Women alone are driving a recovery in workforce

participation
Rising wages for low-skilled workers are tempting women, but not
men, into the labour force

Print edition | United States

Aug 19th 2017| WASHINGTON, DC

IF THERE were a list of common complaints about America’s

economy, the fact that too few people work would be near the top.
Though unemployment is low—only 4.3% in July—the figure does
not include those who are jobless either by choice, or because they
have given up looking for work. The proportion of those aged
between 25 and 54 in work is 79%—lower than in France, where the
unemployment rate is more than twice as high. So it is a relief that
over the past two years, as the labour market has improved,
Americans aged 25 to 54 (prime-age, in the jargon) have been joining
the labour force in greater numbers. What is remarkable, however, is
that this turnaround has been driven almost entirely by women.

When people think about America’s hidden reserves of labour, they

usually point to prime-age men, who have participated in the labour
market at ever-lower rates since the 1960s. Things have been
particularly bad for less educated men, who have suffered as
technological progress and trade have killed off manufacturing jobs.
More than one in five prime-age men with a high-school diploma
does not work, compared with fewer than one in 11 men with a
bachelor’s degree.

Yet in recent decades women’s employment rates have been

disappointing, too. In 1990, after two decades in which women had
piled into the workforce, America’s female labour-force participation
was sixth-highest among 22 rich countries studied by economists
Francine Blau and Lawrence Kahn in 2013. The flow of women into
work slowed to a trickle by the turn of the millennium. Then it went
into a very gentle decline. Because other countries continued to see
gains, by 2010 America had slipped to 17th in Ms Blau and Mr Kahn’s
rankings. They pointed to America’s failure to implement the family-
friendly policies followed elsewhere.

Nonetheless, the top end of the labour market is increasingly

promising for women. Even in 2010, America’s working women were
about as likely to be managers as men; elsewhere, they were only half
as likely. They were also more likely than men to be professionals.
Women are now a majority among new college graduates, make up
more than half of law students, and are equally represented among
freshmen at medical schools. Women in their late 20s and early 30s
are responsible for nearly 40% of labour-force growth since prime-
age participation bottomed out in August 2015.

Yet when Whitney Mancuso and John Robertson of the Federal

Reserve Bank of Atlanta recently crunched the numbers, they found
the recent surge in participation had been driven by unskilled
women. According to their analysis, about a fifth of the growth in
female prime-age participation over the past year is explained by
shifting patterns of age and education. Strip those demographic
changes out of the trend, and higher participation by women without
college degrees explains fully 97% of what remains.

It is easy to explain why participation is booming among less

educated workers. They tend to be the first to suffer from recessions
and the last to benefit from recoveries, and the labour market has
only recently entered its final stages of convalescence after the
financial crisis. Median earnings are now growing by over 4%
annually among full-time employees with only a high-school
diploma, compared with 2.9% for those with a bachelor’s degree.
What is far less clear, however, is why women alone are responsible
for the turnaround.
Isabel Sawhill, of the Brookings Institution, a think-tank, offers one
explanation: low-skilled job openings have been concentrated in
service industries that do not attract men. Meanwhile, traditionally
male jobs, for example in construction, have been harder to come by.
Sure enough, there is a correlation between the number of women an
industry employs, as a percentage of its workforce, and how many
non-managerial jobs it has recently created. Particularly striking is
the education-and-health-services sector, where women make up
three-quarters of the workforce. It accounts for more than 25% of net
new non-managerial jobs in the private sector over the past year.
Most of these roles are in health and social care, which is booming as
the population ages.

Yet plenty of men are working in low-skilled jobs that do not involve
traditional “man’s work”. The leisure and hospitality industry, for
example, has an almost equal gender split. It has added 287,000 non-
managerial jobs in the past year, and wages are up by a healthy 3.5%.
This suggests that the full explanation is more subtle than men not
wanting certain types of work. It may include a simple piece of
economics. Researchers think that women’s labour-market choices
depend more on wages than men’s do. This makes sense when
women are their household’s secondary earner. As a result, recent
wage growth may have tempted more women than men into the
workforce. However, the gap in sensitivity to wages has dropped
dramatically in recent decades. And in any case, this argument
cannot explain the size of the disparity between genders.

Whatever the cause, the evidence is that plenty of unskilled women

on the edges of the labour force can be tempted in. Meanwhile, a
large number of men seem cut off from the modern economy
altogether. These are not just former manufacturing workers, but
youngsters too. The participation rate of men aged 25-34 is only a
touch above its record low; for similarly aged women, it is as high as
it was at the start of 2001. One theory for why young men are
increasingly averse to working, proposed by Erik Hurst, an
economist, and his co-authors in a recent working paper, is the pull
of modern video games. Policymakers still have their work cut out
helping women into the labour force. Recent trends have not
changed the fact that, in most age groups, many more men than
women work. But society also needs to think about a growing group
of men for whom work does not seem to be a worthwhile aim,
however much the economy booms.