The news that Janet Yellen is to be nominated as Treasury Secretary in the Biden administration is very welcome. For the first time, the signature on dollar bills will be that of a woman. Yellen is joined on the international stage by female colleagues at the head of the European Central Bank and IMF, CEO of Citigroup and by the head economists at the OECD and World Bank.
Yellen is an accomplished economist (and her husband George Akerlof earned the Nobel Prize in economics), vastly experienced in crisis management and policy. During her time at the Fed, she notably focused the narrative of the central bank onto the issue of longterm employment. Arguably, such structural issues are best left to the Treasury, and now Dr Yellen will now have a chance to prosecute them.
One worrying challenge in this regard is what some commentators call the ‘shecession’ – the fact that women have been disproportionately hit by the economic fallout.
To highlight, female unemployment as a result of the crisis is a full three percent higher than that of males, partly because women work in sectors hardest hit by the lockdown. In addition, the shutdown of schools has meant that mostly women more than men, have had to stay at home to care for children.
Unless remedied, this will set back female careers, savings and pensions, and widen the wealth inequality gap between men and women. Janet Yellen and other international policy makers have the opportunity to remedy this.
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Reflating, repairing and redirecting
In general, the Biden administration is expected to be a progressive, policy focused one and the headline appointments so far confirm this. Yellen’s first task in ‘reflating, repairing and redirecting’ the US economy will be to craft a stimulus program. This may see taxes rise, but it will likely aim to reduce inequalities across the US economy.
With the ‘she-cession’ prevalent across many economies, there are many things that policy makers can do.
The obvious short-term policy, with coronavirus cases still rising, is to better compensate women for lost jobs and businesses. A related approach is to reinforce social infrastructure such as healthcare, schools and child minding services such that women are more free to work. Another is to make permanent the notion of flexible working patterns, including the ability of most workers to work from home. Normalising labour laws, insurance infrastructure and providing home IT grants can help here.
Gender and pensions
Another area is pensions. Many people – men and women face barriers to investing – from transparency and clarity of investment products to potentially poor cost to return ratios. Governments should look further into how pension schemes can better support women workers – for example better state and employer support for older working women, and where possible enable greater contributions through tax policy. Support for financial literacy and education is another important longterm policy.
The Biden administration, coupled with a Europe that, in theory at last wants to marry values with economic policy, provide the backdrop for a dramatic departure in economic policy making. A prominent thread in this will be inequality – and gender based inequality in investments and pensions is a necessary focus here.
Source: Forbes – Money