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Transcript: Global Women’s Summit: Investing in the Care Economy

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MS. VARGAS: Hello, everybody. I’m Elizabeth Vargas. I’m a journalist and author, and I’m very excited to be joined today by Sharon Marcil, who is head of BCG’s North America Region, guiding more than 9,000 employees. It is BCG who just played that video we were just watching about the care economy, which is huge.

I know we had a great panel a little bit earlier about taking care of special needs people. This is about the enormous number of people in this country, I’m sure in this room, who find themselves in the position of holding down full‑time jobs, part‑time jobs, maybe no job, and still having to care for people. So, it’s a huge issue.

Today on The Washington Post website, there’s an article talking about that, last month, 100,000 Americans had to call in sick, missed work, because of childcare issues. It’s an all‑time high, higher even than it was during covid and during the pandemic.

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Sharon, what is the care economy, as you call it?

MS. MARCIL: Indeed. Well, thank you so much. It’s great to be here with you, Elizabeth, and with all of you today.

So, the care economy, if you think about it, it’s really‑‑there’s two parts of it. One is the paid care economy. I think that’s what we typically think of, people delivering elder care in nursing homes, in assisted living facilities, people delivering childcare in childcare centers, and that’s big, as you described. It’s a $2 trillion economy in terms the paid piece‑‑$2 trillion.

MS. VARGAS: $2 trillion, okay.

MS. MARCIL: $2 trillion. And that’s not the gray economy. That’s actually the‑‑that is the reported number in terms of the economy. There’s also an unpaid portion of it. So, if you think about it, many of us, yourself‑‑we’ve discussed this‑‑you have been caregivers, either for children or for parents or sometimes at the same time. That is another‑‑if you value that work, which we value that work, that’s another $4 trillion. So, the overall care economy, just in the U.S. alone, $6 trillion with–for children, $4 trillion being in the unpaid portion of the economy.

MS. VARGAS: It’s interesting that it’s actually the unpaid caregivers, the people who are taking care of their kids, the people who are taking care of their parents even, because we know that with the baby boomers, we have this generation of people who are sandwiched between the two responsibilities. That is a huger, a bigger portion‑‑

MS. MARCIL: Indeed.

MS. VARGAS: ‑‑of the care economy than the paid sector, which is nannies, nurses, home care attendants, daycare centers, that sort of thing.

MS. MARCIL: That’s right. That’s exactly right. Two‑thirds. It’s two‑thirds, the unpaid portion.

MS. VARGAS: And so, what are the economics of this, and why are they getting so much worse? And why are we seeing numbers like that as far as an impact on the GDP?

MS. MARCIL: That’s a great question. So, you think about care and you think about it being a social issue, and it is completely a social issue, but it is a core economic issue.

So, let me just briefly describe that. If you look at unfilled vacant jobs today in the U.S., the number is 11 million‑‑11 million unfilled jobs. If you look at the care economy, 1.8 million jobs are unfilled. There’s interrelatedness in terms of these two numbers, okay? So many of us count on paid caregivers to care for our parents, our children, or whatever that is, and so there’s‑‑when you don’t have enough people in the care economy, you don’t have people to‑‑so there‑‑there’s an‑‑

MS. VARGAS: You can’t delegate.

MS. MARCIL: You can’t delegate. You can’t delegate.

And so, let me just frame that up in terms of supply and demand. So, if you look at the supply side, I’ll quote one statistic: Since covid, one‑third of childcare facilities have either had a shutdown or have had to cut their care by 50 percent or more, because they can’t find enough qualified workers.

MS. VARGAS: What’s happening? Are people just quitting or‑‑

MS. MARCIL: Well, much has been said about the Great Resignation, Elizabeth, but the truth is the wages are low. It’s typically thought of as women’s work, so only appealing to that segment of the economy. Another core reason is many of these people actually have to take care of their own children. So, the combination of all those factors means that the supply is constrained and it’s relatively low.

And on the demand side, it’s increasing. So, if you think about the baby‑boom generation and the aging of that generation and more and more people living to be 80, 90, which is a great thing‑‑

MS. VARGAS: Mm‑hmm.

MS. MARCIL: ‑‑but in that age sector, you know, they often need care. So, there’s a demand issue. There’s increasing demand, and there’s a supply issue, which is constrained supply.

MS. VARGAS: Yeah. We were talking about that, because you have two now‑grown children who have just left the nest.

MS. MARCIL: That’s right.

MS. VARGAS: And the nest has been repopulated by your 90‑year‑old dad.

MS. MARCIL: That’s right.

MS. VARGAS: I’m a single mom with two teenage boys, two parents in their 80s, one of whom is having some problems with dementia.

MS. MARCIL: Yeah.

MS. VARGAS: So, it requires a great deal of care, and this statistic, an average employee working full‑time spends an average of 30 hours a week caregiving. That’s astonishing.

MS. MARCIL: It’s incredible. It’s incredible. That’s right. That’s what our research‑‑we’ve done research over many years, but our most recent study, which is on our website being released today, of 12,000 respondents actually has that data in it, which is 56 percent of employed people, people in the job market, are also caregivers, and the median number of hours of care they deliver is 30 hours a week. It’s incredible.

MS. VARGAS: You do have a huge report out today, which everybody can read if they would like. It’s called‑‑you can go to ON.BCG.com/care. But talk about what the economics are that you discover in this report. What is it costing us to have the dwindling supply of caregivers and the demand is at least constant or growing?

MS. MARCIL: Yes.

MS. VARGAS: It’s never going to shrink.

MS. MARCIL: Yes. We forecast that in 2030, the cost to the U.S. economy will be $290 billion. So, there’s a cost today in terms of jobs that aren’t filled and then also people who can’t get back in the workforce. The cost today, you fast forward, there’s going to be a $290 billion gap, and to dimensional‑ize that, Elizabeth, that’s actually the economy of the State of Connecticut. It’s big.

MS. VARGAS: That’s how much money we’re going to lose because of lost work, unfilled positions, or people who have to resign because somebody’s got to take care of the kids or somebody’s got to be home‑‑

MS. MARCIL: That’s right.

MS. VARGAS: ‑‑with mom or dad.

MS. MARCIL: That’s exactly right.

MS. VARGAS: And I can’t find anybody who will do it.

MS. MARCIL: That’s right.

MS. VARGAS: That’s extraordinary.

MS. MARCIL: That’s right.

MS. VARGAS: Okay. So, the other statistic that I was struck by from your report, for every 10 unfilled care positions, one full‑time worker must give up his or her job.

MS. MARCIL: That’s right.

MS. VARGAS: So, there’s actual data‑‑

MS. MARCIL: Data. That’s right.

MS. VARGAS: ‑‑for what this is translating to‑‑

MS. MARCIL: That’s right.

MS. VARGAS: ‑‑in terms of lost workforce.

MS. MARCIL: That’s right. And we’ve done research. For everyone who loses paid care, they lose it because their daycare center shuts down or it no longer becomes affordable. One in 10 employees actually have to just fully remove themselves from the workforce.

MS. VARGAS: Even though they might not want to, even though they might‑‑

MS. MARCIL: Absolutely.

MS. VARGAS: ‑‑need that job, as most people do.

MS. MARCIL: Absolutely. Absolutely. And we have both the quantitative research and then a set of very compelling stories of people who have had to make these hard decisions to leave jobs that they love and that actually are contributing to them and to their families and to the economy, but they’ve had to leave. They just were presented with no other choice.

MS. VARGAS: And 80 percent of those workers who have to drop out of the workforce because of the care economy and being unable to find people to care for‑‑women.

MS. MARCIL: Eighty percent of those who drop out of the workforce are‑‑

MS. VARGAS: So, it’s disproportionately on our shoulders.

MS. MARCIL: Yes, it is, indeed.

MS. VARGAS: Okay. Let’s get to what can be done about all this, because we have the private sector and we have the public sector.

MS. MARCIL: Yes.

MS. VARGAS: And let’s start with the private sector‑‑

MS. MARCIL: Okay.

MS. VARGAS: ‑‑because in many ways, that’s the easier solution.

MS. MARCIL: Yeah. I think, in some ways, it is. So, look, at BCG, we have a great culture. We believe in providing care benefits because‑‑

MS. VARGAS: You have a great maternity leave policy.

MS. MARCIL: And you know what, Elizabeth? It’s good business. The truth is, it’s good business.

So, I’ve benefited taking care of my father, taking care of my two girls, and we have many, many employees. Fifty‑six percent of our employees in North America have, at some point, benefited from these policies, and it’s good business because it actually drives retention. So, it’s not just about recruitment. It drives retention. It actually encourages recruitment and loyalty. It actually drives loyalty as well. So, there’s a good reason, other than altruism, for the private sector to do it.

MS. VARGAS: But why haven’t more companies followed that, that sign? I did a prime‑time special for ABC News 16 years ago after the birth of my youngest child about working mothers, and we interviewed experts who said exactly what you just said‑‑

MS. MARCIL: Yes.

MS. VARGAS: ‑‑which is that by giving mothers, especially working moms, generous leave policies, flexible work schedules, all these‑‑

MS. MARCIL: Yes.

MS. VARGAS: ‑‑they are rewarded ten times.

MS. MARCIL: Yes, they are.

MS. VARGAS: Like it’s paid back in dividends with employee‑‑you know, hard work, loyalty. They’ll really‑‑it’s incredible. And that’s been true and common knowledge for 15 years.

MS. MARCIL: It’s been true for 15 years. There has been progress. Actually, you saw kind of a big spike during covid of companies offering both maternity leave and paternity leave and family leave, but that’s coming down now. You see that number coming down.

So, you say why I think the economics aren’t understood, and that’s one‑‑

MS. VARGAS: Still.

MS. MARCIL: ‑‑role that BCG can play. Not only can we do the research and the economic research and‑‑but we can help to amplify it and talk about it. And we serve Fortune 200 clients. We serve the public sector. We can show up in those places and really share our thinking and our research to help advance this agenda.

But you asked me what the private sector can do. We learned about hybrid during covid. Pre‑covid, I barely worked from home. I was at the client site. I was in the office. We learned during covid, wow, we can be pretty productive at home as well. And so, I think hybrid work and allowing your employees flexibility to work both in the‑‑and outside of the office is thing one. Paid leave, I think, is thing two. I think thing three is having some sort of option to actually fund, you know, care; so, thinking about childcare, on on‑site childcare, or some sort of benefit in terms of childcare. And then, the last thing you can do is I think you can encourage your public‑sector leaders to lean in on this.

MS. VARGAS: Okay. You walked right into the public sector. Let’s hear it.

MS. MARCIL: Okay.

MS. VARGAS: Given we’re in Washington, D.C., with our newly divided Congress, what can the public sector do?

MS. MARCIL: We are the only developed country in the world that doesn’t have some sort of paid maternity leave. Now, we do have it in some states. So, I don’t‑‑and we certainly have it offered by some great companies, but it is not at the federal level, as you know. And I think‑‑I think that’s thing one. I think thing two is‑‑and it’s complicated but helping to support higher wages. If you look at the wages, it’s hard work. You know this. It’s hard work to take care of elderly people, and the wages, while often, mostly often higher than minimum wage, aren’t that much higher than minimum wage.

MS. VARGAS: You told me it could be only like two or three dollars more than minimum wage.

MS. MARCIL: That’s right.

MS. VARGAS: These are the people we’re hoping will keep my father from burning the house down‑‑

MS. MARCIL: That’s right.

MS. VARGAS: ‑‑or, you know, making sure he takes that medication when he is supposed to.

MS. MARCIL: That’s right.

MS. VARGAS: Those are critical, important jobs.

MS. MARCIL: Critically important, high skilled, and if you compare it to the retail sector or to the hotel sector, sometimes those jobs are more attractive than care.

MS. VARGAS: We’ve been hearing, though, that that’s what we need to do as a country for a long time. What are your‑‑what’s your optimism level that that will, in fact, happen?

MS. MARCIL: I’m optimistic. I really‑‑I think in some ways, it’s not that hard. In terms of moving the needle‑‑and I’ll talk about the private sector versus the public sector. I think when the economics and the loyalty benefits and actually the costs are better understood, I think we can help companies to move the needle. I think there’s real opportunity there, and they’re going to have to.

I mean, the workforce, the talented workforce is going to be constrained. We’re not replacing ourselves in terms of the number of children we’re having. And so, I think companies to attract and retain the best people are going to have to get better. I think when they understand the return on investment, even better, more quantified, I think we’ll get there. I think we’ll get there.

MS. VARGAS: There was a real hope for a while there pre‑pandemic that the private sector was going to lead by example when it came to the public sector, that we were seeing an increase in the number of companies providing paid leave.

MS. MARCIL: Yes.

MS. VARGAS: Why is that going down? Is that because of the economic constraints right now? Is that because of the gig economy where more and more people are employed sort of in part‑time jobs without benefits? Like, what’s the reason behind this? And because it’s the wrong way. We’re trending the wrong way.

MS. MARCIL: It’s the wrong way.

You know, I get a sense when I talk to various CEOs, they’re trying to figure how things are going to play out in terms of the economy and in terms of the workforce, what percent are going to be hybrid, what percent are going to be fully remote. I think they’re trying‑‑in many sectors that have been disrupted by inflation and by supply chain issues, they’re trying to figure out what they’re doing next. And so, I think there’s an inflection point, and we’ve gone, Elizabeth, a bit backwards, but I think there’s a real opportunity to go for it. I really do. I really firmly believe that.

MS. VARGAS: Well, you’ve got your work cut out for you. You’ve got to convince everybody out there that this is in their best interests.

MS. MARCIL: We’re on it.

[Laughter]

MS. VARGAS: Sharon Marcil, thank you so much‑‑

MS. MARCIL: Thank you.

MS. VARGAS: ‑‑for talking about the care economy.

MS. MARCIL: Wonderful.

[Applause]

MS. VARGAS: Once again, you can see the BCG report. Go to the BCG website and read it all there. It’s really important. It affects probably every single person in this room. So, thank you so much.

MS. MARCIL: Thank you.

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To save Egypt's economy, get the army out of it – The Economist

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TO THE LIST of spectacular ruins across Egypt, you can now add its economy. The Egyptian pound lost half its value over the past year and has been the world’s worst-performing currency in 2023. On January 5th the government devalued it for the third time in less than a year. Nearly half of the state’s revenue goes to servicing its debts, which amount to 90% of GDP. Officially, inflation is running at 21%. The price of food is rising even faster. But official figures have not kept up with Egypt’s economic decline, so the reality is almost certainly worse.

This has brought misery to the Egyptian people. Around a third of them live on less than $2 a day. Another third are on the brink of joining them. They have been failed by officials who put their own interests above those of their citizens.

Egypt’s economic crisis has been a long time in the making, and is partly caused by forces beyond the state’s control. Russia’s invasion of Ukraine has hurt Egypt badly, since it is the world’s biggest importer of wheat and its two biggest suppliers have usually been Russia and Ukraine. Higher wheat prices have made it ruinously expensive for the government to provide the ultra-cheap, subsidised bread that Egyptians have come to expect (they may riot if it is unavailable). The war has also walloped tourism which, before the pandemic, generated about 5% of GDP. Costly grain and a lack of sunburnt Russians have put pressure on Egypt’s foreign-exchange reserves and the pound. Foreign investors have dumped Egyptian bonds. Egyptians now struggle to get hold of hard currency.

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But the country’s main underlying problem is the stranglehold on the economy exercised by the state, and specifically the army. Official statisticians are strangely reluctant to provide a measure of this. The government has said that the army controls just 1.5-2% of output. The true extent of its influence, both direct and indirect, is far greater. And under the rule of President Abdel-Fattah al-Sisi (previous job: commander-in-chief of the armed forces) it has expanded.

The army’s empire now includes everything from petrol stations to mineral water and olives. It has hooked the fish-farming market and engineered control over carmaking. The security services have bought up big chunks of Egypt’s media. The army built a huge new cement plant, causing a supply glut that crushed private firms. In industry after industry it squeezes out or scares off competitors, deterring private investment. No ordinary company can compete with an outfit that pays no tax or customs fees and which can throw its rivals in jail. For ordinary Egyptians, the army’s crushing of competition means slower growth, higher prices and fewer opportunities.

The imf should bear this in mind, as Egypt comes knocking on its door for the fourth time in six years begging for a bail-out. It is now the fund’s biggest debtor after Argentina. In the past Mr Sisi’s regime has agreed to carry out reforms in exchange for imf cash. Under the terms of a $12bn agreement struck in 2016, it has devalued the currency and trimmed subsidies. But Mr Sisi has conspicuously failed to keep his promises to reduce the state’s economic bootprint.

Under its most recent deal with the IMF, struck in December, the government has vowed once again to withdraw the state and the armed forces from “non-strategic” sectors. But the men in (or recently out of) uniform who dominate it have little incentive to do so. Many have benefited handsomely from rent-seeking. And in any case, in a country with a history of coups, few would dare challenge the army’s privileges.

Donors keep bailing out Egypt because they are terrified it might collapse if they do not. It is the most populous country in the Middle East and a key Western ally. An implosion might send fleets of refugees across the Mediterranean. These fears are not irrational. Yet supporting a regime whose refusal to reform makes Egypt steadily poorer and its people steadily angrier is no recipe for long-term stability. Egypt’s frustrated Gulf allies are becoming less generous. The IMF should now hold the government to its commitments. Egypt must start demilitarising the economy, or expect fewer handouts.

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US economy slowed but still grew at 2.9% rate last quarter – Halifax.CityNews.ca

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WASHINGTON (AP) — The U.S. economy expanded at a 2.9% annual pace from October through December, ending 2022 with momentum despite the pressure of high interest rates and widespread fears of a looming recession.

Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — decelerated last quarter from the 3.2% annual growth rate it had posted from July through September. Most economists think the economy will slow further in the current quarter and slide into at least a mild recession by midyear.

The economy got a boost last quarter from resilient consumer spending and the restocking of supplies by businesses. Federal government spending also helped lift GDP. But with higher mortgage rates undercutting residential real estate, investment in housing plummeted at a 27% annual rate for a second straight quarter.

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For all of 2022, GDP expanded 2.1% after growing 5.9% in 2021.

The economy’s expected slowdown in the months ahead is an intended consequence of the Federal Reserve’s aggressive series of rate increases. The Fed’s hikes are meant to reduce growth, cool spending and crush the worst inflation bout in four decades. Last year, the Fed raised its benchmark rate seven times. It is set to do so again next week, though this time by a smaller amount.

The resilience of the U.S. job market has been a major surprise. Last year, employers added 4.5 million jobs, second only to the 6.7 million that were added in 2021 in government records going back to 1940. And last month’s unemployment rate, 3.5%, matched a 53-year low.

“The news couldn’t have been any better,” President Joe Biden said of Thursday’s GDP report. “We’re moving in the right direction. Now, we’ve got to protect those gains.”

Yet the good times for America’s workers aren’t likely to last. As higher rates make borrowing and spending increasingly expensive across the economy, many consumers will spend less and employers will likely hire less.

“Recent data suggest that the pace of expansion could slow sharply in (the current quarter) as the effects of restrictive monetary policy take hold,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research report. “From the Fed’s perspective, a desired slowdown in the economy will be welcome news.”

Consumer spending, which fuels about 70% of the entire economy, rose at a sturdy 2.1% annual rate from October through December, down slightly from 2.3% in the previous quarter.

More recent numbers, including a 1.1% drop in retail sales last month, indicate that consumers have begun to pull back.

“That suggests higher rates were starting to take a bigger toll and sets the stage for weaker growth in the first quarter of this year,’’ said Andrew Hunter, senior U.S. economist at Capital Economics.

Economists at Bank of America expect growth to slow to a 1.5% annual rate in the January-March quarter and then to contract for the rest of the year — by a 0.5% rate in the second quarter, 2% in the third and 1.5% in the fourth.

The Fed has been responding to an inflation rate that remains stubbornly high even though it has been gradually easing. Year-over-year inflation was raging at a 9.1% rate in June, the highest level in more than 40 years. It has since cooled — to 6.5% in December — but is still far above the Fed’s 2% annual target.

“The U.S. economy isn’t falling off a cliff, but it is losing stamina and risks contracting early this year,” said Sal Guatieri, senior economist at BMO Capital Economics. “That should limit the Fed to just two more small rate increases in coming months.”

One additional threat to the economy this year is rooted in politics: House Republicans could refuse to raise the federal debt limit if the Biden administration rejects their demand for broad spending cuts. A failure to raise the borrowing cap would prevent the federal government from being able to pay all its obligations and could shatter its credit.

Moody’s Analytics estimates that the resulting upheaval could wipe out nearly 6 million American jobs in a recession similar to the devastating one that was triggered by the 2007-2009 financial crisis.

At least the economy is likely beginning the year on firmer footing than it did at the start of 2022. Last year, the economy shrank at an annual pace of 1.6% from January through March and by a further 0.6% from April through June. Those two consecutive quarters of economic contraction raised fears that a recession might have begun.

On corporate earnings calls for the April-June quarter of 2022, nearly half of companies in the S&P 500 had cited a “recession” — the highest such proportion since 2010 — according to the data provider FactSet. Forecasters at Bank of America and Nomura had predicted that a recession would hit by the October-December quarter.

But the economy regained strength over the summer, propelled by resilient consumer spending and higher exports.

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AP Writers Christopher Rugaber and Josh Boak contributed to this report.

Paul Wiseman, The Associated Press






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Oil advances on solid U.S. economic report, signs of China demand – BNN Bloomberg

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Oil gained on signs of better-than-expected U.S. economic growth and the potential for greater energy demand from China. 

West Texas Intermediate traded near US$81 a barrel, paring some earlier gains. Global benchmark Brent also advanced.

The U.S. economy expanded by more than forecast in the fourth quarter, figures released Thursday showed, easing recession fears and buoying markets. Meanwhile, a gauge of the dollar slipped to the lowest since April, making commodities priced in the currency cheaper for overseas buyers. 

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Oil has recovered from a steep drop at the start of the year, largely on hopes that Chinese consumption will pick up after years of lockdowns. The number of virus-related deaths and severe cases at hospitals in China is now 70 per cent lower than peak levels in early January, authorities said late Wednesday. 

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Energy demand is starting to pick up and the momentum will continue this year, Trafigura Chief Economist Saad Rahim said during a webinar. The rebound in Chinese tourism will have a big impact on consumption, he added, noting that the recovery takes place against a “backdrop of structural underinvesment” in supply.

Liquidity is also returning to the futures market, with open interest in global benchmark Brent near the highest since last February. 

Prices:

  • WTI for March delivery rose 1.3 per cent to US$81.20 a barrel by 10:03 a.m. in New York.
  • Brent for March settlement increased 1.1 per cent to US$87.09 a barrel.

U.S. crude inventories rose for a fifth week to the highest level since June 2021, the Energy Information Administration reported Wednesday. Still, the gain of 533,000 barrels was smaller than some market participants expected. 

Russian oil products will be subject to a European Union ban on seaborne imports and a Group of Seven-led price cap on the fuels in less than two weeks, with concern it may be more disruptive to markets than recent sanctions on Russian crude. Russian shipments of diesel-type fuel from the Baltic port of Primorsk are already on course to slow. 

Meanwhile, French strikes are hampering deliveries of fuels such as diesel and gasoline as labor action hits the refining industry for the second time this month.

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