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Investment Bank

Investment Bank

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At 4.4%, the U.S. unemployment rate, as reported by the Bureau of Labor Statistics (BLS), remains low by historical standards, yet worker participation in the labour force has finally stabilised after falling steadily for much of the last decade.

The long decline in women’s workforce participation was a specifically American phenomenon; in recent decades, labour force participation by working age women has increased steadily and substantially in the euro area, Japan and the UK, for example. 

What could be enticing workers back? An analysis of labour force participation rates (LFPR) indicates that women are playing a significant role in this shift.

U.S. labour force participation has stabilised after being on a downward trend for over a decade

Source: Bureau of Labor Statistics, Haver Analytics, Barclays Research

Increased labour force participation among 25-54 year olds

Since 2015, LFPR among prime age (25-54 years) workers rose by one percentage point, to 81.6%. This increase reverses about one-third of a long-term decline that goes back to 2000. Prime age workers, the most active group in the workforce, make up half of the working age population and well over 60% of the active labour force. Large shifts in this group can have important implications for the labour supply and the economy overall.

U.S. labour force participation among prime age workers

Source: Bureau of Labor Statistics, Haver Analytics, Barclays Research

When examined further, the data show an LFPR increase of 2% among female prime age workers since 2015, while the rate among men has remained largely flat over the same period. This increase has erased more than half of the same long-term participation decline among female prime age workers. What is enticing female workers back into the labour force?

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Encore! A path for workplace re-entry

Encore! A path for workplace re-entry

Now in its second year, the Barclays' Encore! programme invites select applicants to participate in a 10-week programme focused on workforce re-entry.

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Low income wages are growing

Rising wages in recent years, especially for lower-income workers, seems to be one reason. Wages for women in the lower-income group have grown more than for other workforce participants. In fact, median earnings growth for female workers without degrees in the bottom income quartile (25%) has increased dramatically, from -1.4% year over year in Q2 2014 to 6.8% by Q2 2017. This growth amounted to an 8.2 percentage point acceleration, compared with just a two percentage point acceleration for men in the same category.

Rapid acceleration in median earnings of U.S. female workers likely pulled more women into the labour force

Source: Bureau of Labor Statistics, Haver Analytics, Barclays Research

Room for more?

While the LFPR among women has risen with wage growth, it is still about 2 percentage points below its 2000 levels and about 13 percentage points lower than that of men. Historically, the unemployment rate served as one of the key economic indicators to watch for signs that monetary tightening or loosening might be needed. However, our evaluation of the current LFPR indicates the supply of workers is picking up gradually as labour markets continue to improve further.

Overall wage pressures in the economy also remain modest, suggesting tight supply is not yet biting into wage inflation. The presence of more women in the workforce has had a positive effect on the labour supply, and their low LFPR compared with male workers suggests it is possible for more women to join.

Read the full report

Authorised clients of Barclays Investment Bank can log in to read the full report, as well as access related articles including:
US Outlook: Not in the labor force, but want a job
US Outlook: Wages growth is not as weak as it seems

For further information about Barclays Research offering, please contact:

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About the analyst

Blerina Uruçi is a Vice President in the U.S. Economics team at Barclays, based in New York. Her main responsibilities include forming the firms’ near- and medium-term inflation forecasts and assessing the GDP growth outlook. Before joining the U.S. team, Blerina was the UK Economist for Barclays, based in London. She was responsible for developing the firm’s view on the UK economy, including monetary and fiscal policy.

Ms. Uruçi joined Barclays in 2010 from the London School of Economics, where she completed a master’s degree in Economics. Prior to that, she worked in development economics in Malawi and for Thomson Reuters as a European economist. Ms. Uruçi also holds a BSc (Hons) in Economics and Politics from the University of Bath.

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