Wednesday, August 21, 2013

Labor Force Participation Falling for Men and Women

From the end of World War II to the present, the nation’s labor force participation rate (LFPR) can be separated into three distinct time periods: 1948 to about 1965 (very little change), 1965 to 2000 (steady increase), and 2000 to today (declining). Oregon's rate has followed a pattern similar to the national average.

Gender certainly played a major role in changes to labor force participation rates during the last 60 years. Nationally, the LFPR of women nearly doubled from 1950 to 2000. Meanwhile, the LFPR of men gradually declined (see graph).

Why is the male rate decreasing? In recent times, it has been influenced by the Great Recession. When the housing bubble burst, the steepest job losses occurred in the construction and manufacturing sectors, which are male-dominated industries. This led to the unemployment rate for males increasing dramatically at the beginning of the recession relative to females. From the beginning of the recession (December 2007) to June 2009, the unemployment rate for Oregon’s males more than doubled.

The initial effect of the Great Recession on women's LFPR was a actually an increase. Women were entering or re-entering the labor force, most likely to replace incomes from family members who had lost a job. (This is known in labor economics as the “added worker effect.”)

As the economy has started to recover and re-balance after the recession, more recent job losses have occurred in industries with a high share of female employment, such as local government education (schools). Correspondingly, women’s LFPR has seen a sharp decline. It dropped from 61.5 percent in April 2011 to 56.4 percent in January 2013.

Looking ahead, the Bureau of Labor Statistics projects that the national labor force participation rate will decrease by 2.2 percentage points from 2010 to 2020. The decline in women’s LFPR is expected to be half the decline men will experience over the coming decade.

To learn more about the decidedly fascinating topic of labor force participation, please see the full report ("Oregon’s Falling Labor Force Participation: A Story of Baby Boomers, Youth, and the Great Recession").

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