"How Many People Belong in the Labor Market?"
Brad DeLong offers the following chart to illustrate the severity of our economic woes:
Now one thing you will notice here is that today’s employment-population ratio is actually higher than it was at the peaks of pre-1980s business cycles. The difference-maker is feminism, which substantially increased women’s labor force participation. But while I think it’s fair to say that the United States of 40 years ago was suffering from a major social justice problem related to women’s unequal access to labor market opportunities, it’s not at all clear that we were actually facing an objective labor shortage.
Maybe instead of settling into a long-run equilibrium where overall labor force participation is way higher than it was in the late 1960s we ought to be headed for an equilibrium in which women’s labor force participation is way higher but overall participation is only slightly higher. More stay-at-home dads, in other words.
Now to be clear, what we’re seeing today is the result of an economic collapse. And it’s a collapse that’s disproportionately led to men losing their jobs, because the hardest-hit sectors have been male-dominated ones. But that’s not the same as a voluntary shift toward more stay-at-home fathers. Still, looking at the chart it’s hard for me not to wonder about the future. Will recovery, when it comes, really ever entail returning to the employment-population ratios we saw in the late 1990s?