President Obama’s Gender Gap

President Obama faces an important gender gap in a key labor market indicator – the unemployment rate.  The unemployment rate in July for women age 25 to 54 was 7.4% while the unemployment rate for men of the same age group was 7.0%.  It is more troubling that the unemployment rate for women age 25 to 54 has increased by 1.2% in the President’s first 42 months in office, while it has dropped by 0.6% for men age 25 to 54.  (Note: I use the unemployment rate for this age group because younger workers may drop out of the labor force to attend school and older workers may drop out of the labor force to retire.)

Over the past 30 years the average unemployment rate for men has been slightly lower than for women (age 25 to 54).  Moreover the annual jobless rate for women has exceeded the men’s rate by more than 0.4% (the current gap) only three times in the past three decades.

The following chart compares unemployment rates for women for President Obama and the previous five presidents who were seeking re-election, 42 months into their first term.  The current unemployment rate of 7.4% for prime working age women is one percentage point higher than the rate for any other first term incumbent.

The increase in the unemployment rate of 1.2% is also unusually high compared to previous presidents seeking re-election.  The only president who held office during a larger increase in women’s unemployment was George Herbert Walker Bush; the unemployment rate for women age 25 to 54 increased by 1.8% from January 1989 to July 1992.

The reason for the poor labor market outcomes for women in the past three and a half years is worthy of more study.  The composition of employment by sector doesn’t explain the gender gap.  Over one million construction sector jobs have been lost since January 2009 and only about one in eight of these jobs were held by women.  In contrast, women hold about four out of five jobs in the health care sector, where employment has increased by 925,000 in the past 42 months.  Much has been made, by some observers, about the decline in government employment since January 2009.  Government employment has dropped by 625,000 in the past 42 months, but 43% of these jobs were held by men.  Finally, government employment is about 16.5% of total employment, or about 0.2% higher than when President Bill Clinton said “the era of big government is over.”  The modest decline in public sector employment over the past few years is simply not large enough to explain the increasing unemployment rate of women.

There will be three more monthly labor reports that will be released by the BLS before election day.  However, it is almost certain that when voters go to the polls the unemployment rate for women will be higher than for men and substantially higher than it was on Inauguration Day.  That could mitigate some of the gender gap Mr. Obama enjoyed in 2008.

Women, Job Losses, and the Postal Service (Warning this post was based on data that the BLS now considers inaccurate)

This post, originally dated April 24th, is subject to revision once the BLS corrects its data series on the employment of women. See my updated post.

Last year President Obama told NBC’s Ann Curry “a lot of businesses have learned to become a lot more efficient with a lot fewer workers.”  The President gave examples of airport kiosks and ATM machines as technological changes that lowered the demand for certain types of clerical and sales jobs.  The President could have added that many of these jobs were previously held by women and are unlikely to return even after the economy recovers.  That may be one reason why the unemployment rate for women has increased from 7.0% to 8.1%, while it has fallen by 0.3% for men since January 2009.

Although economics textbooks often describe technological change that replaces factory workers (and jobs traditionally held by men)  more recent advances in information technology have reduced the demand for some clerical and sales jobs traditionally held by women.   There may be no better example of this phenomenon than the United States Postal Service where more than one in three women lost their jobs in the past three years.  The number of USPS employees has fallen by 116,500 (15.6%) in the past three years.  Nearly all (more than 96%) of the job losses have been due to a decrease in the number of jobs held by women.  The following chart illustrates the average employment by gender and calendar year, for the past five years, at the USPS.

Women’s employment declined by 112,300 while men’s employment dropped by 4,200 from 2008 to 2011.

The next chart illustrates the fraction of USPS jobs held by women in each of the last five calendar years.

The fraction of USPS jobs held by women peaked in 2007 but has now fallen below one third for the first time since 1980.

The information technology revolution, and the recession, did not just lower demand for post office employees; over the past three years employment at bookstores fell by more than 30% and in the courier and messenger industry by almost 9%.

The dramatic change at the United States Postal Service since 2009 is but one example of how advances in information technology can permanently reduce the demand for some clerical and sales positions traditionally held by women.  Although polls indicate that President Obama enjoys a comfortable lead over Mitt Romney among women that may well depend on what happens to the gender gap in job creation between now and November.  As more Americans use the internet to communicate, shop, gather information, and find entertainment it is likely that employment will continue to decline at many retailers and service providers even if the economy strengthens.

Women and the Economic Recovery

News media coverage of the 2008 recession and the subsequent recovery has focused on changes in total employment and movements in the overall unemployment.  Although the change in the total number of jobs is an important economic indicator, a focus on overall employment and unemployment can mask important changes in the composition of the workforce.  I look beyond changes in total employment to illustrate why the 2008 recession is unlike any in U.S. history.  Job losses in recessions previously were concentrated in traditionally male-dominated jobs.  The 2008 recession was different.  Women lost jobs in record numbers and women have seen small job gains during the recovery.  This stands in stark contrast to previous recessions and recoveries.

The following graph illustrates changes in the full-time equivalent employment (a part-time job is counted as ½ of a full-time job) of men.  Four years after total employment started to decline, men’s employment recovered and grew to 4 to 5% above the pre-recession peak in the 1970’s and 1980’s, but only about 1% above the pre-recession peak after the 1990 and 2000 recoveries.  The recovery over the past two years has been especially weak.

The U.S. labor force changed dramatically during the 1970s and 1980s.  The labor force participation rate of women increased from 43.3% to 57.5% between 1970 and 1990 but has leveled off since then.  The widespread reallocation of women’s human capital from household activities (not included in GDP) to paid market work had a profound impact on measured employment and GDP.  Employment and GDP increase, even though the same work is being done, when house cleaning and lawn care tasks are completed by paid service workers rather than by family members.

Cyclical employment fluctuations look very different for women.  The robust labor market recoveries of the 1970’s and 1980’s were fueled by the entry of women into the labor force.  Women’s employment grew by 15% between 1974 and 1978, and by 10% between 1981 and 1985, despite the deep recessions.

Job losses during recessions were largely confined to men until the 2008 downturn.  Women’s employment never fell by more than 1% in any recession prior to 2008.  In contrast, women’s employment fell by 5% between January 2008 and December 2009, and is still 4.6% below the pre-recession peak.

Future economic recoveries are unlikely to exhibit the robust employment gains that occurred during the 1970’s and 1980’s as millions of women moved from unpaid household work to jobs in the market sector.  This type of transformational change is unlikely to occur again.

The 2008 recession is unique because of the magnitude of employment losses sustained by women (although still smaller than for men) and the sluggish growth in women’s employment during the recovery.   In the past year both employment and labor force participation declined for women but increased for men.  Despite the labor market gains achieved by women over the past forty years, women face a somewhat new challenge – coping with substantial job losses in an economic downturn.

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