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Women leading the way

Prime-age women are setting the pace among labor force participants.

Women with young children, in particular, have seen their participation rise 1.4% compared to the pre-pandemic record, according to Brookings.

Alicia Modestino, an economist at Northeastern University, said the rise of flexible and remote work, along with boosted childcare funding, may have assisted this group’s recovery, but she’s worried what might happen if these benefits unwind.

“We're already seeing some of that softening in terms of worker power shifting,” she says, noting more companies are calling their employees back into the office and seem more likely to lay off their remote workers over folks who show up more frequently in person.

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Men's fortunes rebounding, too

Prime-age men — a demographic that has been stepping out of the labor market for years — could be seeing an unexpected, if not as drastic, rebound as well.

Bunker indicates that the construction industry, which disproportionately employs men, has still held strong despite the rapid rise in mortgage rates over the past year. And a November note from Wells Fargo suggests other male-dominated sectors like manufacturing, transportation and warehousing have grown as well.

The Wells Fargo report also says that less educated prime-age men could be returning to the labor market during a shift to more skills-based hiring, as demand for workers remains elevated.

There’s been an increase in immigration as well, with foreign-born workers accounting for about a fourth of the growth in the labor participation rate, according to the Indeed report.

Additionally, Modestino, the Northeastern Economist, said there’s research suggesting labor force participation data might not be measured accurately in the first place.

One working paper from the Federal Reserve Bank of Boston investigates how informal gig work — which has seen a surge over the past few years — could be missing from official employment surveys due to individuals not fully reporting their informal hours.

The paper reveals the employment-to-population ratio would have been 0.25% to 1.1% higher over the 2015–2022 period and as much as 5.1% higher under more generous estimates.

Will this trend continue?

Indeed’s report notes that although prime-age workers are participating in the labor force at a rate equivalent to two decades ago, it’s still short of the 84.6% all-time high reached in January 1999.

It also predicts that even if the prime-age worker participation rate does rise to match that peak, the overall labor force participation rate would only slightly increase next year and then level off in 2025.

“After that, the weight of demographics would take over, and the participation rate would start to drop,” Bunker writes in the report.

Whether the rise in prime-age worker participation continues is further contingent on demand for new hires, Bunker says.

At the moment, conditions look favorable to workers: the economy added 199,000 jobs and the unemployment rate dipped further in November, according to the latest Bureau of Labor Statistics data.

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About the Author

Serah Louis

Serah Louis

Reporter

Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.

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