ARE modest interest rates driving a major lifestyle change for Americans or just allowing some women to spend more time at home? Economists are debating what might be called, ``The case of the missing 20- to-24-year-old women.''
Richard Hokenson, chief economist for Donaldson, Lufkin & Jenrette Securities Corporation, has scanned United States labor statistics for the past four decades. He has come up with the hypothesis that a major American ``sea change'' is afoot: A demographically pivotal exodus of women from the work force is causing the decline of the two-paycheck family after a two-decade rise, and the reappearance of the one-paycheck family as the fastest-growing household unit.
Based on Bureau of Labor Statistics (BLS) figures showing employment dropoff among women ages 20 to 24, Mr. Hokenson's ideas were played up in a story in a recent issue of Barron's magazine. The implications for the economy would be ``profound,'' the article notes, identifying a ``shocking about-face'' in the ``yet unnoticed'' trend ``that seemed unthinkable just a short while ago.''
If read his way, the statistics might signal a return to a 1950s lifestyle, in which former careerists return to such time-consuming activities as cooking (eating away at restaurant profits), comparison shopping (undercutting pricey namebrands), and reining in purchases on everything from houses to cars.
Tough labor market
John Stinson, a labor economist at the BLS who has calculated the labor participation rates of women of childbearing ages (20 to 44), says he agrees with Hokenson that there has been a drop-off beginning about 1988 - and that the drop-off has been most significant among younger women ages 20 to 24. But he says the decline is not precipitous, adding that a tough labor market in recent years could account for part of the decline.
``It seems significant that we have definitely turned a corner,'' Mr. Stinson says. ``But as to how long this change lasts and whether it continues downward is hard to know.''
Other articles in the business press over the past year have identified the ``women returning home'' phenomenon. The decline in interest rates, most say, has been a major factor, allowing significant numbers of one-paycheck families to again qualify for a 30-year home loan. It has also freed up mothers and women of child-bearing age to return home.
``We are seeing the re-emergence of the American family with more time than money, rather than more money than time,'' Hokenson says in an interview. Those who are not buying their first home are refinancing their largest monthly obligation (mortgage) - not to finance travel and purchases but to make lifestyle changes. The trend is even stronger in Europe, he adds.
Hokenson formed his hypothesis after following the drop-off in growth stock companies of the 1980s - such companies as Kelloggs, Phillip Morris, R.J. Reynolds, and Nabisco. ``This movement is and will continue to have a significant impact on the distribution channels for consumer goods and services as these income-sensitive households widen and intensify their search for values,'' Hokenson says.
Supporting this hypothesis, he says, are these statistics:
* According to BLS figures from 1950 to 1993, the number of 20 to 24-year-old women with jobs began accelerating in 1962 from about 48 percent to about 75 percent in 1988. Since then, the percentage has dropped to 69 percent, leveling off at around 70 percent in 1991. Women ages 25 to 34 with jobs also rose steadily over the same period, leveling off at 73 percent the same year.
* Figures from the the US Census Bureau for 1975 to 1992 show that the number of married couples with both husband and wife working full time increased from 7.6 million households in 1975 to a peak about 13.5 million households in 1989, and dropping slightly thereafter.
* A demographic boomlet of Americans hitting age 25 is now happening (so-called ``draft deferral babies,'' referring to fathers who avoided the Vietnam war beginning in 1968). More women in the population means more women out of work for that period. And the post-boomlet years following 1996 will be ones of economic retrenchment for US growth companies as numbers of working-age consumers drop nearly 25 percent during the 1990s. That retrenchment will mean more layoffs starting from the bottom of the pecking order - traditionally minorities and women first.
Those critical of the hypothesis are many. They include demographers, economists, and sociologists. They hold that Hokenson has read too much, too soon into the tea leaves. Their comments have forged a wide national debate, prompting a vehement rebuttal by Hokenson.
Hokenson's critics claim that the falloff of young women is so far too small, and that the change may be only cyclical rather than permanent - related to recession more than ongoing sociological change.
``Primarily, these women are staying out of the work force because of the recent recession,'' says Finis Welch, a demographic economist at Texas A&M University.
``There has been a slight drop in women's participation [in the work force], but by no means a mass return to the home front,'' notes Peter Morrison, a demographer at RAND, a Santa Monica-based think tank.
Kevin Murphy an economist at the University of Chicago says that Hokenson's base observation may be true to a point, but that his predictions are off. ``What he has identified might be telling us that change itself is tapering off,'' he says. ``But I think it means that the numbers and types of one- and two-paycheck families are going to look more like today in year 2010 than that today is beginning to revert back to the 1950s.''
Cathy Lundstrom, spokeswoman for Formerly Employed Mothers at the Leading Edge, says Hokenson has identified a period ``in which the superwomen syndrome is over - those women who felt they had to do it all now feel they have a choice.'' The 2,500 members `are not just staying home but are putting children ahead of career for a period of time,'' she says.
Hokenson counters that his hypotheses are sound: ``In every previous economic recovery following recessions in the 1970s and 1980s, the number of two-paycheck families jumped dramatically,'' he says. ``The fact that it has not done so in this recovery is a very meaningful occurrence.''
David Kemme, a professor of economics at Witchita State University says the working woman dropoff is driven primarily by low interest rates. ``If interest rates go back up significantly, this trend could disappear,'' Professor Kemme says.