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Labor Force Participation Falling for Both Men and Women
by Nick Beleiciks, Tracy A Morrissette, Pat O'Connor
Published Jul-18-2013

 
Oregon's labor force participation rate (LFPR) climbed gradually from 63.0 percent in 1976 to 68.9 percent in 1998, and declined over the following years. The participation rate was 63.4 percent in 2012. Within the overall population, different groups are showing different trends in participation. Oregon's declining labor force can be explained by looking at participation rate trends for various groups.

As part of a series of articles based on the report Oregon's Falling Force Participation: A Story of Baby Boomers, Youth, and the Great Recession, this article looks at trends in participation by men and women separately.

Figure 1
Participation Rate =   Employed + Unemployed
  Civilian Noninstitutional Population
In 2012, 63.4% =   1,792,000 + 171,000
  3,097,000
Long-Term Trends Driven by Baby Boomers/Changes in Women's Participation
 
From the end of World War II to the present, the nation's labor force participation rate can be separated into three distinct time periods. From 1948 to the mid-1960s, the nation's LFPR showed very little change. That was followed by a steady increase in the LFPR from the mid-1960s to its peak in 2000. Since 2000, the nation's LFPR has been declining.

Gender certainly played a major role in changes to labor force participation rates over the last 60 years. Nationally, the LFPR of women nearly doubled over a 50-year period. In 1948, only one out of three (32.7%) women in the U.S. was in the labor force. By 1999, that level rose to 60.0 percent.

From 1948 to the mid-1960s, the LFPR of women increased while the LFPR of men began its six-decade decline (Graph 1). Even though the participation rates shifted for both sexes during this period, the overall U.S. LFPR remained fairly constant from post-World War II until the mid-1960s.

From the mid-1960s to 2000, the U.S. experienced steady increases in labor force participation. These gains are largely explained by two factors. First, more women entered the labor force. Second, the Baby Boom Generation (born between 1946 and 1964) grew older and gradually moved into the prime working age group (ages 25 to 54), a segment of the population with a high LFPR. Because this generation is large relative to other generations, their shift into the prime working age group caused the nation's LFPR to steadily increase during the 1970s and 1980s.

Demographic factors also explain a significant amount of the decline in the LFPR since 2000. One of the main factors behind the drop is that older workers make up a larger share of the population as the Baby Boom Generation ages and moves out of the prime working age group. The rise in the share of older workers decreases the LFPR because this group has a lower participation rate than workers in the prime working age group. A second cause of the declining labor force participation is the steady reduction in the LFPR of young workers (ages 16 to 24) since 2000. Also, the LFPR of women in the U.S. stopped increasing and in fact declined since 2000, halting a half-century trend of rising labor force participation rates.

Graph 1
U.S. labor force participation rates by sex
The Great Recession Shaped Recent Trends in Oregon's Participation Rates
 
The bursting of the nation's housing bubble led to the recent recession, with the steepest job losses occurring in the construction and manufacturing sectors. This was the case in Oregon and the U.S. The steep job loss in these two male-dominated sectors led to the unemployment rate for males increasing dramatically at the beginning of the recession relative to females (Graph 2). From the beginning of the recession in December 2007 to June 2009, the unemployment rate for Oregon's males more than doubled, going from 4.9 percent to 13.7 percent. The unemployment rate for Oregon's females increased from 5.0 percent to 9.6 percent during that time period, a dramatic increase, but not of the magnitude seen in the male labor force.

The dramatic increase in male unemployment gave rise to the term "mancession" or "hecession" to describe the recent recession. Ironically, it appears that what may have begun as a "mancession" has also affected labor force participation rates among Oregon's females. The LFPR for Oregon's women actually started to creep upward in the second half of 2006 and 2007 (Graph 3). As the recession hit in 2008, women's labor force participation continued to grow until the first quarter of 2011. Why would this happen? One hypothesis is that the steep job losses and soaring unemployment that Oregon experienced during the recession, particularly in industries that predominately employ males, may have resulted in even more women entering or re-entering the labor force as they sought to replace incomes from family members who had lost a job. This is known as the "added worker effect."

Following five years of growing labor force participation among Oregon's women, in the middle of 2011 women's LFPR began a sharp decline, dropping from 61.5 percent in April 2011 to 56.4 percent in January 2013. It is difficult to know how much of the sharp decline in Oregon's LFPR of women is the result of other household members regaining suitable employment, and thus allowing women the opportunity to leave the labor force. Another explanation is that women are leaving the labor force due to job losses and limited opportunities in their own employment fields.

While job losses early in the recession were often in industries that predominantly employ men, job losses during the recovery phase hit industries with a large share of female employment. Local government education employment (K-12 and community colleges) is a good example. These employers have reported employment declines in recent years, more so than early in the recession.

Graph 2
Oregon unemployment rates by sex
Graph 3
Oregon labor force participation rates by sex
Further Declines in Participation Rate Projected
 
The Bureau of Labor Statistics projects that the national labor force participation rate will decrease by 2.2 percentage points from 2010 to 2020. Applying a similar decrease to Oregon's population by age group would lower the state's labor force participation rate to 61.2 percent in 2020.

The decline in women's LFPR is expected to be half the decline men will experience over the decade. The national labor force participation of women is expected to decline 1.5 percentage points from 2010 to 2020. Assuming a similar drop for Oregon women means their LFPR could fall from 58.5 percent in 2012 to 57.3 percent in 2020.

There's More in the Full Report
 
This article is an excerpt from the Oregon Employment Department's special report Oregon's Falling Labor Force Participation: A Story of Baby Boomers, Youth, and the Great Recession. The full report is available online at www.QualityInfo.org/pubs/lfpr.pdf.