For the past few months, the labor market has turned a corner and begun to create jobs at a growing rate, although its pace seems to have slowed again. As jobs are being created, more and more people who had completely given up looking for work are drawn back into the labor market. Although they are not the majority of new job holders, women still constitute a large proportion of them. And while women tend to be the primary caregivers of their children, the job opportunities that are expanding the fastest for women are those where child care benefits are rarest, part-time and service-industry jobs. And not only are employers becoming increasingly stingy in offering child care benefits, the government has been cutting back as well. Consequently, affordable child care will continue to be an important issue as the labor market continues to grow.
Recent job creation has drawn many workers back into the labor market, who had completely given up looking for a job. Over the past four months the economy has created 1 million jobs, including 112,000 in June, according to figures released today by the Bureau of Labor Statistics. The share of the population that was either employed or actively looking for work dropped from 67.1 percent in March 2001 to 65.9 percent in February of this year. Since then job growth has accelerated, and the labor force participation rate has stabilized, reflecting the fact that people are entering the labor force at the rate of population growth. In June alone an estimated 77,000 people entered the labor force. This also explains the phenomenon that despite job growth, the unemployment rate has been unchanged at 5.6 percent in recent months.
Employment has been fastest in jobs, typically associated with women's employment, such as part-time and service sector jobs. Since February 2004, after which job growth accelerated, the majority of newly created jobs were part-time jobs, and the service sector added 830,000 jobs compared to 194,000 jobs in the goods producing sector of the economy. Thus, the sectors that generally offer women better employment opportunities than other sectors are expanding faster than others.
As women re-enter the labor market, they need to find affordable child care. However, the jobs that are expanding fastest – part-time jobs and service-sector jobs – are also jobs that pay lower wages and have fewer benefits. Inflation adjusted wages in the service sector were about 13 percent less than in the goods-producing sector in May 2004, the last month for which data are available. And importantly, inflation-adjusted wages in both the service and goods-producing sectors have been falling for some time now, reaching their lowest level since March 2003 in May 2004. Further, today's figures showed a decline of weekly earnings by 2.4 percent in the service sector and by 1.8 percent in the goods producing sector in the last month alone before inflation is even taken into account. Not only are women likely going into jobs that pay less and offer fewer benefits, but there is clearly no offsetting wage effect that would allow them to pay more for child care on their own.
In addition, companies are actually reducing benefits that could help working parents to take care of their children. A recent report by the Society of Human Resource Management found that the share of companies that offered paid family leave dropped from an already low 27 percent in 2001 to 23 percent in 2003. Also, a study by tax and business information provider CCH found that the share of companies offering the possibility of compressed work weeks, telecommuting or job sharing dropped precipitously from 2002 to 2003. In light of declining benefits in other areas, such as employer sponsored health insurance and pension benefits in recent years, it is clear that employers have taken advantage of the weak labor market to reduce their costs by reducing access to benefits. That is, working mothers face rapidly rising costs as they reenter the labor market.
The government is not filling the gap in child care, either. Many states have recently reduced access to child care to fix their budgets. The Bush administration has also proposed to reduce after-school programs and other child-care efforts in the face of large budget deficits. The Children's Defense Fund, for instance, estimated earlier this year that the Bush Administration's proposed level funding in its 2005 budget would have left 1.32 million children behind who should have access to after-school programs. And the administration continues to propose cuts to child-care programs, cutting off access to hundreds of thousands of children each year.
All of this ultimately makes it harder for parents, especially mothers, to enter or stay in the labor market as the costs of labor market reentry are soaring. While much of the public policy focus during the years of job decline was on helping workers who could not find a job, the rising labor market raises additional concerns about the inadequate support that working families need to make ends meet, even when they are working.
Christian E. Weller is a senior economist at the Center for American Progress.