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Good news for women in the labor force? Assess the data before jumping to conclusions


If you’re looking at gender disparity in the U.S. labor force, FRED’s got your back! In a previous blog post, we analyzed the demographics of the activity rate decline. Today, we look at the gender disparity story told by two different labor market indicators: the employment and activity rates (the latter is also known as the labor force participation rate). Although these two indicators may both provide information about employment, they actually measure different aspects of the labor market.

The employment rate is the ratio of people who are currently employed to the working age population. The activity rate is the ratio of people who are employed or actively seeking employment to the working age population. Hence, the activity rate measures the overall willingness of the working age population to work. The Y-axis in the top graph represents the differences of activity and employment rates by gender. Starting off at 60% in 1955, it’s striking how the gaps for both rates declined at a similar pace until they stabilize at approximately 15% currently. This seems to suggest that, as women have joined the workforce, they’re finding employment at rates similar to men. It’s also important to note that the gender gap in employment reached its lowest level during 2007-2009 recession. Does that imply that women’s jobs are more recession proof?

Before trying to come to any conclusions on (i) the cause of the narrowing of the gaps and (ii) the steady-state that began around 2000, let’s look at the individual series for men and women. It could even be the case that both male and female employment have been declining, but that male employment has been declining at a faster rate. This is illustrated clearly by the employment rate during the 2007-2009 recession. The two graphs below show the evolution of both rates by gender. By graphing these series, we can see that the female employment rate has indeed been catching up with the male employment rate since 1977, while the male employment rate has been fluctuating around 85-90%. However, the decrease in the gender gap during the recent recession seems to be attributed to the fact that the recession has hit men harder, as there is a sharper decline in male employment than female employment.

Similarly, we can see that the female activity rate has increased from 1955 to 2000, while the male activity rate has been on a slow decline since 1955. However, the female activity rate has also been on a slight decline since 2000. Hence, we cannot conclude that more women have been joining the workforce in recent years; in fact, the opposite is true. Much of the decline since 2000 can be explained by the aging of the Baby Boomers into their retirement years and the new trend of lower participation among teens and young adults. (For more insights on this issue, see this recent speech by Janet Yellen.)

How these graphs were created: For the first graph, search for “Employment Rate: Aged 25-54: Males for the United States” and select “Add to Graph.” From the “Edit Graph” section, add “Employment Rate: Aged 25-54: Females for the United States” as another line and apply the formula “a-b.” To include the differences in activity rate, add “Activity Rate: Aged 25-54: Males for the United States” and repeat the same procedure. Expand the years to 1955 to see the earliest possible data. For the second graph, search for “Employment Rate: Aged 25-54: Males for the United States” and choose the seasonally adjusted monthly series. From the “Edit Graph” section, add the seasonal adjusted monthly series for “Employment Rate: Aged 25-54: Females for the United States.” Similarly, search for the seasonally adjusted monthly series for “Activity Rate: Aged 25-54: Males for the United States” and add “Activity Rate: Aged 25-54: Females for the United States” for the last graph.

Suggested by HeeSung Kim.

View on FRED, series used in this post: LRAC25FEUSM156S, LRAC25MAUSM156S, LREM25FEUSQ156S, LREM25MAUSM156S


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