Implications of Changing Work Lives

Over the past two decades there have been at least two basic trends in the American workplace. First, a much higher proportion of women has entered the job market. Second, both men and women have been working longer hours. These changes have important implications for employers, as explained in The Career Quarry, an excellent study by the Population Reference Bureau in February of this year. However, these two trends also have significant long-run implications for consumer credit markets that we examine here.

First, consider the proportion of women in the work force. Over the past 30 years, the proportion of women aged 16 and older in the workforce has grown from about 43 percent in 1970 to about 61 percent in 2000. Over the same period, the proportion of married women with husband present in the workforce has risen from 30 percent to just over 43 percent. The growth in women's participation is clearly linked to their greater share of undergraduate college enrollment, up from 43 percent in 1971 to 56 percent in 1997.

Even more notable than the increased entry of women into the job market has been the growth in the employment of mothers of preschoolers, even infants. "Today, almost two-thirds of mothers of preschoolers and, even more striking, married mothers of children under age 1, are in the workforce."

Second, over the past two decades both men and women have been working more hours per week, as shown in the nearby chart. For example, whereas the average work week for women aged 25 to 54 was 15.1 hours in 1979, it was 24.2 hours in 1998.

What is the significance of these employment trends to credit grantors? On the one hand, two incomes are likely to be more reliable than one income stream. If only the husband (or wife) is employed, loss of a job has a much greater impact on family finances than if just one partner loses his or her job. In addition, the two partners are likely to have better health insurance than if only one was working. Consequently, when both partners are employed, the family has more money to spend and can probably support more credit than if only one were employed. However, an employed couple with young children will also have more child-care costs than if the wife is an (unpaid) caretaker.

An employed couple is likely to have different credit-based expenditures than when only one partner is employed. There may be a need to finance two cars, two workplace wardrobes and more meals away from home. Rather than assume the costs and time to manage a house, working couples are more likely to opt for an apartment or condo.

Quite likely, an important impact of the dramatic change in the work life of Americans is that they are inevitably "time short." We observe a growth in firms that offer to pay consumers' bills for them, for a fee of course. The increased interest in online banking services reflects the fact that consumers do not have time to stand in line. The wife who used to do that chore is at work. The growth of purchases by mail or online reflects the fact that consumers do not have time for shopping at "brick-and-mortar" retailers. Finally, consumers who are time short are impatient with any errors or confusion in their credit dealings. Speed, clarity and accuracy in credit dealings are more important than ever.

Printer-Friendly Chart

Editors note: Undoubtedly, readers of Spotlight will be able to think of additional impacts on credit grantors from this dramatic change in the workforce. Send your thoughts into Spotlight on Financial Services via the "Contact Us" button, and we will summarize your contributions in a future issue.