May 22, 2013

Recent Labor Participation Trends for Men and Women aged 25-54

Recently the Planet Money blog wrote asking Millions Of Americans Are Leaving The Workforce. Why? its a good question.   If you read their article you can see they split out the workforce by age groups.    First they break out the people over 55 years old.   Labor force participation for older Americans is actually increasing and its up since the recession.  Lets presume baby boomers failed to save adequately for retirement or lost a large % of their retirement savings and are 'forced' to work longer.    At the other end, they look at the younger group from ages 16 to 24.   That group is working less but they chalk that up to more and more and more of us going to college and not joining the workforce right away.  That sounds credible.   Then they end with the rest of the labor focusing on the group ages 25-54.   Lets look at that group...

Take a look at the following two graphs:


Both of those are taken from the site.   Look at the overall trend for both of them.   First in the top graph you can see that the numbers basically flattened out around 1999 and have been in a slightly downward trend since then.     In the second graphic you can see a pretty steep descent the entire time with some marginal bouncing around.

Lets plot the graphics again and show a trend line over time.


The trend line on the first group is pretty obvious there.  The blue line deviates some from the long term trend but not too much.    What the red line is doing in the second graphic is a bit less clear.  The overall trend is upwards but it looks like it may have peaked around 1999 and may be trending downwards since then.  Lets look again at the red line with a polynomial trend line:

This shows more 'hill' where the peak has been passed.    The red line is on a downward trend from 1999 onwards.   In fact for the past decade or so the red line has been in a similar trajectory to the blue line.

Lastly lets compare both lines from the period from 1999 to 2013:

Well there you go.   Now looking at the past 14 years we can see that both lines are quite similar in the trend.   They are both down about 3 points over the period and they flow roughly the same fluctuating pattern.

If you haven't figured it out yet, the red line is for women and the blue line is for men.  

I'm showing just ages 25-54 to filter out the impact from young people in college and older people transitioning into retirement.    I'd call ages 25-54 the 'prime' labor years.     

Looking at the longer period from 1984 to 2013 we can see that the labor participation rate for men is down about 5% and the rate for women is up about 6%.  

If we break it into different periods before and after 1999 we see different trends.   From 1984 to 1999 the labor rates of men and women were going in opposite directions.   We had more women working and fewer men.     Then starting in 1999 the labor participation rate of both men and women started to decline at a similar rate.     Or looking at it another way you could say that women joined men in leaving the workforce.


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