COVID's wrath is receding: Women from 25 to 54 are returning to the job market

Sara Iversen quit her six-figure human resources job at a Silicon Valley technology company last October after its pandemic-related demands became too much to bear.

Employees were leaving in droves for higher pay and those who remained had to juggle a bigger workload along with family responsibilities. Iversen had to recruit new workers in a highly competitive field and help staffers balance stressful work and home lives.

“I’m very empathetic,” says Iversen, who is 44 and lives in Aptos, California. “I was just exhausted….I had nothing left to give.”

She sold her stock options for income and decompressed by taking long walks on the beach and hikes in the woods, and also took some online HR and coaching courses.

Sara Iversen

But a few months ago, she started applying for jobs and has had a few interviews. “I just started to feel like I was stagnating,” she says.  “I wanted to get back at it.  I miss the work.”

Iversen is among hundreds of thousands of women who are streaming back to the workforce after leaving during the pandemic. In August, the share of women age 25 to 54 working or looking for jobs jumped to 77.2% from 76.4% the prior month, matching or topping its pre-COVID-19 mark of 76.9% for the first time since the health crisis began in early 2020, the Labor Department's jobs report showed.

Put another way, nearly half a million women in that age bracket joined the labor force last month, the most since June 2020.

The monthly numbers, which are based on a survey of households, can be volatile. But the trend has been broadly positive, with the labor force participation rate for working-age women climbing from 75.4% a year ago. 

Many women have returned as child care responsibilities, most of which are handled by them, have eased as schools reopen and staffing levels at day care centers largely recover from COVID-19 losses. Also prodding women to come back are inflation that’s straining budgets, a robust labor market offering high wages and a desire to get back in the game, economists say.

Iversen says her cash reserves from the stock options were running low just as inflation was picking up in the spring. She also fears a “looming recession” and wants to land a job before a downturn chills hiring.

The return of women in their prime working years was the main driver behind a big rise in the overall labor force participation rate last month, from 62.1% to 62.4%. That still leaves the share a percentage point below its pre-pandemic level.

Worker shortages have roiled the job market for two years, leading to long restaurant waits and pay increases that have contributed to a historic inflation spike.  A larger workforce would ease those worries and could persuade the Federal Reserve to moderate its aggressive campaign of interest rate hikes to fight inflation.

A lack of child care, especially for women, has been identified as one of the biggest reasons for the labor shortage.

“It’s significant that some of the ills of the pandemic are moving in the right direction,” says economist Dante DeAntonio of Moody’s Analytics.

It’s also a reminder, however, that some of the gaps in the job market will be harder to fill.

The participation rate for working-age men also rose last month, but less dramatically, from 88.4% to 88.6%, as a smaller contingent of 126,000 men entered the workforce.

The male labor force may be partly reverting to a longer-term trend of stagnation, DeAntonio says. That has been traced to the offshoring of manufacturing jobs, a decline in male educational attainment, a rise in substance abuse and heavy video game use, among other factors, according to a report last year by the Federal Reserve Bank of Richmond.

The other big reason for the worker shortage is the early retirement of a couple of million baby boomers during the pandemic. Some have come back to work and more are expected to, especially as inflation continues to pressure pocketbooks, DeAntonio says. But most early retirees aren’t expected to return.

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DeAntonio expects the labor force participation rate to gain another half percentage point or so, topping out at about 62.8% as boomers continue to retire, leaving it short of its pre-COVID-19 level.

Here’s a closer look at why working-age women are coming back to the workforce:

Schools are reopening

Although most schools reopened a year ago, many were beset by strict rules about quarantines if children came into contact with classmates who tested positive for COVID-19, says Teresa Tanner, CEO of Reserve Squad, a company that helps women who leave the workforce maintain professional connections and eventually return to jobs.  

“I think it’s more normalized,” she says. That is allowing women to more confidently take new jobs, she adds.

The surge in women 25 to 54 working or looking for jobs could be even bigger in September, says Jasmine Tucker, director of research for the National Women’s Law Center.

“The September (jobs report) is really when we’re going to see more of that play out,” she says.

Day care centers staff up

Many child care services closed early in the pandemic, laying off about 375,000 employees, or more than one-third of the industry’s workforce. Many have reopened but lots of workers have been hesitant to come back because of COVID-19 concerns, demanding work and low pay, says Cindy Lehnhoff, director of the National Child Care Association.

Nearly 50,000 jobs have been added at day care centers this year, though that still leaves the sector 88,000 short of its pre-COVID-19 level.

More flexible work options

A growing number of employers are offering more flexible hours and remote work options, encouraging many women with kids to return to work, Tanner says.

Strong labor market

Employers have added an average of 438,000 jobs a month this year and wages in August rose 5.2% from a year earlier.

Also, there were a near-record 11.2 million job openings in July. While that’s helping all workers, openings have been particularly abundant in industries such as retail and restaurants, of which women make up a disproportionate share, DeAntonio says.

Inflation squeezes family budgets

Inflation has come off a 40-year high of 9.1% but remains elevated at 8.5%, according to the Consumer Price Index.

“Inflation is taking a toll on household finances, driving more people back to work out of necessity,” DeAntonio says.

Paul Davidson is USA TODAY's senior economics correspondent. You can follow him on Twitter @PDavidsonusat and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

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