Challenges to Women’s Labor Force Participation

In the United States, women’s labor force participation leveled off around 2000 and then began to decline. This is a divergence from other developed countries. In the late 1990s, for example, the labor force participation rate for prime-age women was the same in the United States and Canada. But in 2017, there was a 7.9 percentage point gap between the two countries. The decline in participation does not appear to be driven by women with children. Instead, the decline is most dramatic for prime-age women with less formal education, regardless of whether or not they have children. A combination of fiscal policies, including joint taxation, the phase-out of the Earned Income Tax Credit and the structure of disability insurance, may create financial incentives for women with less education to not work or to work informally. This incentive structure merits reexamination. Employers might support women’s labor force participation by offering more stable schedules, better working conditions or family-friendly policies. Education tends to increase participation, but many women face the same barriers to attending school as to working. Programs that provide wraparound services and feature collaboration between schools and employers could boost women’s labor force participation. Investing to remove obstacles to women’s labor force participation would benefit both individuals and our nation’s economy as a whole.