Labor Force - Labor Force in The United States

Labor Force in The United States

In the United States, the unemployment rate is estimated by a household survey called the Current Population Survey, conducted monthly by the Federal Bureau of Labor Statistics. The unemployment rate is calculated by dividing the number of unemployed persons by the size of the workforce and multiplying that number by 100, where an unemployed person is defined as a person not currently employed but actively seeking work. The size of the workforce is defined as those employed plus those unemployed.

The labor force participation rate is the ratio between the labor force and the overall size of their cohort (national population of the same age range). In the West during the later half of the 20th century, the labor force participation rate increased significantly, largely due to the increasing number of women entering the workplace.

In the United States, there were three significant stages of women’s increased participation in the labor force. During the late 19th century through the 1920s, very few women worked. They were young single women who typically withdrew from labor force at marriage unless family needed two incomes. These women worked primarily in the textile manufacturing industry or as domestic workers. This profession empowered women and allowed them to earn a living wage. At times, they were a financial help to their families. Between 1930 and 1950, women labor force participation has increased primarily due to the increased demand for office workers, women participating in the high school movement, and electrification which reduced the time spent on household chores. In the 1950s to the 1970s, most women were secondary earners working mainly as secretaries, teachers, nurses, and librarians (pink-collar jobs). Claudia Goldin and others, specifically point that by the mid-1970s there was a period of revolution of women in the labor force brought on by a source of different factors. Women more accurately planned for their future in the work force, investing in more applicable majors in college that prepared them to enter and compete in the labor market. In the United States, the labor force participation rate rose from approximately 59% in 1948 to 66% in 2005, with participation among women rising from 32% to 59% and participation among men declining from 87% to 73%.

A common theory in modern economics claims that the rise of women participating in the US labor force in the late 1960s was due to the introduction of a new contraceptive technology, birth control pills, and the adjustment of age of majority laws. The use of birth control gave women the flexibility of opting to invest and advance their career while maintaining a relationship. By having control over the timing of their fertility, they were not running a risk of thwarting their career choices. However, only 40% of the population actually used the birth control pill. This implies that other factors may have contributed to women choosing to invest in advancing their careers. One factor may be that more and more men delayed the age of marriage, allowing women to marry later in life without worrying about the quality of older men.

Another factor that may have contributed to the trend was the The Equal Pay Act of 1963, which aimed at abolishing wage disparity based on sex. Such legislation diminished sexual discrimination and encouraged more women to enter the labor market by receiving fair remuneration to help raising families and children.

The labor force participation rate can decrease when the rate of growth of the population outweighs that of the employed and unemployed together. The labor force participation rate is a key component in long-term economic growth, almost as important as productivity.

Pop = total population

LF = labor force = U + E

LFpop = labor force population (generally defined as all men and women aged 15-64)

p = participation rate = LF / LFpop

E = number employed

e = rate of employment = E / LF

U = number of unemployed

u = rate of unemployment = U / LF

The labor force participation rate explains how an increase in the unemployment rate can occur simultaneously with an increase in employment. If a large amount of new workers enter the labor force but only a small fraction become employed, then the increase in the number of unemployed workers can outpace the growth in employment.