The
US was for decades held up as a global standard-bearer in furthering women’s
fortunes in the jobs market. Not any more.
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Last year the labour force participation rate of prime-age American
women fell behind that of Japan — a country traditionally viewed as
being a global laggard — leaving it languishing below the majority of OECD
nations including Sweden, France, and even Greece.
The experience of women like Charlotte Brock, 35, helps
illustrate why. After finding she was pregnant, Ms Brock did what many working
women are forced do in the US when confronted with a system that offers no
guaranteed right to paid parental leave and hugely costly childcare:
she quit her job to look after her baby.
Five years later, the former think-tank analyst and Marine
corps veteran says her career has never recovered. “I have lived in France and
Canada, and it is night and day,” she says. The US system is “absolutely
terrible for parents”.
The reasons for declines in US labour force participation,
which measures people in work or looking for a post, are complex and heavily
contested. However, experts believe one driver is threadbare support for
working parents. “We don’t have the same incentives other countries have for
women to stay in the labour force after they have kids,” said Elise Gould of
the Economic Policy Institute in Washington DC.
The share of US women either in work or looking for a post
soared from just 33 per cent of 25-54-year-olds in the 1940s to 77 per cent at
the start of the 2000s. Yet since then it has trended to around 73 per cent —
even as other countries’ participation rates improved.
A paper by Francine Blau and Lawrence Kahn of Cornell
University in 2013 found that the gulf between family friendly policies of
European countries and those in the US could explain at least part of the
relative decline in US women’s labour force participation.
“Support from the public sector, subsidised childcare,
mandates on employers to make arrangements: all these are very skimpy in the US
compared with most of western Europe — and compared with Japan now,” said Paul
Swaim, senior economist at the OECD in Paris.
The issue shows signs of featuring in the presidential
election, said Michael Strain, a resident scholar at the American Enterprise
Institute, amid concerns that US economic prospects are being impaired by the
large share of the population that has become detached from the jobs market.
“The stage is set for this to be a live issue,” he said.
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Among the Democrats, Hillary Clinton is attempting to capture a
greater chunk of the female vote by attacking a system that means a quarter of
all women return to work less than two weeks after having a child. Her
interventions come after President Barack Obama raised the issue of paid leave
in his State of the Union address at the start of the year.
Republicans have generally declined to embrace family leave
rights for fear of imposing burdens on business, but presidential candidate
Marco Rubio last month unveiled a plan to encourage companies to
offer paid leave by offering them tax breaks. Jeb Bush has talked about
lowering marginal tax rates for secondary earners, which could help incentivise
entry to the workforce.
But political attention on female participation touches only
one aspect of a broader, worrying trend. While unemployment has dropped since
the recession and the US still benefits from a flexible labour market, the
overall workforce participation rate including men hasslid to its lowest
level since 1977.
The ageing population explains a chunk of the departures
from the labour force, but dismal numbers among individuals aged 25-54 point to
other forces at work. Among prime-age men, only Italy and Israel have lower
participation rates among 34 countries tracked by the OECD.
Gary Burtless at the Brookings Institution think-tank said
lower levels of participation are apparent among the least-skilled men, which
could reflect changes in the nature of the jobs on offer, as well as the recent
downturn, when there was heavy attrition in sectors such as construction. Women
have also suffered, in part because of public sector job cuts, he added.
The notion that low interest rates could bolster activity
and attract more of these people off the sidelines has underpinned calls by
many economists for the Federal Reserve to leave its official rate at
near-zero levels this year.
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Betsey Stevenson, a professor at the University of Michigan, says America’s
workforce is being disproportionately affected by the number of men who have
fallen foul of the law. Some 70m-100m of America’s population have criminal
records, raising a major barrier to their hopes of getting employed. Other
countries are also proving better at promoting policies including job-search
help to incentivise people to stay in the workforce even when they have lost
their jobs.
“The puzzle is both prime age women and men’s participation
has declined a lot,” said Ms Stevenson.
“We have a growing group of people who are somehow
disconnected from work.”
Jason Furman, chairman of the White House Council of
Economic Advisers, said workforce participation has become one of the most
important questions in labour market economics. “We understand it a lot less
than we should,” he said.
“There has been research on the female side that says a
decent fraction of the difference between the US and other countries would be
closed by more flexible workplaces and childcare. On the male side it is a
little more puzzling. One question is as you lose jobs in some areas are you
making enough steps to create jobs for people in other areas?”
