Friday’s jobs report seemed to grab headlines for one aspect in particular: the labor force participation rate, i.e., the number of people either working or looking for a job, fell to 63.8 percent, the lowest level since 1981. That means more and more people are dropping out—retiring, turning to something else like grad school or just giving up on the prospect of a job altogether. But there was a debate about how much of a bad sign this is. Is it because the recession has made people lose hope of finding gainful employment? Or is it just because baby boomers are hitting prime retirement age and moving to Miami?
It’s likely a combination of factors. But there seems to be a big difference in what’s driving men and women to leave the labor force.
What do the numbers look like for both genders? According to the Bureau of Labor Statistics’s Current Population Survey, men’s participation rate—the ratio of men working or looking for work versus those who have dropped out—has fallen 3.1 percentage points since the beginning of the recession, and women’s has fallen 1.8 points. The dip looks more troubling for men than for women. The last time women’s labor force participation rate was this low “was in June 1995,” Joan Entmacher of the National Women’s Law Center told me. But her colleague Katherine Gallagher Robbins noted that this year has been pretty steady for women’s rate, while men are starting to experience a real decline.
Yet interestingly, a recent paper from the Federal Reserve Bank of Kansas City (hat tip to Mike Konczal) finds that the forces behind those numbers are very different. For men, 60 percent of the drop from 2007 to 2011 has been due to a decline in “trend participation,” meaning things that were on course to happen whether we were in an economic crisis or not. That’s because the rate for men “has been falling steadily for 60 years,” in part due to things like increased access to Social Security benefits and an aging population that make retirement look like a pretty good option. In contrast, the paper “attributes essentially all of [women’s] decline to the cyclical downturn of the labor market”—in other words, the fact that we hit the Great Recession.
Why would a recession drive women out of the labor force so much more strongly than men? Because when the labor market looks shoddy, the Kansas City Fed paper says, “nonmarket work can become relatively more productive for many women.” That’s a fancy way of saying that domestic work—and very likely childcare in particular—becomes more valuable. “The difference between the benefits of working or not working may often be fairly small” for women, it says, while “the human capital of men is often more specialized toward market activities,” in other words, jobs outside the home.