource workers were female. Attracting and retaining female workers is a critical issue where many businesses are actively exploring solutions.

Female-Specific Benefits

One way businesses have attempted to attract and retain female workers is through the expansion or addition of female-specific benefits. These benefits include increases to maternity leave, child care services, and access to and coverage of fertility and family-planning services. Once uncommon employer benefits such as egg freezing are becoming standard benefits for incoming female workers.7 Expansion and addition of these female-specific benefits could aid companies in the competitive labor market and help retain their female staff. The cost of services such as in vitro fertilization, which can exceed $10,000 per cycle, is now covered by more than 40% of large employers across the U.S.8 Companies specializing in offering fertility benefit services such as Kindbody have seen rapid and exponential growth in their businesses during the past few years. Progyny, the first fertility benefits management company to go public, has doubled its client base from 2021 to ’22. Total revenue for Progyny from 2020 to the first quarter of 2022 has increased more than 50%, and in 2021 the company brought in over $500 million in revenue.9 Other firms in the fertility sector such as Maven Clinic have reached startup unicorn status, receiving hundreds of millions in series funding. Venture capital continues to increase investment in fertility service companies; 2020-2021 saw greater than a 30% increase in VC funding. As of 2021, fertility startups have received more than $300 million in funding from VC firms.10

Macroeconomic Implications

Working women in the U.S. are giving birth at later ages than in the past, and they are also seeking easier access to fertility services such as IVF and egg freezing. Fertility rates among young females in the U.S. have substantially decreased over the decades. From 1990 to 2019, fertility rates (birth per 1,000 females) decreased 43% among females ages 20-24 and 22% among females ages 25-29. In contrast, over the same period, fertility rates increased 22% and 67.35% among women ages 30-34 and 35-39, respectively.11 As the U.S. struggles with a declining birth rate, access to these services could potentially raise fertility rates over time. As of April 2021, 19 states have fertility insurance coverage laws.12 These laws, however, differ broadly state by state; some give explicit coverage of services such as IVF or egg freezing while others are less specific. State coverage of these benefits continues to change over time, and various states have fertility laws in draft phases, pending review, or that have been recently passed or vetoed.

Female labor participation in the U.S. is considerably lower than that of nearly all the other G-7 countries and 13 percentage points below developed economy leader Sweden. As employers continue to expand their female-specific benefits in efforts to attract and retain female staff, we could see that gap begin to narrow. Both the increase in participation of women in the workforce and potential long-term impacts on birth rates are positives for the economy. The Congressional Budget Office estimates the U.S. labor force will grow 0.4% per year over the next 10 years. If the labor force could increase at the 0.8% annual rate experienced 10 years ago, then the economy would be roughly $1 trillion larger 10 years from now with a total of $5 trillion more GDP generated over the 10 years.13 The resulting economic benefits, if realized by employers, may incentivize employers who do not offer female-specific benefits to consider them.

Employer Implications

Work by UNC Kenan-Flagler Business School Finance Professors Paige Ouimet and Elena Simintzi has highlighted that female-friendly benefits such as maternity leave are used by firms to increase gender diversity and attract female talent. Generous maternity benefits can help firms attract and retain women who plan to make use of such policies as well as more broadly signal a female-friendly workplace. Ouimet and her co-authors find that generous maternity benefits are most common in labor markets and geographies where there is a low supply of female talent and, hence, greater competition for female talent. Generous maternity benefits appear to increase gender diversity. Moreover, these generous benefits appear to be value enhancing for shareholders, as evidenced by stock price changes around the announcement of state-level policies that provided paid family leave.


Understanding the broad impact of female-specific nonwage benefits as competition and shortages continue to plague the workforce is vital for both individual firms and the economy as a whole. In these contentious times, focusing on fertility and maternity benefits may be polarizing for firms, but there could be missed opportunities for attracting and retaining female workers if firms do not conduct their due diligence on these matters. As female labor participation is a critically important economic variable, expansion of these female-friendly benefits could have long-term positive impacts for the U.S. The private and public funding markets have both seen the tremendous growth potential in fertility and maternal benefits, as noted by the revenue increases and strong investments in these companies. It will be essential to track how these benefits have affected both individual workers as well as firms. It will also be necessary to see how expansion of these benefits is affecting the clinicians and medical providers who inevitably deliver many of these services to the individual.

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