Women in their prime working years are storming back into the labor force.
In June, 77.8% of women age 25 to 54 were working or looking for jobs, up from 77.6% in May and the highest in U.S. history, the Labor Department’s recent jobs report showed.
The labor force participation rate for men also has risen steadily but, at 89.2%, is still slightly below its pre-pandemic peak.
Women were especially hobbled by job losses early in the health crisis and are now benefitting from a robust recovery as well as the wider availability of child care, remote work options and other factors.
So many women lost jobs in early 2020, “They called it a she-cession,” says Brad Hershbein, senior economist at the W.E. Upjohn Institute for Employment Research.
What is the labor force participation rate?
Their return to the job market has helped boost the broader U.S. labor force participation rate from 60.1% early in the pandemic to 62.6%. The larger pool of workers has made it easier for businesses to attract workers and slowed sharp wage growth, helping ease a historic inflation spike.
Still, the overall participation rate remains short of the 63.3% pre-COVID level, largely because of the early retirements of baby boomers during the health crisis, says economist Dante DeAntonio of Moody’s Analytics. He doesn’t expect the nation to reclaim its pre-crisis participation rate because boomers continue to retire in large numbers and most who stopped working sooner than planned aren’t coming back.
So far this year, the pool of 25- to 54-year-old women working or job hunting has swelled by 815,000 after a gain of 448,000 in 2022.
Are more women working than ever before?
They’re not just looking for jobs – they’re landing them. The share of prime-age women who are employed also hit an all-time high of 75.9% last month.
For four decades, a sharply rising share of prime-age women entered the workforce but their participation rate peaked in 2000 and then dipped during the 2001 dotcom recession and the Great Recession of 2007-09.
Here’s why women aged 25 to 54 are now in the workforce in record numbers:
Economic recovery lifts more women
The pandemic led to heavy 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, health care and education.
As COVID has eased, most of those sectors reached and then topped their pre-COVID payrolls because of pent-up customer demand, says Hershbein.
Hot job market
Pandemic-related worker shortages triggered record job openings and wage growth last year. That has drawn in women who left the workforce during COVID, DeAntonio says.
Many left because of health concerns, to care for children or to cope with burnout. But the health crisis has eased even as U.S. households’ COVID-related cash reserves have dwindled.
Schools reopen, daycare centers staff up
Schools with distance-learning mandates during the pandemic have fully reopened and child care services that closed or laid off workers have rehired or replaced most former employees. That has allowed more women to go back to work, De Antonio says.
Child care services laid off 375,000 employees early in the pandemic, but their payrolls hit 1 million in June, just 48,000 below their pre-COVID total.
More flexible work options
About 35% of people who can do their jobs remotely are working 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 survey in December by Harris Poll for Express Employment Professionals, a staffing firm.
As a result, many women can work and care for children during the day.
“Women have more options to balance their careers with their life priorities,” says Teresa Tanner, CEO of Reserve Squad, a company that helps women who leave the workforce maintain professional connections and eventually return to jobs.
Inflation squeezes family pocketbooks
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 2% target. That has forced many women back to the workforce to supplement family incomes, DeAntonio says.
Despite the strides by prime-age women, Hershbein notes that consumer spending is moderating and June’s job gains were the smallest since December 2020. The pullback particularly hit service industries that have employed lots of women.
“Is (women’s participation in the workforce) going to reverse?” Hershbein asks. “We may have seen its peak.”
