(Bloomberg Opinion) -- The U.S. job market has been good to President Donald Trump: Over the past few years, ample hiring has reduced unemployment to extreme lows, yet there’s little sign of the kind of overheating that could lead to unwelcome inflation.
For this, to a significant extent, Trump has women to thank.
Like any market, the U.S. labor market is subject to the law of supply and demand (with some notable caveats). If companies don’t need workers, unemployment rises and wages stagnate. But if demand for labor exceeds what people are willing and able to offer, the competition for scarce workers can drive up wages and start an inflationary spiral.
Lately, employers have been exhibiting a lot of demand. This has brought the unemployment rate down close to its lowest level in half a century (specifically, 3.7% in August). Yet it seems that — among other things — enough workers are showing up to keep wages in check. As of August, average hourly earnings were up 3.2% from a year earlier, just below the long-term average.
So where’s the supply coming from? It’s mostly — and consistently — women. Since Trump took office in January 2017, the labor-force participation rate among women in their prime working years (ages 25 to 54) has gone from 74.5% to 76.3%, the equivalent of more than 1.1 million people. Over the same period, the participation rate for prime-aged men has hardly budged. Here’s how that looks:
Women’s willingness to step in has various possible explanations. Perhaps their employment prospects look better because they’re more educated or more willing to do the service jobs that growing sectors such as health care offer. Maybe they’re more able, because the opioid epidemic hasn’t hit them as hard as it has men. Or maybe what’s been keeping them out of the official labor market — often tending to children or relatives, as opposed to illness or disability — is easier to change when opportunity calls.
Whatever the reason, it’s a desirable trend. And there’s plenty of room for improvement: Women’s prime-age participation rate remains below that of men, which stood at 89% in August. Better access to child care, more equitable family-leave policies and fairer pay could help close the remaining gap and boost the U.S. economy’s productive capacity.
To contact the editor responsible for this story: Mary Duenwald at mduenwald@bloomberg.net
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mark Whitehouse writes editorials on global economics and finance for Bloomberg Opinion. He covered economics for the Wall Street Journal and served as deputy bureau chief in London. He was founding managing editor of Vedomosti, a Russian-language business daily.
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