Women are now departing the U.S. labor force at historically high rates. The continuation of this trend has serious consequences for long-term economic growth and gender equity in the workplace. Recent statistics reveal that the labor force participation rate for prime working-aged women, those between 25 and 54 years old, peaked at an impressive 78.4% last year. That figure has dropped to just under 77.7%. In an equally surprising plunge, it dropped more than 3 percentage points to 73.5% in just one month.
Our workforce is undergoing a great resignation. Between January and August of this year, an estimated 455,000 women have exited the workforce. The pandemic’s effects are still being felt to this day. Women were 55% of the 21.9 million people who lost their jobs during this pandemic. This troubling trend calls into question the long term prospects for women’s employment and the overall strength of the U.S. economy.
Factors Behind the Decline
Human capital factors account for some of the worrisome departure of women from the labor force. From performance evaluations to negotiating salaries, the pressure is forcing countless women to reevaluate their career trajectories. Some have already gone back to school, others are looking for part-time employment. Most are becoming entrepreneurs themselves. That’s because the abrupt move to remote work during the pandemic created a benefit that many women had long coveted—flexibility. Yet with return-to-office mandates forcing them to abandon these new arrangements, many have exited the workforce altogether.
Increased federal workforce cuts have only made this worse, especially in agencies that employ a higher percentage of women. The policies of the current administration have come under fire for favoring policies that discourage women from pursuing careers outside of a home environment. Michelle Holder, an economist, stated, “There have been policy proposals by the administration either overtly, or not so subtly, encouraging women to leave the labor force and concentrate on home and hearth.”
The economic landscape has shifted due to the rise of artificial intelligence and a sluggish labor market, which has adversely affected white-collar and customer-facing sectors typically employing women. As Diane Swonk, chief economist for KPMG noted, a weakening economy is usually the first to punish marginalized groups. Annie highlighted this very important point in her analysis. This recent trend only further emphasizes how systemic barriers continue to affect women in the working world at a higher rate than men.
The Impact on Families and Health
The choice to exit the labor market is usually made due to personal situations, especially for women of school-age children. Diane Swonk emphasized this point, stating, “Women with children under five are driving the outflow from the labor force;… [they are] leaving at more than twice the pace of anyone else.” The pressure of juggling work and family obligations can be an impossible burden for countless women. Due to this, many are forced to put their health and well-being before their profession.
Katharine Ransom-DiCerbo, a former employee who left her job due to overwhelming demands, expressed her struggles: “I put everything I had into that job. My mental and my physical health broke down to the point where I could not go back.” Her experience points to an increasingly pressing issue that too many women in STEM fields confront — the unique, overwhelmingly demanding pressures of their workplaces.
When women do leave the labor force, their exits have personal consequences. This transition rings true across the rest of the economy. Failure to attract or retain these smart, talented individuals may limit their economic growth potential. Diane Swonk remarked on this impact, stating, “It’s diminishing both current and potential growth in the economy.”
Broader Economic Consequences
Women’s exodus from the workforce has dire impacts. More than that, it threatens to wipe out the hard won progress we’ve made over the last several years. Yet economists not only encourage moving forward, they strongly caution that doing otherwise is a recipe for long-term economic stagnation. Swonk articulated this concern: “You want an economy that has as many people who want to have their hat in the ring working and their talents as possible.”
Sisters, the reality is grim Black women are the second largest group of workers exiting the labor force. And their experiences are just the tip of the iceberg on the systemic inequities that still exist in our economy. Michelle Holder pointed out that “the attack on public sector employment by the administration is playing out with regard to where women are positioned in the workforce,” highlighting how policy decisions can exacerbate existing disparities.
As the conversation around gender equity and workforce inclusivity grows, we know that it is crucial to address these issues head on. Taking these actions is essential to ensure a thriving economy. Taylor Rogers, a spokesperson for a political figure associated with current administration policies, asserted that “President Trump has a proven record of building an economy that benefits all Americans, including women.” This policy note raises important questions, which are still much debated today, about the effectiveness of different macroeconomic strategies for furthering gender equality in the labor market.