This article was also published on the Federal Reserve Bank of Minneapolis website. The authors thank Lauren Bauer, Ana Kent, and Mike Zabek for insightful comments. The views expressed in this article are those of the authors and not necessarily those of anyone else associated with the Federal Reserve Bank of Minneapolis or the Federal Reserve System.
For much of 2022, the U.S. has enjoyed an unusually strong labor market. Unemployment is historically low and job creation is well above the level needed to keep pace with population growth. By some measures, such as wage growth, the labor market is especially solid for many lower-wage workers.
However, this does not mean that all workers are participating in the labor market at the rates they had prior to the pandemic: the economic consequences of the pandemic are lingering. In a new analysis of Current Population Survey microdata, we find that less-educated couples became more likely during the COVID-19 pandemic to include only one labor force participant. This shift from two-participant to one-participant families reflects declining participation by women with younger children and is not evident in couples where at least one partner has a four-year college degree.
When we examine why some prime-aged workers (25- to 54-year-old adults) are not participating in the labor force, caregiving stands out as an important factor. Compared to before the onset of the pandemic, labor force nonparticipants without a four-year degree are considerably more likely to report caregiving as their reason for not working.
This analysis indicates that policymakers concerned with the incomplete recovery of labor force participation should pay attention to who remains out of the labor force and why.
Fewer families have two adults working than before the pandemic
The overall labor force participation rate misses essential differences in who participates. In this analysis, we track the share of prime-age individuals in households with different participation patterns, focusing on less-educated individuals who experienced larger employment disruptions early in the pandemic.
In Figure 1, we study partnered (i.e., cohabiting adults who can be either married or unmarried) prime-aged workers, neither with four-year college degrees. For each month from 2017 through July 2022, we calculate the shares of that group that fall into four distinct family categories: those with two labor force participants, one male labor force participant, one female labor force participant, or none. Immediately after the pandemic began, the share of workers in couples with two participants plummeted by 3.9 percentage points from the pre-pandemic baseline of 64 percent. (That baseline in each panel of the figure is indicated by a dashed horizontal line). In late 2021 that share began to rise slowly; by July 2022, it was still 2.9 percentage points below its pre-pandemic value. Offsetting this downward shift was an increase of 2.2 percentage points in the share of couples with just one (male) participant. There was also a relatively small increase among those couples with no labor force participation at all.
At the beginning of the pandemic, there was a sharp rise in the rate that workers in dual-participant families without four-year degrees transitioned to solo-participation. The rate of transition from dual-participation to solo-participation remained somewhat elevated above its pre-pandemic level through 2021, but only among those couples where neither adult has a four-year degree.
Figure 2 shows that participation trends for workers in couples where at least one member has a four-year degree look substantially different from those of the less-educated workforce. Adults in families with at least one four-year degree saw a similar decline in the dual-participant share at the outset of the pandemic—2.9 percentage points at its largest—but the subsequent recovery reversed that decline entirely.
To better understand the shift for families without four-year degrees, we now investigate the role of parenthood. Prior work by ourselves and others has indicated the increased importance of caregiving during the pandemic, leading us to explore participation changes for people in households with at least one child under the age of 13.
As seen in Figure 3, the decline in two-participant couples with young children was larger—at 3.5 percentage points—than for their counterparts without children under 13 (2.1 percentage points). Also notable in Figure 3 is that—among partnered couples with children—there was virtually no persistent increase in the share of adults in couples with no labor force participants; as of July 2022, almost all of the reduction in dual-participation translated into increases in male solo participation.
By contrast, unpartnered adults—limiting to those without four-year degrees and with at least one child under 13, just as in Figure 3—have nearly returned to their pre-pandemic level of labor force participation. See Figure 4. This pattern makes for a striking contrast with the continued lower participation shown in Figure 3 for partnered families. One possible explanation for the difference is that unpartnered parents without college degrees simply can’t remain out of the labor force indefinitely while still supporting their children. Another possibility is that unpartnered and partnered parents differ in ways (apart from partnered status) that have caused their labor force participation trends to diverge. In assessing the overall effect of child care issues on pandemic-era labor force participation, researchers have pointed to the importance of variables like industry in accounting for disproportionate participation losses by mothers.
More adults report caregiving keeps them out of the labor force
Having children and attendant caregiving responsibilities may be part of the story of the pandemic-era shift to solo-male-participant couples, consistent with analysis showing higher rates of caregiving among women outside of the labor force. We now explore the reasons people give for not being in the labor force, focusing on labor force nonparticipants with no four-year college degrees.
For partnered adults, caregiving is the most common reason for being out of the workforce, though it is important to note that this could be to care for children or others, such as elderly relatives. See Figure 5. The share reporting caregiving as the reason for nonparticipation was 1.5 percentage points higher in July 2022 than before the pandemic began. For unpartnered adults, caregiving is less-commonly cited and remains only 0.7 percentage points higher than its pre-pandemic level.
Addressing remaining barriers to labor force participation
Despite progress against the public health harms of COVID-19, the economic consequences of the pandemic remain. Considerable improvement in overall labor force participation has not entirely returned the country to its pre-pandemic level. For some groups—for example, partnered parents without four-year college degrees—the shortfall is substantial.
As our findings indicate, parents of young children report that caregiving is increasingly the reason given for their labor force nonparticipation. Those reports are consistent with the disproportionate participation shortfalls for families with younger children and the decline in couples with two participants. But our analysis can’t discern if this decline is related to persistent disruption in the child care sector—which shed workers early in the pandemic and rehired them only slowly—or perhaps to an unusually strong labor market for less-educated workers. That robust job market might allow couples to make different child care choices.
Our analysis indicates that policymakers concerned with diminished labor force participation should pay close attention to the household structure of labor force participation and the reasons that nonparticipants give for staying on the sidelines.