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back to index backAMERItalk July,  2005

Feminization of the labor market

Labor market participation in the USA has been falling since 2001.

Surprisingly, this is an almost exclusively male phenomenon, while women are far less affected by the sluggish labor market. One reason for this could be the structural shift towards a service-based society.

Female employment substantially more stable

The number of women in work has been on the increase since the late 1940s. Only 32 % of all working-age women participated in the labor market in 1948, but this figure has continually increased since then, and currently stands at nearly 60 %.

We have already indicated several times that, since the beginning of the recession, the labor market participation rate in the USA has dropped significantly from a high of 67.3 % in Q1 2000, to 66 % in April 2005. The participation rate reflects the proportion of people who are either employed or are actively looking for work. Thus, for any given number of jobs, a drop in labor market participation causes the unemployment rate to fall. If this is taken into account, the actual situation on the US labor market appears considerably less favorable than an unemployment rate of 5.2 % might suggest.

There are, however, two very interesting trends hidden behind the aggregate figures. First, labor market participation among men fell by 1.9 percentage points – considerably more than the rate for women, which slid by 1.2 percentage points. This disparity is even more pronounced if one looks at the employment rates. Here,

the rate for men dropped 3.2 percentage points, while employment among women declined by only 2.1 percentage points. This leads to the second trend, which sees the female unemployment rate up only 0.9 percentage points, whereas the male rate climbed 1.3 percentage points. It should also be noted that long-term unemployment is more common among men than women. At 12.5 %, the proportion of unemployed men who have been unemployed for more than 12 months, according to the OECD, is considerably larger than the comparable group of women, at 11 %. This trend is evidently not an isolated phenomenon. During the downturns back in 1981/82 and 1990/91, labor market participation among women was substantially more stable than that among men. The phenomenon appears to be closely related to the structural shift from an industrial to a service-based society, which traditionally accelerates during periods of economic downturn. The industrial sector is traditionally dominated by male employees, and is susceptible to dramatic fluctuations in output and employment rates across the economic cycle. This is reflected in the higher volatility of male employment rates.

But there still remains a relatively high wage disparity between the two genders. This can be traced not only to the fact that the proportion of part-time workers among women, at 18.8 %, is significantly higher than that among men, but also to hourly wage levels. The USD 17.5 hourly wage for industrial workers remains markedly higher than the USD 15.6 rate paid in the service sector. But service jobs are catching up. Since

January 1990, hourly wages in this sector have risen by almost 64 %, whereas those in industry are up by 56 %.

Source: Dresdner Bank Economy and Markets” newsletter - GAI

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