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Whither the Women?
After Decades on Rise, Labor Participation Rate Is Down

By Nell Henderson
Washington Post Staff Writer
Friday, July 7, 2006; D01

The trend was clear and consistent. Since the end of World War II and stretching to the start of the current millennium, the percentage of American women entering the labor force rose steadily, at a rate so fast that it offset the steady decline in participation by men.

The influx of fresh workers buoyed economic growth. As companies expanded and demand rose, there were plenty of hands to get the job done.

But women's rush to employment stopped in 2000 and started to decline, as they began to join their male counterparts in retirement, go out on disability and delay paid employment to get more education. Some economists think the high-water mark of female participation in the labor force was in 2000, when it hit 60.3 percent.

"The enormous rise in [the] women's labor force participation rate was destined to run its course," wrote demographer Cheryl Russell in a recent analysis. "Most women who want or need to work are now in the labor force."

This flattening of the women's rate, combined with a continuing decline in the men's rate, has helped tighten the job market and could slow U.S. economic growth in coming years, economists say.

A paper by four Federal Reserve economists to be published this month by the Brookings Institution puts it this way: The decisions recently of so many Americans to opt out of the workforce are "nearly unprecedented in the post-war economic experience" and "seems large and unusually protracted by historical standards."

Contrary to popular theory, Labor Department data do not show a rising proportion of women dropping out of the workforce to spend time with their families. Indeed, the participation rate has fallen since 2000 for both women with children and women without children.

While nonworking women are still much more likely than men to cite "home responsibilities" as their reason for not holding or seeking a job, that's actually less true now than it was in the past. The share of women aged 25 to 54, considered to be in their "prime" working years, who gave that reason for not seeking employment has shrunk for more than a decade. The share of men citing that reason has edged up over the same period, according to a Labor Department analysis of census survey figures from 1990 to 2003.

The female participation rate peaked below the men's, though, because women still take out more time to care for children and other relatives, analysts say and the data show.

"During soft economic times, women with young children will be more likely to stay home if they can afford not to work. This is not a new trend; it's just common sense," Russell wrote. She added in an interview that the women's participation rate will probably never match the men's rate because of childbearing. "That is the biological gap."

Still, what the data show is that working women are behaving in a similar fashion to men: As the population ages, more workers of both sexes are retiring or being pushed to the sidelines by disability. More younger workers are staying in school longer to juice up their future career prospects in an increasingly information-based economy. Many middle-aged workers have lost industrial jobs and have gone back to school for retraining or have given up looking for new work.

"I don't want to work anymore," said Mary Lorenzo, 66, who retired in 2002 after laboring for 31 years at the Sparrows Point steel mill near Baltimore, pouring coal into coke ovens, shoveling mud and repairing electrical equipment. "I really enjoyed it when I was young. . . . But when you get older, it gets harder because most of the work is physical."

For most workers, retirement was a 20th-century invention, labor historians say. In an agrarian economy, most men and women had no choice but to work until they dropped. But with industrialization came company pensions. And with the New Deal came Social Security benefits for retirees and disabled workers. And the United States grew wealthier, particularly after World War II.

Over time, more men could afford to stop working -- and did. The male labor force participation rate peaked in 1949 at more than 87 percent.

Now, the female baby boomers who entered the work world in recent decades -- often after fighting in court for access to high-paying jobs in mines and factories -- are increasingly eligible for private pensions and Social Security disability insurance benefits.

"I was in excruciating pain," Lorenzo said of her last years at the steel mill, which was originally owned by Bethlehem Steel Corp. and is now owned by Mittal Steel Co. A divorced mother of six children, she had surgery on both shoulders and her thumb before retiring in 2002 with disability benefits and a company pension.

Lorenzo was among the first women hired at the mill in the early 1970s under pressure from the courts, she recalled. Now, she said, "I have it so much better than a lot of women I know" who don't have her retirement income.

Among nonworking adults aged 25 to 54, a growing share of women said they were not holding or seeking a job because of disability or illness, according to the survey data. A shrinking share of comparable men cited those reasons.

Meanwhile, younger men and women are staying in school longer, reflecting the increasing value of advanced education. The labor force participation rate among people aged 16 to 24 peaked in 1989 and has fallen since as enrollments have climbed. Younger women "are now more likely than their male counterparts to have received a high school or college degree," the Fed economists noted.

"I always thought I might want to go back to school; I just was not sure what for," said Sara Agre Watson, who grew up in Baltimore and graduated from Colgate University with a bachelor's degree in psychology in 2000.

Women who once fought to work alongside men are now also subject to layoffs by employers in the steel, textile, automotive, aerospace and similar industries. Many of these middle-aged workers are also returning to school temporarily to retrain themselves for new jobs.

Now, without a growing share of female workers to offset the departing men, the national labor force participation rate dropped to 66.1 percent in May from a peak of 67.3 percent in early 2000.

To appreciate what that difference means: The country's labor force has continued to grow as the population has expanded, but it would have 2.7 million more members today if the rate had rebounded to its high point.

Some analysts say the labor force participation rate also reflects the lingering effects of the last economic downturn and that it would have rebounded by now if job growth were stronger. The fact that so many people remain out of the workforce reflects "weak labor demand rather than choice," said Jared Bernstein, senior economist at the Economic Policy Institute, a think tank focused on labor issues.

Even so, others say the rate is unlikely to rise in coming years for demographic reasons, primarily the coming retirement of the baby-boom generation.

Another reason, though, is that Hispanics are the nation's largest and fastest-growing minority group, accounting for 49 percent of the country's population gain from 2004 to 2005, according to a recent census report. Hispanic men are more likely than average to work, but Hispanic women are less likely, which helps depress the overall participation rate for women.

However, behavior can change, making predictions risky.

For example, the share of working men and women over 55 has grown for more than a decade, making this rapidly expanding group a "wild card," the Fed authors wrote.

But Lorenzo won't be looking for another job. "It was sad to leave" the steel mill, she said. But now, she's moving to Las Vegas. "I bought a mobile home in a senior community there. . . . I like to play bingo."

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