Politics of Employment Quiz 2

Labor force participation rate (LFPR) formula

Labor force (employed + unemployed) ÷ civilian noninstitutional population age 16+

LFPR numerator

Employed plus unemployed (including those on temporary layoff or actively seeking work)

LFPR denominator

Civilians age 16+ who are not institutionalized (excludes people in prison)

Is someone on temporary layoff in the labor force?

Yes, they count as unemployed, so they are in the labor force

Is an incarcerated person counted in LFPR?

No, institutionalized people are excluded from the denominator entirely

Prime-age workers

Ages 25–54; past schooling and not yet retired, so they would be expected to work

Why LFPR matters

Major determinant of GDP; affects poverty; linked to social well-being and physical health

Labor as a market: buyers

Employers/firms, who buy skills and time; demand is derived from consumer demand; goal is to maximize profits

Labor as a market: sellers

Employees/workers, who sell skills and time; individual decision; goal is to maximize utility

Prime-age women's LFPR trend

Consistent growth for about 50 years

Prime-age men's LFPR trend

Long-term decline, with faster drops during recessions

How much prime-age men's LFPR has fallen in 60 years

About 8 percentage points

College vs. high school gap in men's LFPR

Now an 11-point gap favoring college grads; 50 years ago the rates were very similar

Why overall LFPR fell 2019–2025

Population aging; growing share of people 65+, who participate less

Overall LFPR 2019–2025 with vs. without aging

With a constant age mix it would have risen 0.58 points; instead it fell 0.74 points

Mothers of children under 5 after COVID

Participation surged, hitting an all-time high of 71% in September 2023

Possible drivers of higher LFPR among mothers

Pandemic-era child care funding and increased telework

Group with the highest telework rate

Parents of young children; about 1/3 of prime-age mothers with kids under 5 telework

Main reason prime-age women are out of the labor force

Caregiving

Main reason prime-age men are out of the labor force

Disability

Share of prime-age women out of labor force (Q1 2025)

22%, down from 24% in Q1 2019

Share of prime-age men out of labor force

11%

Women's LFPR at age 25, late-1990s cohort vs. 45 years earlier

76.6% vs. 66.3% (rising across cohorts)

Men's LFPR at age 25, late-1990s cohort vs. 45 years earlier

84.0% vs. 93.0% (falling across cohorts)

Male cohort with the sharpest LFPR drop

Born 1985–89, turned 25 during or right after the Great Recession

Post-pandemic recovery vs. past recessions

More gender-balanced and much faster; about 2x faster than after 2001, 4x faster than after the Great Recession

She-cession

Early label for the pandemic because women were hit harder; the gap proved temporary

Demand-side explanation for nonparticipation

Employers aren't hiring or don't want workers' skills

Supply-side explanation for nonparticipation

Workers aren't fit for, or choose not to take, available jobs

Structural displacement

A worker's job disappears permanently (automated or shipped overseas) so their skill set is no longer wanted; mainly affects men

Reservation wage

The lowest wage a person will accept to take a job; if offered wages fall below it, they stay out of the labor force

Risk bind (Hacker)

Women's move into the workforce during flat wages and rising family costs increased the risk to families' standard of living, pushing them into debt and sometimes ruin

Why a second income is a necessity (Hacker)

Wages are relatively flat while the cost of raising a family keeps rising

Why two-earner families face more income shocks

Two jobs means two chances of layoff or illness, and costs depend on both incomes

The safety-net family has become the risky family

Two incomes should add security, but with both locked into fixed costs and no backup earner, families are more vulnerable

Married mothers of infants who work, 1975 vs. today

About 3 in 10 in 1975; about 6 in 10 today

Married couples working roughly equal hours, 1970 vs. 2000

Less than 1/3 in 1970; more than 60% in 2000

Male breadwinner families, 1970 vs. 2000

About half in 1970; about one-fifth in 2000

How middle-class families got richer (Hacker)

Only because women started working for pay, worked more hours, or earned higher salaries

Countries with no cash benefit during maternity leave

The United States and Papua New Guinea

Personal savings rate trend

Fell from about 10% of disposable income in the early 1970s to the low single digits (2.6% at end of 2017)

Debt of median indebted couple with children (2007)

About 170% of income, highest of any family type

Non-mortgage debt today vs. 2007

Higher now than in 2007

Families unable to sustain poverty-level living for 3 months (2016)

Over 25%, per the Survey of Income and Program Participation

Why the 25% wealth figure is too optimistic

It counts housing, which is hard to turn into cash if the family still needs a home

Warren: the big four household expenses

Housing, health care, education, and child care

Warren: middle-aged family wealth today

Less than one-fourth of what the median middle-aged family had 40 years ago

Millennials vs. boomers at the same age

50% more on rent, 75% more on health care, almost 150% more on education

Warren: choice between security and family

Americans increasingly must choose between economic security and having children