Thursday, March 06, 2008

The Drop in Labor Force Participation

Following a comment on yesterday's post, here is an article from the the St. Paul Pioneer Press two years ago discussing voluntary withdrawal from the labor market. The key paragraphs:

So who is dropping out, and why?

Primarily the declines since 2001 are among younger workers ages 16 to 24 and women ages 25 to 45. Proportionally, since the teens account for a small number of workers in the state, women dropouts are mainly driving the changes.

The change with young workers can be more easily explained. Most don’t have to work. When jobs are flush and pay well, more take jobs. If jobs are slim and pay tight, homework and hanging out win out. “If jobs aren’t readily available they are not going to be searching for them and calling themselves in the labor market,” Stinson said.

The reasons why women are leaving are more elusive.

Julie Hotchkiss, a research economist and policy adviser with the Federal Reserve Bank in Atlanta, has studied why women leave the work force.

She found that women with college degrees were less likely to participate in the labor force in 2005 than they were just five years earlier. Women were still getting college degrees at the same rate but the degrees were less of a pull into the labor market.

The increase in Hispanic women, who traditionally are less likely to be in the labor force, is another factor, as is the increase in women with children under age 6. Still, “unobserved” factors that couldn’t be explained, more than anything else, contributed to the reasons why women are dropping out, she said.

Read the whole thing.


Anonymous said...

Thanks for posting the link to the article. Are you seeing a similar trend in the Northeast?

Minnesota has (or at least had) the highest female workforce participation rate in the nation.

Andrew Samwick said...

The BLS doesn't publish these data by state and age/gender group. My wife went through a process similar to what is described in the article over that period of time, but there's no way to tell whether she's indicative of a broader trend.

Lord said...

For myself, I am not interested in moving, commuting hours, or working for what I earned 10 years ago. There is more to life than work.

Anonymous said...

If you plot the portion of males and females with income above $75K (corrected for CPI) as a function of time you find two diverging curves:

Isn't it a discouraging factor for a female with a degree?

Anonymous said...


I was a female with income above 75K when I left the workforce . . . in my case my husband was also highly compensated, also in a high stress job (we were two high flyers and no time for the kids) and something had to give. I was happy to give it.

These women have the ability to leave the job market due to husband's high income (high earners tend to marry high earners). I'm wondering if the curve diverges because of this drop out phenomenon -- just when degreed women are reaching the over 75K income levels they are also dealing with the heaviest demand years for child rearing . . . . it would be an interesting study.


DoseOfReality said...

I appreciate that someone is willing to tackle this issue of labor force participation. But, I find that those who have the time to tackle such topics are typically insulated from the reality of the middle class. In other words, academics, journalists or Wall Streeters. I don't say that in a negative way. Just that these people aren't typically hobnobbing with average joes working a 9-5 job. Let me give you another anecdotal reality. A reality that I could back by statistics were I to actually compose a study.

The lowest capital spending, adjusted for inflation, in measured history. Accumulated years of NAFTA and China resulting in losses of millions of good paying jobs that typically requires displaced workers to move down the income ladder. Lack of enforcement of anti-trust legislation that has resulted in M&A activity over the last twenty years of unprecedented proportions that has put a lid on free markets and job creation. Etc, etc, etc. What caused much of this? Ask Harry Truman? He told us but no one listened.

I come from a very blue collar family. Many of the bread winners in my family simply cannot find employment capable of supporting a family. They live in regions devastated by 'free' trade. What ever happened to Hamiltonian economics that built this country? Well, I'll tell you what. Brainwashing by powers that be have killed them. It's funny how our values and view of economics changes over generations because they have changed often and drastically over generations.

Jay, writer said...

Could these factors include migration or the number of women operating their own businesses? In other countries, factors such as tradition or increased harassment of women are also considered. Although I have a feeling the reasons have more to do with the earlier speculations.

Anonymous said...


Your study has already been confirmed by a policy called 'economic stimulus rebates'. Isn't it ironic that the present administration now admits that supply side doesn't work, and all those tax cuts for the rich were just nice bonuses for their pals. They didn't create new jobs.

I'm in the rust belt, and yes, we've lost thousands of good paying manufacturing jobs, only to replace them with jobs that pay half the hourly wage or less.

The middle class is waning, and now upper middle class is also feeling the pinch.

It is the new gilded age.

Anonymous said...

Child care expenses probably have something to do with it, with daycare tuition often running over $1000/per month. A high-earning spouse is not a prerequisite for the numbers to work out.

Anonymous said...

Yes, daycare costs are a factor.

When I decided to drop out I ran the numbers. First off, my earnings, coming on top of husbands, were dollars taxed at the highest tax rate. If we'd been divorced I'd have been in a much lower tax bracket. Marrieds get whacked, but what can I say, I'm in love with the guy. The Feds just don't respect marriage as much as I do. And they don't respect those who raise the nation's children either (yep, that's pro-life!). How many decades has it been since they last raised the child deduction? It's a sad joke.

Second, there were daycare costs, which ran 15 to 20K a year. OK, so I was a guilt ridden mother who sent my kids to the expensive country club summer camps.

Then there was the cost of my clothing (suits for work), lunches out, suppers out and convenience foods (no time to cook at the end of the day), gas for the commute to work, etc. Oh yes, and paying for home nurses when my kids were sick and neither husband nor I could be at home due to job obligations. And don't get me started on how stressful it was when I had to go on business trips. Husband can't cook, has a much higher threshold for clutter and mess, doesn't remember which days are dance lesson, girls scouts, piano lesson nights, when the dental and medical appointments are, and where the kid's friends live, their names, and their mother's names and numbers.

Oh, and don't think you can get out of this stuff. As an upper middle class parent you are expected to program your kids up the ying yang (otherwise you are a bad parent), and someone (usually the mother) has to ride herd on this schedule and do the driving to activities. You'll also be called upon to chaperone field trips, volunteer in the classroom, and chair at least one committee (or be the den mother or Sunday school teacher or both).

This is why upper middle class working women eventually leave their jobs. Multitasking has it's limits.