After you have added values to a picklist field, you must set those values to be available based on the record type.

To make the picklist values available, do the following: 
  1. Click on your name in the upper right corner and choose Setup
  2. On the left-hand side, go to App Setup > Customize > Contacts > Record Types
  3. Click the Record type (Household Contact or Organizational Contact)
  4. Under Picklists Available for Editing, find the desired picklist
  5. Click Edit
  6. Select the values in the Available Values list and add them to the Selected Values list
  7. Click Save