During the COVID-19 pandemic in the United States, it was mainly women who took on the significant demands of childcare and housework, causing a sharp drop in their labor force participation rate: From February 2020 to April 2020, an estimated 7,000,000 women between 25 and 54 years of age decided to forgo employment. There’s evidence to suggest this mass exodus of women from the labor force was due to school closures and lack of child care.

In this FRED Blog post, we examine the employment levels for women 25-54 years of age and for men 25-54 years of age as well as the number of childcare job postings compiled on Indeed.com in early 2021, after the US economy had moved out of the COVID-19-related recession.

The FRED graph above shows that growth in women’s employment was stronger than (and surpassed) growth in men’s employment as of April 2021. There’s also a correlation between the growth of childcare job postings and the growth of these employment levels: As women returned to work after the COVID recession, the number of childcare requests rose.

One possible explanation for the higher employment growth rate for women is that the US government made childcare more affordable. In early 2021, we can see a disproportionate increase in the percent change of childcare postings. The American Rescue Plan Act was enacted in March 2021 and contained a childcare tax credit that would help pay for the care of eligible children and other dependents. After the Act was enacted, we see a huge spike in the following months of April and May, indicating an increased demand for childcare, possibly to take advantage of this tax credit.

How this graph was created: From FRED, search for and select “Employment Level – 25-54 Yrs., Women.” From the “Edit Graph” panel, modify the frequency to monthly and change the units to display the percent change from a year ago. From the “Add Line” tab, search for and select “Employment Level – 25-54 Yrs., Men,” modify the frequency to monthly, and change the units to display the percent change from a year ago. Add the third line: “Childcare Job Postings on Indeed in the United States,” modify the frequency to monthly, and change the units to display the percent change from a year ago. From the “Format” tab, switch the axis of the childcare job postings to the right. Finally, edit the time window so it shows from January 1, 2021, to June 1, 2021.

Suggested by Alexander Bick and Kevin Bloodworth.

Summer is ending. As the new school year gears up, some areas of economic activity will get seasonal boosts—such as increases in retail sales of office supplies as incoming students and their families buy what they need for the classroom. Female employment also picks up at this time of year. Recent research on labor markets finds that the childcare services provided by formal schooling drive this increase in employment.

The FRED graph above replicates Figure 1 in a related piece of research: the NBER Working Paper, “The Summer Drop in Female Employment,” by Brendan Price and Melanie Wasserman. The graph shows the non-seasonally-adjusted labor force participation rates among males (orange line with triangles) and females (blue line with dots) between 25 and 54 years of age. (The values are normalized to zero in December 2019.*) A close examination of this graph shows that, every summer, women’s labor force participation drops sharply, whereas men’s participation remains comparatively stable.

Why? During the summer, women reduce the amount of time they work outside the home; they are more likely than men to step in and provide some of the childcare services required while school is out for the summer. Vacations, summer school, and camps—supplemented by informal childcare by relatives, for example—do not add up to the six hours per weekday that children spend in school most of the year.

The research by Price and Wasserman helps answer the seasonal puzzle that the FRED Blog described last year, which helps tell the bigger story behind the numbers.

* The data in the NBER paper are two series from the Bureau of Labor Statistics available in FRED through the Organization for Economic Co-operation and Development’s Main Economic Indicators Release. Borrowing from Geoffrey Chaucer: All roads lead the data user to FRED.

How this graph was created: In FRED, search for “Activity Rate: Aged 25-54: Males for the United States.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Activity Rate: Aged 25-54: Females for the United States.” Use the “Edit Line 1” tab to customize the units by selecting “Index (Scale value to 100 for chosen date)” and enter “2009-12-01” in the date box. Click on “Copy to all” to apply the unit transformation to both series.

Suggested by Diego Mendez-Carbajo and Mary Clare Peate.