The Exchange

Why One Important Group Is Missing From the Labor Force

Rick Newman
The Exchange

Where are all the young women? This is a question economists have been asking lately as they ponder the transformation of the U.S. labor force. One troubling trend has been a decline in the number of people interested in working, with an especially notable pullback among women between the ages of 18 and 29.

The latest employment report, for example, showed the “labor force participation rate” for 18- to 24-year-old women — the percentage either working or looking for a job — fell 1.2 percentage points from the prior month, to 67.3%. Ten years ago it was 71.2%. The nearby chart shows how the trend has intensified since 2009, when the economy bottomed out.

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Labor-force participation for women 18-24. Source: Bureau of Labor Statistics

Those numbers suggest something ominous is going on that’s forcing women out of the workforce and reversing one of the powerful economic trends of the past 40 years. As people looking for jobs keep hitting dead ends, the theory goes, they become “discouraged workers” who end up watching TV at home, sponging off of others and basically dropping out of the economy.

A benign explanation

For young women, at least, there may be a more benign explanation: More of them are going to college. “The trend toward higher college enrollment among women dwarfs the decline in labor force participation,” Sarah Green and Walter Frick of the Harvard Business Review wrote in a recent blog post. “These women are actually doubling down.”

Women, in fact, are trouncing men when it comes to education. Women now earn 57% of all bachelor’s degrees, 63% of all master’s degrees and 53% of all doctorates. The unemployment rate for young women and men is comparable, but that may change as women become better educated. Even though a college degree has become more expensive to earn, it still generates far better career prospects and lifetime pay than a high-school diploma. If our experience with the G.I. bill after World War II is a guide, a surge in the number of people with college degrees during the past few years could produce big economic gains in five or 10 years’ time.

Instead of asking where are the women, a better question might be: What’s happening to working men? The labor force participation rate for men has plunged during the past few years, as the following chart shows:

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Labor-force participation for men 16-plus. Source: Bureau of Labor Statistics

One explanation is that men are overrepresented in industries such as manufacturing, which seem to be transitioning permanently to new models that rely more on technology and less on labor. But some people see a sort of civic decline in the number of men bailing out of the work force.

“These numbers have no precedent in a country where, until the last few decades, it was taken for granted that all adult males in the prime of life who were not completely disabled would be working or looking for work,” political scientist Charles Murray wrote in a recent monograph on American exceptionalism.

Women still earn less than men and hold just a fraction of the top jobs at most organizations. It’s tough to factor out lifestyle choices such as starting a family, however, and educational trends could give women newfound economic power before long, even if they do opt out of some traditional career paths. It might still be a man’s world for now, but women seem increasingly likely to call the shots going forward.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.

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