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More Women Choosing Not to Work

Wednesday, March 22, 2006
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The latest report from the Federal Reserve Bank of Dallas shows a new trend: The number of younger, college-educated women opting out of work is growing.

According to the report, the labor-force participation rate of 25- to 54-year-old women has gone through its largest sustained decline in more than 50 years.

"The recent downturn in the women's labor-force participation rate has surprised many," the authors write in Opting Out of Work: What's Behind the Decline in Labor Force Participation?

"Prime-age female . . . rates slid from their peak of 76.8 percent in 1999 to 75.1 percent in first-quarter 2005. This is an unprecedented fall in [this category] in the post-World War II era.

"It bears noting, however, that the pace of increase in female participation rates has been slowing since the mid-1980s. According to a recent Federal Reserve Bank of Boston paper, the decline in rates has been concentrated among college-educated women, both married and unmarried," the report states.

It also has been high for married women with children under age 6 or "high-earning husbands."

Leaving the workforce "seems to be more of a choice than a consequence for people getting forced out," says Pia Orrenius, a senior economist at the Dallas Fed and a researcher for the study.

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Another factor contributing to the decline, according to the study, is the growing number of Hispanic women in the population as they -"have lower labor participation rates than other women."

Another factor may be the number of disabled women ages 25 to 54, which has grown from 12.6 percent in 1991 to 21.9 percent in 2003.

The report cites "other potential explanations for the decline" as waning real wage growth, increases in other family income and changing preferences for work.

But many questions remain, the authors say. "In other words, this phenomenon is not well-understood."

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