2006 July 07 Friday
Female Labor Market Participation Rate Declines

After decades of rising labor market participation women peaked in 2000 and have declined since then.

But women's rush to employment stopped in 2000 and started to decline, as they began to join their male counterparts in retirement, go out on disability and delay paid employment to get more education. Some economists think the high-water mark of female participation in the labor force was in 2000, when it hit 60.3 percent.

Family responsibilities are declining as a reason for women to offer for why they do not work.

While nonworking women are still much more likely than men to cite "home responsibilities" as their reason for not holding or seeking a job, that's actually less true now than it was in the past. The share of women aged 25 to 54, considered to be in their "prime" working years, who gave that reason for not seeking employment has shrunk for more than a decade. The share of men citing that reason has edged up over the same period, according to a Labor Department analysis of census survey figures from 1990 to 2003.

The female participation rate peaked below the men's, though, because women still take out more time to care for children and other relatives, analysts say and the data show.

People spending time training and retraining.

More younger workers are staying in school longer to juice up their future career prospects in an increasingly information-based economy. Many middle-aged workers have lost industrial jobs and have gone back to school for retraining or have given up looking for new work.

The overall labor force participation rate is declining.

Now, without a growing share of female workers to offset the departing men, the national labor force participation rate dropped to 66.1 percent in May from a peak of 67.3 percent in early 2000.

I'd like to know what is behind this trend. Some sufficiently affluent people do not work because they value leisure time more than additional money. Others, however, have given up getting jobs that pay enough to make legal work worthwhile. More time spent in school is not behind the huge decline in black male labor market participation.

Among 20 to 24 year old black males, employment rates also have declined considerably from their peak values of 77 to 83 percent in the mid to late 1960s to dramatic 50-year lows more recently. During 2003, for example, just 56 percent of such young black men ages 20 to 24 was employed.

High affluence can not explain this result either. Immigration, trade, and automation are all driving down the wages of the least skilled. Millions of black men have given up on making an honest living.

The US Department of Labor, Bureau of Labor Statistics reports on patterns in labor market participation. A report of theirs suggests to me that perhaps lack of skills might be driving down labor market participation in an economy with a declining demand for less skilled workers.

The sharpest decline in labor force participation between the first quarter of 2001 and the second quarter of 2003 occurred among persons aged 16 to 24. During this period the participation rate for this group fell by 3.6 percentage points, compared with a decline of 0.6 percentage point between the third quarter of 1990 and the third quarter of 1992.

Participation rates during the most recent labor market downturn also declined among both women (from 76.8 to 75.9 percent) and men (from 91.6 to 90.7 percent) aged 25 to 54. By comparison, during the early 1990s, the rate for women in that age group actually continued to rise, increasing from 74.0 to 74.7 percent, while the rate for men was little changed.

Partially offsetting the declines in participation among the other age groups, the labor force participation rate for individuals aged 55 and older rose by 2.8 percentage points over the most recent recession and the year and a half following. The rise in labor force participation rates among older workers may reflect several factors that affect work and retirement decisions such as changes to Social Security regulations, falling stock market prices, and declining interest rates.

The BLS probably reports higher labor market participation than the first article above because the BLS restricts to ages 25 to 54.

The 16-24 population has less skills because they are younger. They also have less skills because that portion of the US population has a much higher Hispanic fraction and Hispanics have low educational attainment. Come a recession demand for younger and less skilled workers might have declined more than the decline for more skilled workers. The labor market participation of women might also have declined due to lower average skills. Since men work more (on average) they probably accumulate more job skills (again, on average). A lessening demand for less skilled workers might fall harder on women.

Share |      By Randall Parker at 2006 July 07 10:40 PM  Economics Labor

John S Bolton said at July 8, 2006 12:41 AM:

We can't trust businessmen, officials, scholars or media when they pretend that there is a labor shortage, such as would justify more than negligible immigration.
The NYT, 7-5-06 p.A13, reported on the "popularity and pervasiveness of inmate labor here.
'It's just such a shortage of people who will work, or that can work', Mr. Wiltcher said.
This parish, the poorest in Louisiana" is the sort of place we're expected to believe might have a labor shortage.
Declining labor force participation indicates a labor surplus, as do low incomes and wages, in such places as the jurisdiction mentioned for disproportionate use of chain gangs.
White male labor force participation is down more than ten points since the 60's, while the comparable black rate is down dozens of points.
These are monstrous failures of affirmative action and immigration policy; neither of which were supposed to have such negative effects.
If we had honest officials or scholars, they could look at these figures and admit that their policies have failed and need to be reversed; specifically regarding affirmative action and mass immigration of illiterates.

Jody said at July 8, 2006 5:36 PM:

I suspect that some fraction of the decrease is attributable to the crime wave in the 80s and the crack down on crime in the 90s. This effect should be most significant in the young black male community.

Rob said at July 8, 2006 9:46 PM:

What effect do you think the DRD2 dopamine receptor allele that causes ADHD and is very common in South American Indians has on the educational acheivements of hispanics, which is below what IQ alone would predict? I'm super tired, so don't ream me for stupid mistakes.

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