America’s female workers deserve more appreciation: They’re playing a crucial role in helping the U.S. economy grow without stoking unwanted inflation.
By many measures, the U.S. is at or near full employment, the point at which demand for workers should push up wages and prices. The unemployment rate is at an extremely low 3.9 percent, and the number of available workers per job opening has declined to one, from more than six in the depths of the last recession. Yet wages haven’t responded as expected: Average hourly earnings were up 2.9 percent in August from a year earlier, more than in previous months but still well short of their pre-crisis growth rate.
Why the disconnect? One explanation is that people who weren’t counted as unemployed, because they weren’t actively seeking work, are coming off the sidelines and taking the jobs on offer. Women have made by far the biggest contribution. The share of females aged 25 to 54 either working or seeking work, also known as the prime-age labor participation rate, averaged 75.4 percent in the three months through August. That’s up from 73.6 percent three years earlier — a change that, together with population growth, amounts to almost 400,000 added workers.
It’s hard to know exactly why women have outperformed, but it’s possible to make some guesses. For one, they tend to stay out of the labor force to handle domestic tasks such as caring for children or relatives — something they can pay others to do if the right job comes along. Men, by contrast, tend to leave the workforce because of illness or disability, situations that often can’t be reversed. Also, women have more of the social skills that an evolving economy increasingly requires.
Whatever the reason, women’s willingness to rejoin the workforce raises a question for the Federal Reserve: What if they can keep going, reaching or even exceeding the 77-plus-percent participation rate achieved in the late 1990s? The added supply of labor could help keep wages in check, allowing the central bank to pursue a more stimulative monetary policy — and put more people back to work — without overheating the economy.
It’s something Fed officials might want to keep in mind as they decide on the trajectory of interest rates.
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Mark Whitehouse writes editorials on global economics and finance for Bloomberg Opinion. He covered economics for the Wall Street Journal and served as deputy bureau chief in London. He was founding managing editor of Vedomosti, a Russian-language business daily.