In this Ten Talk episode, Senior Economist Didem Tüzemen examines the recovery of labor force participation following the Great Recession and finds that the only prime-age group to regain pre-recession levels is college educated women.
Tiffany Bailey of Claremore, Oklahoma, remembers exactly where she was in 2008 during the Great Recession.
She was working—just as she’s been doing every year since she was 17. Now 30, Bailey said she has followed her mother’s advice: “Always keep a job.”
Over the years, Bailey has worked in construction, maintenance and fast food. Now she works in the tool room of Pelco Structural, a manufacturer of custom steel poles for utility, traffic, lighting and communications uses.
Bailey, who earned a GED diploma when she was 19, now is among a group of “prime-age” women whose participation in the labor force is not yet back to where it was before 2008. Prime-age women and men—those between the ages of 25 and 54—were the focus of Kansas City Fed research examining labor force participation rates after the Great Recession. Senior Economist Didem Tüzemen studied four groups of prime-age workers—men with a college education, men without a college education, women with a college education and women without a college education.
Bailey is an example of someone who has defied the trend in the group of prime-age women without a college education. The overall participation rate for that group dropped from 72.4 percent in 2008 to 69.9 percent in 2019. Labor force participation was not fully recovered by the end of that 10-year span, Tüzemen said.
“Prime-age individuals are in their most productive working years, and a decline in their labor force participation has important implications for the future of economic growth,” said Tüzemen, whose research was published in October 2019 in the Bank’s Economic Review.
Through the period of 2008 (during the recession) to 2011, 5.7 million prime-age individuals—men and women—lost their jobs, and the overall participation rate has not fully recovered.
“Prime-age men and women without bachelor's degrees may have a harder time returning to the labor force because they are unable to find jobs suitable for their skills and education levels,” Tüzemen said.
As part of her labor force participation research, Tüzemen studied statistics for the years 2008 through 2019 from the U.S. Census Bureau’s monthly survey of about 60,000 households nationwide. The survey asks respondents whether they are employed, unemployed or not in the labor force. If the respondents are not in the labor force, they are asked, “What best describes your situation at this time?”
More than 60 percent of the women without a college education and more than 68 percent of the college-educated women responded with “taking care of family.”
One example of that situation is Crystal Marticke, 38, of Kansas City. Marticke taught in private and public schools after earning a bachelor’s degree in 2003. In 2008, she left teaching to work for a direct marketing firm. Marticke said she felt the “heat of the recession in 2010” when her pay was slashed by 15 percent and two-thirds of the work force was laid off.
“I missed teaching, and I knew I could find another job,” she said. Marticke’s degree in Elementary Education and a certification in Early Childhood Development played an important role in keeping her employed despite the recession. Marticke left the direct marketing firm in 2010 to accept a job teaching kindergarten. She quit working in 2014 when she and her husband started a family. They now have two girls.
If she had decided to continue working, Marticke said, “child care is so expensive that I would have been working to pay for the cost of child care.”
A lack of affordable family care may prevent many prime-age women from joining the labor force, Tüzemen said.
Tüzemen said others have studied labor-force participation among prime-age women in countries such as Canada, France and Japan. She said they found that family-friendly workplace policies in those countries have allowed more prime-age women to work and care for families. Such policies in the United States could help increase labor-force participation among prime-age women, she said.
Adrienne R. Smith, president and chief executive officer of New Mexico Direct Caregivers Coalition, said that such policies are becoming vital in order for companies to find or retain good workers.
“I can see that employers with good job policies are the ones that will thrive in the future,” said Smith, whose organization advocates for caregivers statewide.
Some companies have been enacting policies to support women employees. In 2017, for example, the Lowe’s hardware store chain revamped its paid parental leave policy and increased leave for mothers to 10 weeks and leave for fathers to two weeks. Adoption benefits now cover expenses up to $5,000 and two weeks paid leave for adoptive parents.
“Skills demanded by employers and the composition of job opportunities have changed dramatically over the past several decades,” Tüzemen said.
As many jobs at the “middle-skill” level have gone away, workers are finding employment at the upper and lower ends of the skills spectrum—a trend called “job polarization.”
For example, middle-skill jobs—such as assembly line work and routine jobs in sales, office and administrative services, construction, maintenance and transportation—have been disappearing. Computers, artificial intelligence and robotics have replaced many middle-skill workers.
What is left are jobs described as “low-skill,” such as food service and security, and “high-skill” jobs, such as engineering, medicine, finance and others requiring analytical ability, problem solving and creativity.
“Job polarization accelerates during economic downturns,” Tüzemen said.
Workers whose skills have become obsolete may simply quit looking for work. Or they can choose to return to the classroom, polish their skill sets and apply for positions that require their new skills.
In northeast Oklahoma, for example, there is a projected gap of 24 percent between jobs that require an associate degree, a postsecondary training certificate or industry credential and workers qualified to fill them. These jobs are in health care, manufacturing, information technology, transportation and logistics, said Michelle Bish, executive director of the Northeast Workforce Development Board in Oklahoma.
The board works with local businesses and other partners in rural Oklahoma to help job seekers acquire skills, degrees and certifications in high- demand occupations.
In Claremore, Tiffany Bailey’s husband, Taylor Bailey, became a welder at Pelco through an apprenticeship collaboration between the company, the Northeast Workforce Development Board and other agencies.
“Apprenticeships are a win-win,” Bish said. “We customize the approach for every business and every occupation within a business.”
Internships are another way companies train their future work force.
April L. Vise, 36, of Las Cruces, New Mexico, was spared an after-graduation job search, thanks to an internship during her senior year of college.
In 2006, she interned 20 hours a week and not only earned a paycheck but also four credit hours toward a bachelor’s degree in journalism.
“When I graduated, they offered me a full-time position with benefits and a raise of $1 an hour,” Vise said. She stayed with the company until 2010 and has continued to work in the field of technical writing and editing.
“If I didn't have a degree and experience, I wouldn’t have had constant employment,” she said. “Only women with a college degree have seen their participation return to its pre-recession level,” Tüzemen said.
Vise is among the only group of prime-age workers whose participation rate has rebounded after the recession.
In 2008, college-educated women were 16.6 percent of the prime-age labor force. In 2019, the share had risen to 21.7 percent.
In Wichita, Cheri Koke, 47, was laid off in 2008 from a job she held in the aircraft industry. She saw the economy begin its downward turn in 2007.
“The recession hit the aircraft industry earlier than other industries,” she said. “Companies began cancelling advance orders for private jets.”
Koke holds bachelor’s and master’s degrees. Like others in the group of prime-age women with college education, Koke wasn't out of work long. She is now working full time in commercial lending for a bank in the Wichita area.
In Albuquerque, Sara Maria Araujo, 40, found the job market much friendlier in 2019 than it was in 2009.
After earning a master’s degree in Public Health in 2009, Araujo searched for openings in the job market in New Mexico. “Looking for a full-time position was difficult,” she said. So, she parlayed her education and experience into work as public health consultant. Though demand for her expertise was constant, after 10 years without a steady income or benefits, Araujo decided in 2019 that she wanted the security and perks of a 40-hour work week. This time, the job search was rewarding. Araujo found a full-time job that matched her “education, experience and interests.”
With regard to labor force participation, college-educated women overall have fared better than the other three groups of prime-age workers. If the other groups had caught up to their 2008 levels, 1.8 million more individuals would be in the labor force in 2019.
In the Tenth District, there are programs and initiatives that help get prime-age individuals into the work force. State workforce agencies are collaborating with businesses, schools, vocational programs and other partners in their communities to match job seekers with employers.In Colorado, for example, retail is a key area of focus for the state’s Workforce Development Council. “Colorado is the eighth fastest-growing state for retail,” said Britta Blodgett, senior communications strategist with the council. In addition to selling goods directly to customers, retail includes hospitality and food and beverage services.
In 2018, the “Lives Empowered” initiative was launched through funding from a $4.1 million grant from Walmart.
The initiative includes regional retail partnerships throughout Colorado and training so that workers can acquire skills and credentials.
In Oklahoma, where the labor participation rate is among the lowest in the country, “the state has introduced policies and programs to increase skill development and thus, the participation rate,” said Steven Shepelwich, a Kansas City Fed senior community development advisor based at the Oklahoma City Branch.
Shepelwich said that one strategy has been to identify “opportunity occupations”—jobs in a regional economy that pay well, don't require a four-year degree and have the greatest opportunity for local employment. The Federal Reserve System has published research and resources pertaining to opportunity employment as part of its role in the “Investing in America’s Workforce” initiative. (Learn more at investinwork.org.)
In Tulsa in 2017, for example, the top 10 opportunity occupations were registered nurses, supervisors of retail sales workers, machinists and bookkeepers. For registered nurses, there were 6,500 job openings paying annually around $60,000; and for machinists, 2,100 job openings paying around $49,400.
Opportunity occupations may be a quicker route to employment than a four-year degree and require less investment of time and money, Shepelwich said.
In Kansas, the Workforce Alliance of South Central Kansas Inc., answered the challenge of filling jobs in the male-dominated field of manufacturing by training 64 women. The alliance received a two-year grant of $180,000 to train women for entry-level manufacturing work in composites, sheet metal and machining. Those who completed the training found employers eager for their skills, said Keith Lawing, president and chief executive officer of the alliance. In addition to training, grant funds also paid for all participants to be fitted with personal protective equipment, he said.
Policies to help encourage labor-force participation among prime-age workers include those geared toward “equipping workers with new skills and education demanded by employers” or that provide support for family care, Tüzemen said.
In Claremore, Tiffany Bailey understands. She has stayed in the labor force in part because she has been willing to pursue training and upgrade her skills. She learned tool room skills on the job at Pelco, where she also acquired forklift certification and first-aid training.
“Be persistent about learning new things,” Bailey said. That’s one of the lessons she wants to pass on to her four children, she said. Looking ahead: “I'd like to learn how to weld and how to read blueprints,” Bailey said. Adding to her skills, she said, reminds her of another lesson she learned from her mother: “Have something to fall back on.”