Robust employment rates among prime-age Americans are a key driver of state finances, and women’s contributions are on the rise. In most of the country, higher shares of women were employed in 2023 compared with the 15-year averages from 2008 to 2022, with Arizona, Washington, D.C., and Colorado leading the way. And the gap between the shares of prime-age men and of women who are employed narrowed nationally and in most states, though women everywhere are still less likely than men to engage in paid work.
For state governments, changes in employment rates can affect both sides of a budget ledger. When more people have jobs, that typically translates into increased tax revenue and lower demand for public services. Compared with the oft-cited unemployment rate, the ratio of prime-age workers to the overall prime-age population provides a more precise picture of a state’s labor market, because it accounts for workers’ choices about retirement and full-time education and includes individuals who are not actively looking for work.
Nationally, three-quarters of women between the ages of 25 and 54 were employed in 2023, the highest rate on record. That share has almost doubled since 1955, the first year of available data, when only about 38% of women in that age group were employed.
Across U.S. states, Arizona boasted the greatest gain, with 76.1% of prime-age women working in 2023, up from the 67.5% average from 2008 to 2022. This means that for every 100 prime-age women, about 8.5 more were employed in 2023 than on average over the preceding 15 years. Washington, D.C., and Colorado followed Arizona, with gains of more than six percentage points.
Although rising employment rates for prime-age women has been a trend in most of the country, not every state showed clear gains. Rates in New Hampshire, Vermont, and Wisconsin increased only slightly, while the share of women who work in Maine and North Dakota remained nearly unchanged in 2023 compared with those states’ long-term averages.
Although the COVID-19 pandemic interrupted these trends when the share of working prime-age women plummeted nationwide in 2020, the impact on individual states varied. Some states already are back on track, but elsewhere the pandemic threw a measurable wrench into employment among women in their prime working years. For example, Nevada had the 13th-largest gain in 2023 compared with its long-term trend, but that might have been even greater if not for the blow that COVID-19 dealt to the state’s economy. Nevada’s share of working women was on a steady upward trajectory before the pandemic devastated the state’s leisure and hospitality industry—a sector that is generally largely dependent on female labor. And as of 2023, Nevada’s rate still lagged its pre-pandemic rate by 2.7 percentage points, the second-lowest outcome nationally.
The general long-term growth in female employment rates can be largely traced to highly educated women. For example, according to the Penn Wharton Budget Model, the share of 25- to 54-year-old women with a college degree has been rising over the past 20 years, and “[s]ince college graduates are more likely to work, that raised the overall employment rate of prime age women.” The Penn Wharton study also highlights a significant increase in employment among college-educated mothers of young children. This shift was particularly apparent since the start of the COVID-19 pandemic, when the expansion of remote and hybrid work allowed many highly educated women with children to remain in the workforce. A growing number of women also turned to entrepreneurship to achieve improved work-life balance. Experts also claim that the tight labor market and increased cost of living because of high inflation pushed many women into the workforce. Finally, in general, throughout the country, it has become more common for women to work full time and year-round.
The growth in female employment is also evident in the shrinking gap between working men and women in the 25-to-54 age group, when comparing 2023 data to state averages over the prior 15 years.
The gap narrowed the most in Colorado and Arizona, the two states where female employment rates increased the most in 2023 versus the long-term trends. Meanwhile, rates among men remained nearly unchanged in Colorado, and they increased in Arizona but at a slower pace than women’s. Consequently, the difference between men and women shrank by 5.4 and 4.5 percentage points in these states, respectively—significantly more than the average national decrease of 1.7 percentage points.
On the other end of the spectrum, Kansas’ gap grew by 1.8 percentage points, followed by Arkansas, North Carolina, and Wisconsin, each with an increase of 1.4 percentage points. The divergence in these states was driven mostly by strong growth in men’s employment, which outperformed increases in the shares of working women in 2023 relative to the states’ long-term trends.
Nationally, the male and female employment rates have been inching closer for nearly a decade. Even the pandemic did not stop the trend. In 2023, the gap was 11.2 percentage points, 1.6 points smaller than it was in 2019.
A shift in the share of working women can affect states’ overall employment trends and budgets. As is the case with all employees, more working women broadens tax bases. Their paychecks help generate additional individual income tax dollars and fuel consumer spending. Higher employment rates also can lower costs for states, such as through decreased need for safety-net assistance. And having more prime-age women engaged in paid work could help counteract the looming labor shortages and smaller tax bases associated with the aging of the population.
Some states and cities have begun testing strategies for increasing female employment, such as enacting legislation to boost the availability of child care and paid family leave, offering paid parental leave for state employees, and providing public employees with flexible work arrangements. Although these policies benefit male and female workers alike, they may be particularly valuable for women, who commonly bear a higher share of household and childcare responsibilities.
Overall, removing barriers to and cultivating employment among women is in states’ economic interest. And the perennial gap between men’s and women’s rates suggests that untapped potential in female employment remains to be unlocked.
Pew weighted data from the Current Population Survey, using values provided by the U.S. Bureau of Labor Statistics (BLS). The survey is sponsored jointly by the Census Bureau and the BLS. Pew used the data to calculate the total number of civilian, noninstitutionalized 25- to 54-year-olds in each state and in the nation, and the average percentage of people who were employed in each state, disaggregated by sex.
Pew then combined monthly data to create annual averages for employment and population for each state and sex, and used those to generate annual employment-to-population ratios. Percentage-point differences between the prime-age employment-to-population rates in each state were not tested for statistical significance.
Findings are based on survey results, and individual observations—especially in states with smaller populations—should be interpreted with caution.
Joanna Biernacka-Lievestro is a senior manager with The Pew Charitable Trusts’ Fiscal 50 project; John Hamman is a principal associate and Gayathri Venu is an associate with Pew’s state fiscal policy project.