Hiring

Weekly Stat: Coaxing Women to Rejoin the Labor Force

Child care costs may keep the labor force participation rate of U.S. women suppressed.
Weekly Stat: Coaxing Women to Rejoin the Labor Force
Photo: Getty Images

Nonfarm U.S payrolls bulked up in February, increasing by 678,000. The Bureau of Labor Statistics also raised the payroll numbers for December 2021 and January 2022 by a combined 92,000. 

With more children at in-person school, women made up about half of the payroll adds in the nonfarm numbers. 

But so far, in 2022, the number of women in the civilian labor force age 20 years or older (who are more likely to have children at home) has shrunk. (The labor force level is the number of people working or actively looking for work.)

For women 20 years and up, the labor force participation rate was 58% (56.6% for those 16 and older), up from 57.1% a year ago but still lagging behind its pre-pandemic 59.3%.

In historical context, those rates are striking: Before the disruptions from the pandemic, the women’s participation rate was last at 56.6% in July 2016. The highest women’s participation rate was recorded in March 2001, when the rate just eclipsed 60%. 

Men have always been a larger part of the labor force. (See the chart for comparison.) Over the past 60 years, however, men’s participation has steadily fallen.

Multiple factors are at play in the slow recovery for women. For example, according to the payroll data, many of February’s job gains were in sectors (construction, computer system design, transportation, and warehousing) where women constitute less than 30% of the workforce.

But other trends should, in theory, be boosting participation. For example, February BLS data showed that the number of persons unable to work because of the pandemic fell to 1.2 million from 1.8 million a month ago. Same for the number of persons who were unable to work because of the pandemic’s effect on their employer’s business.

The more structural and lasting issue could be the real problem. And that issue is the cost of child care. 

The cost of center-based infant or toddler child care chews up as much 18% of some families’ incomes.

In his State of the Union address on Tuesday, President Joe Biden said many families were spending $14,000 a year for such services. He was not exaggerating: the cost of center-based infant or toddler child care chews up as much as 18% of some families’ incomes, according to the website World Population Review. (The federal definition of affordable child care is 7% or less of annual household income, the website notes.) 

As the pandemic fades, the supply of such services remains tight: the daycare service industry’s employment rate is still 12% below pre-pandemic norms, according to a Wells Fargo report. With hourly wages for childcare workers averaging $12.25, the industry will have to raise pay to attract candidates — and probably pass that extra cost on to customers.

For many two-parent households, childcare bills surpass one or each parent’s take-home pay, which means it’s cheaper for one parent (often the mother, for households that have one) not to work, or at least not full-time. For women or men raising their children on their own, the situation can be dire. 

Early in the pandemic, some companies started expanding their benefits packages for parents. But now, more employers may have to find ways to offer benefits like onsite daycare, child care subsidies, and backup child care permanently. Higher pay for women and comprehensive legislation from Congress would also help.

If companies ignore this trend, they may have difficulty finding the workers to power their growth plans. That may wind up costing them more than funding a benefits package that not only helps family finances but gives employees a good reason to stick around.