Today there are fewer Americans in the workforce than at any time over the past 35 years. And women of the Baby Boomer generation are leading this surprising job-market exodus following the Great Recession.
The U.S. labor force participation rate stood at a mere 63.2% in August of 2013 – the lowest level since the early 1980s — and has been on a steep decline since the start of the Great Recession in 2007. Economists expected that some workers would leave the workforce permanently over that point, since the baby-boom generation was already moving into retirement age. But a much higher number of workers dropped out than predicted. Not only are they not working: they’re not actively seeking work either.
In interviewing labor economists, employment attorneys, and researchers at the BLS, Heidi Shierholz at the Economic Policy Institute has determined that the pool of so-called “missing workers” numbers more four million Americans. Her estimate is based on comprehensive projections of labor force participation for the period 2007-2016, published by the Bureau of Labor Statistics in 2007, prior to the onset of the Great Recession.
The BLS predicted that job market conditions and economic trends at that time would continue for the next 10 years. So the difference between that forecast and what has actually happened is directly linked to cyclical economic conditions – primarily the faltering labor market during the Great Recession and in the recovery that’s followed.
There are different demographic groups in that pool of “missing workers” – those of prime working age, those under the age of 25, and workers aged 55-plus. And within that last group, the overwhelming majority are women. Among younger workers, more men than women left the workforce.
Many of these older women likely got laid off or voluntarily left their jobs in the downturn — or maybe ran a small business that they shut down. In the still-weak economy of our current recovery, these women find it difficult to land new jobs — especially anything coming close to the salary and skill level of the jobs they lost. This trend has even been noted by workers’ compensation lawyers who have seen a decline in the number of older female clients.
Shierholz says some of the missing Boomer women are “people who are extremely discouraged, who would very much would like to be in the labor force.” Others, she says, have taken early and not-entirely-voluntary retirement. “Maybe they’re nearing retirement age, they got laid off from a job, they looked around for a while, can’t find anything that’s even close to the quality of job they’re interested in, and just kind of say, ‘OK, it’s not what I was planning on, but I’m retiring now,’” she says.
Where have all the older women gone?
Some of them are simply discouraged and have chosen not to keep hustling for a low-skilled or low-paying job. Although for some, even one more year in the workforce could make a considerable long-term financial difference. One Baby Boomer interviewed, Barbara Clothier, discovered that if she could stay in the workforce even one more year, it would increase her Social Security benefits by as much as 8 percent. Reina Mitchell of the Pension Research Center at the University of Pennsylvania’s Wharton School has followed these trends closely, and is concerned about the pattern of women retiring earlier than expected due to poor job-market prospects. “Older women — and I put myself in that group, in the 55-to-64 age bracket — really need to make up for a lot of the deficits that they’ve incurred during their working life,” Mitchell says. “Many of them have taken time off, they haven’t built up a good pension, they haven’t built up a good Social Security endowment, and so those last several years can make a huge difference in terms of future retirement security.”
Beyond dropping out because of discouragement, many women are now absent from the workforce as a result of family obligations, especially with their own elderly parents needing additional care.
And then there is simply a segment of the “missing Boomer women” who are comfortable with no longer working. “Not everybody in this pool of missing workers is completely unhappy,” Shierholz points out. That news doesn’t surprise career counselor Minda Redburn at LifeLong Career Options in Portland. Redburn points out that many Boomer women grew up in a generation where they didn’t anticipate working their whole lives. “If they don’t have to work financially, why would they?” she asks. “It’s not as important to them in terms of self-image to have a job, as it is to their male counterparts. They also weren’t raised to empower themselves with the kind of self-efficacy and decision-making that women need to be effective in the workplace.”
Chris Clothier says that if the only jobs women her age can find are a big step down, in terms of pay and intellectual challenge, they won’t stick with them.
“I think men have always been raised to be the quote-unquote providers,” says Clothier. “And so they’re going to stick with a job no matter what, till the end. And I think women, perhaps, have less tolerance for that.”
And as it turns out, Shierholz’s study shows that a higher number of men in the 55-to-64 age bracket remained in the workforce than the BLS predicted. After incurring heavy financial losses during the recession (both in their homes and in 401Ks), they now want to squeeze every last dime out of working before they retire.