May 28, 2013

Stay At Home Parents and the Labor Force

I recently looked at the overall trends for labor force participation for men and women for the past few decades.   That data was narrowed down to 25-54 year old group to set aside people in college and boomers nearing retirement or going into disability.    The 25-54 group should normally be the peak of labor force participation.    The trend for the past few years has been a decrease in labor force participation.   Why is that happening?

One theory I came up with is that there may be more people staying home to raise their kids instead of working.   As more and more women work full time, I've heard that theres been somewhat of a reverse in trends with more women deciding to stay at home to raise their children instead of working.   I've seen this called the 'opt out revolution'.    At the same time with more women working there is also more men who are becoming stay at home Dads.   

I decided to check out this theory and see if there has been a change in the number of stay at home parents and what impact that might have on the labor force participation rate.

More Stay-at-home Dads

A Boston College study 'The New Dad : Right at Home' from 2012 talks
The BC study also said specifically that "This translates to an increase of at-home dads from 81,000 in 2001 to 176,000 in 2011"    Thats a NET increase in SAHDs of +95,000.     From '01 to '11 the population increased from 59.5M to 61.5M.   Therefore the % of SAHD went from just 0.13% to 0.28%. 

Thats an increase of 0.15% of the male population opting to be SAHDs.

 More Stay-at-home Moms

The Census report Historical Changes in Stay-at-Home Mothers : 1969 to 2009 has data on the number of SAHM over the decades.   Table 1 on page 24 shows the total number of SAHM and other mothers over the decades.    In 1999 there were 5.2M SAHM's and by 2009 the number had increased  to 5.7M.   Thats an increase of 500k SAHMs.      During that period from '99 to '09 the population of women age 24-54 went from 60.1M to 63.4M.   Therefore the % of SAHM went from 8.65% to 8.99%.

That gives us an increase of just about 0.34% SAHMs.

Is 'opt out revolution' real?

A slight side note here.   I mentioned the 'opt out revolution' which is the idea that more women have decided to not work and instead be SAHM's.    The Census report I found the SAHM questions that idea.   They say that the phenomenon may be over reported or overstated by the media.   Also they point out that a higher % of SAHM's are Hispanic or foreign born.   It may be then that the increase in SAHM's from 1999 to 2009 is simply a demographic shift due to a larger Hispanic or foreign population.

Total Impact to Labor Force

Unfortunately the date ranges I have for the data for men and women are off by 2 years with '01 to '11 for men and '99 to '09 for women.    So I can't get an exact total number, but I'll just ignore that and figure it out as if the years did match and we'll pretend its close enough.   At the start of the decade we had 81k SAHD and 5,200k SAHM.   The total population was 59.5M men and 60.1M women.  That gives a combined stay at home parent % of 4.4%.    Then at the end of the decade there were 176k and 5,700k SAH's and 54.6M +| 63.4M population.   That results in 4.7% population.    

The total increase in stay at home parents over the decade was about +0.3%.

Now if you look at the same period roughly 2000 to 2010 then the overall labor force participation rate dropped from 84.4% to 82.4%.    Thats a 2% decline in the population thats in the labor force.

We could conclude then that about 15% of the people who left the labor force are now staying at home with their kids.    That doesn't account for much of the population that is no longer in the labor force but its a factor.

What Caused it?  Was it choice or not?

The data shows that there are in deed more stay at home parents and that number has grown faster than the population.   However we don't know what caused what.    Its possible that individuals decided that they did not want to work, quit their jobs and dropped out of the labor force to stay home with their children.   Its also possible that individuals lost their jobs due to the poor economy, struggled to find work for 1-2 years, finally gave up and are now staying at home with the kids.   Or maybe its just shifting demographics like the Census report pointed do more Hispanic and foreign born mothers.    The statistics don't tell us the "why" of the change.   


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