Women in their prime are storming back into the workforce.
In June, 77.8% of women ages 25 to 54 were working or looking for work, up from 77.6% in May and the highest in U.S. history, the Labor Department’s recent jobs report showed.
Labor participation for men has also risen steadily, but at 89.2% is still slightly below the pre-pandemic peak.
Women were particularly hampered by job losses early in the health crisis and are now benefiting from a robust recovery as well as the wider availability of childcare, telecommuting options and other factors.
So many women lost their jobs in early 2020, “They called it a female session,”[ads1]; says Brad Hershbein, senior economist at the WE Upjohn Institute for Employment Research.
What is labor force participation?
Their return to the labor market has helped boost the broader US labor force participation rate from 60.1% early in the pandemic to 62.6%. The larger pool of workers has made it easier for companies to attract workers and slowed the sharp rise in wages, helping to ease a historic rise in inflation.
Still, the overall participation rate is below the 63.3% pre-COVID-19 level, largely due to the early retirement of baby boomers during the health care crisis, said economist Dante DeAntonio of Moody’s Analytics. He does not expect the nation to regain its pre-crisis participation rate because boomers continue to retire in large numbers and most who left work earlier than planned do not return.
So far this year, the pool of 25- to 54-year-old women working or looking for work has increased by 815,000, following an increase of 448,000 in 2022.
Are there more women working than ever before?
They don’t just look for jobs – they get them. The proportion of prime-age women who are employed also reached a record high of 75.9% last month.
For four decades, a sharply increasing proportion of prime-age women entered the workforce, but their participation rate peaked in 2000 and then fell during the dotcom recession of 2001 and the Great Recession of 2007-09.
Here’s why women 25 to 54 are now in the workforce in record numbers:
Economic recovery lifts more women
The pandemic led to large job losses in customer-facing service industries that employ more women than men, such as leisure and hospitality (which includes restaurants, bars and hotels), retail, healthcare and education.
As the pandemic subsided, most of these sectors reached and topped their pre-COVID-19 payrolls due to pent-up customer demand, Hershbein says.
Hot job market
Pandemic-related worker shortages sparked record job and wage growth last year. It has attracted women who left the workforce during the pandemic, says DeAntonio.
Many left because of health problems, to care for children or to cope with burnout. But the health crisis has eased even as US households’ COVID-19-related cash reserves have dwindled.
Schools open again, kindergarten staff up
Schools with distance learning mandates during the pandemic have fully reopened and child welfare services that closed or laid off workers have hired or replaced most former employees. It has made it possible for more women to return to work, says De Antonio.
Child welfare services laid off 375,000 employees early in the pandemic, but their payrolls reached 1 million in June, just 48,000 below their pre-COVID-19 total.
More flexible work opportunities
About 35% of people who can remote work from home, up from just 7% before the pandemic, according to the Pew Research Center.
And nearly half of U.S. companies offer flexible work options, according to a December survey by the Harris Poll for Express Employment Professionals, a staffing firm.
As a result, many women can work and take care of children during the day.
“Women have more opportunities to balance their careers with their life priorities,” says Teresa Tanner, CEO of Reserve Squad, a company that helps women leaving the workforce maintain professional connections and ultimately return to work.
Inflation puts pressure on family wallets
Inflation hit a 40-year high of 9.1% a year ago. It has slowed but remains high at 4%, well above the Federal Reserve’s target of 2%. That has forced many women back into the workforce to supplement family incomes, says DeAntonio.
Despite advances by prime-age women, Hershbein notes that consumer spending is moderating and June’s job gains were the smallest since December 2020. The downturn particularly hit service industries that have employed many women.
“Is (women’s labor force participation) going to turn around?” Hershbein asks. “We may have seen the peak.”