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posted on 04 February 2017

Women's Labor Force Participation Down, Capping Jobs Economic Growth

from Lakshman Achuthan, Co-Founder and Chief Operations Officer of ECRI

Without a dramatic surge in the number of women joining the labor force - immigration - it will be virtually impossible to add 25 million jobs in the next eight years, as the Trump administration has promised. This is because a key measure of economic health, the percentage of people participating in the work force (LFPR), that showed positive trends in the 20th century, has been going in the wrong direction largely because of a shrinking percentage of women participating in the labor force.

The vast majority of baby boomers attained adulthood in the 28 years between the end of President Truman’s last term and the end of President Carter’s term, when male and female populations both grew at about 1.7% per year, on average. But in the next 20 years, until the beginning of the 21st century, the male population grew at only three-quarters of that pace and the female population grew at only two-thirds of that pace. In the 21st century, population growth slowed a bit further (not shown). The point that many already appreciate is that overall population growth is well below what it used to be through the waning years of the Carter administration. But drilling down to gender-related data shows a much more troubling story.

Following the end of World War II, almost seven-eighths of the over-16 male population and nearly one-third of the over-16 female population were in the labor force (see chart). However, the LFPR for men has fallen continuously ever since, with the decline speeding up between the mid-1950s and the mid-1960s, then slowing somewhat until the eve of the Great Recession, around which time it took another step down, ending up at 69%.

In sharp contrast, the LFPR for women kept rising throughout the second half of the 20th century, converging quickly with the male LFPR, and rising rapidly between the mid-1970s and early 1980s - essentially the Carter years and early Reagan years. The pace of increase in the LFPR for women slowed in the 1980s and 1990s, and then peaked just above 60% around the end of the 20th century.

In effect, this convergence between the LFPRs for men and women, which was a critical feature of the 20th century job market, ended in the late 1990s. Only in the wake of the Great Recession did the two LFPRs come a bit closer, but that was just because the men’s participation rate fell even faster than women’s.

The end of this convergence by the late 20th century - before which a rising overall LFPR kept boosting the potential labor force - has taken away a major pillar of labor force growth, which helps define the limits to job growth. At this juncture, absent the demographics the U.S. used to enjoy in the 1950s, 1960s and 1970s - and without a dramatic surge in immigration or the number of women joining the labor force - it will be virtually impossible for any president to add 25 million jobs in the next eight years.

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