“The 5 percent figure is one of the biggest hoaxes in modern politics” claimed then-Presidential candidate Donald Trump in August 2016, in reference to the unemployment rate, which at that point was 4.9 percent––down from the 2009 post-recession peak of 10 percent. While President Trump seems to have reversed his position on the veracity of unemployment statistics since assuming office, there was at least one sliver of truth to his initial criticisms Since the 1960s, there has been a steady decline in the labor force participation rate for prime-age men: those ages 25 to 54. While this major change to the socioeconomic fabric of America has not been widely recognized, leading economists and policy-makers have begun paying more attention to the phenomena in recent years.
The consequences of this decline in the labor force are so significant that in 2016, President Obama’s Council of Economic Advisers published a comprehensive report to cast an analytical light on the issue. The labor force participation rate measures those who are either employed or looking for work, so it often provides a fuller picture of economic health than the unemployment rate alone. In other words, those who are non-participating are not only jobless, but have given up on looking for work altogether. According to the CEA report, the labor force participation rate for men of prime working age has fallen from 98 percent in 1954 to 88 percent in 2016. In more concrete terms, this means over 7 million working-age men are not in the workforce. While any economist will likely admit that there is no easy way to halt or reverse this trend, at the very minimum this problem demands the full attention of our political leaders. Americans are already beginning to see the political and social destabilization that comes from a diminished labor force, and the absence of a multipronged effort to address this decline will only exacerbate these issues.
Searching for a Cause
One consistent element of the discussion surrounding this troubling trend has been a debate over whether the cause is related to a decreasing number of jobs, or a shrinking pool of laborers to fill those jobs. In this debate, the Obama CEA primarily makes the case that there are fewer jobs. However, the report also concludes that certain “institutional factors” unique to the United States likely contribute to the decline in prime-age male labor force participation. These institutional factors are important because a reduction in the availability of jobs alone cannot explain why the United States has seen one of the largest decreases in prime-age male labor force participation rates among developed countries.
In an interview with the HPR, Jason Furman emphasized the chief finding of the report that was published while he was Chairman of the CEA, namely that demand for less skilled workers has fallen. He further explained that the general decline in prime-age male laborers comes from “the way that reduction in demand [for less skilled laborers] has been processed by labor market institutions in the United States.” Furman does not believe that reductions in labor supply––the number of able workers––are a major cause of the increased number of non-participating men. A common theory is that greater reliance on government programs such as Social Security Disability Insurance is creating an incentive to not work, but Furman argued that programs such as disability insurance make up, at most, only a small fraction of the problem. His final analysis is that disability insurance is “responsible for a lot less than one-sixth of the increase” in rates of non-participation.
Another scholar studying the decline in male labor force participation is Nicholas Eberstadt, the Henry Wendt Chair in Political Economy at the American Enterprise Institute, who wrote a 2016 book titled Men Without Work: America’s Invisible Crisis. In a conversation with the HPR, Eberstadt generally agreed with the framework established by the CEA report and pointed to the “decline of manufacturing, increased trade competition, outsourcing, globalization, [and] automation” as some of the frequently discussed demand-side culprits.
However, Eberstadt seemed most concerned about the institutional characteristics of the United States that make it an outlier among its economic peers. Eberstadt noted that the decline has been markedly worse in the United States than in European countries. He believes that a less-examined piece of the labor force puzzle is “institutional barriers… [such as] the crime-and-punishment phenomenon, in particular the guys who have felony convictions in their background.” Roughly 9 million men of prime working age have spent time in prison, and according to the CEA report, those with criminal records have trouble reentering the labor force “likely due to both discrimination and the degeneration of employment networks.”
Economist and former Treasury Secretary Larry Summers expressed greater concern over the influence of changes in labor supply in an interview with the HPR. Summers argued that “the declining quality of the opportunities…make[s] work less attractive,” and therefore some men opt not to work in an interview with the HPR. He further explained the labor supply component, saying that “the increased viability in a more generous society, and in a society where women are doing more work, of living without working” plays a role. However, Summers was clear that the causes are varied and that there is also a powerful job-availability component.
If Not Work, then What?
The fact that so many men are not participating in the workforce raises an obvious question: what are these men doing with their time? The answer may be somewhat concerning.
Summers offered a fairly bleak view of how non-working men spend their time. “I think the available evidence suggests that they’re not helping in their house, helping their children, or particularly helping themselves,” he said. Work, according to Summers, is generally not being replaced with comparable tasks.This assertion by Summers has been corroborated by economist Erik Hurst, who co-authored a 2016 paper which found that increased availability of “leisure technology” may have decreased the supply of labor. The study posited that many non-working men are spending significant amounts of time playing video games rather than partaking in more productive activities.
Eberstadt was quick to make a distinction when asked what non-participating men do with their leisure time, clarifying that he would define it as “free time rather than leisure time.” As Eberstadt described, “the economic literature today generally makes the false assumption that if you’ve got free time, it’s leisure. I believe within free time, there are distinctions between idleness and leisure.” According to Eberstadt, “much of what we see I think is idleness. And that I think is the troubling thing.”
Social and Political Ramifications
Economic disruptions almost always affect the political landscape, and it is no different with this phenomenon. It is not a stretch to suggest that those men who are not participating in the labor force are likely frustrated, and are apt to express this frustration politically. Summers has written that the decline in male labor force participation can lead to “toxic populism,” and he elaborated on this point to the HPR by saying that both people without work and those who are engaged in unrewarding work “feel resentment about their situations in life.” Summers argued that “people who feel resentment…have a tendency to favor simplistic, strong-willed solutions. And that’s the kind of thing that draws them to leaders who externalize blame by placing it on foreigners, or on particular groups of domestic villains.” One might reasonably conclude that this disturbing economic trend contributed to the political anger that characterized the 2016 election. Indeed, FiveThirtyEight reported after the 2016 election that Donald Trump performed better than Hillary Clinton in counties with weaker job growth since 2012.
But while it may seem logical that resentful people may have voted for Donald Trump (who seems to embody many of the traits of a ‘toxic populist’), Eberstadt is not so sure. He reasoned that “the same guys who don’t go out to volunteer or to worship or to even get out of the house are probably not super-likely to be mobilized for voting either.” In any case, it is impossible to know for sure, because, as Eberstadt lamented, political pollsters very rarely ask about employment status.
On a broader level, we have begun to see the adverse consequences of a large number of men not participating in the workforce. The economist Alan Krueger has found in his research that large portions of non-participating men have health problems, and nearly half of non-participating men take painkillers––two-thirds of which are by prescription. When asked whether health problems cause men to be unable to work, Summers told the HPR that the finding of poor health status and widespread painkiller use is likely “a symptom rather than a cause of non-employment.” In other words, such a high rate of non-participation is likely contributing to the opioid crisis that has wrought havoc upon communities across the United States.
The loss of work for so many prime-age men has amounted to a collective psychological blow. If these out-of-work men are not filling their time with other worthwhile pursuits, the result is a void that strains communities. Princeton economists Angus Deaton and Anne Case have suggested that there is a connection between the large number of non-participating men and increased mortality rates,often due to suicide and drug overdose among middle-aged, non-Hispanic white Americans. Furman agreed, positing that the phenomenon has “played a role in the opioid epidemic we’ve seen … [and] plays a role in marginalization from society and the political changes that we’re seeing in this country.” To make matters worse, according to Alan Berube of the Brookings Institution, the loss of work for so many men appears to be concentrated in “small and often economically isolated U.S. regions,” such as those in Michigan, Indiana, and Ohio that have suffered from the loss of industry.
No Quick Fix
Just as there is no single, straightforward cause for this decline, there is also no single solution. However, it is possible to minimize the number of men exiting the labor force and limit further sociopolitical disruption. On the labor demand side, the CEA report concluded that “investing in public infrastructure can also help directly address the lack of demand for lower-skilled prime-age men” by creating jobs. Fortunately, there is some bipartisan agreement that large infrastructure improvements would be beneficial, although disagreement remains on the details. Summers added that increasing the number of men working is merely one of the benefits of infrastructure investment.
Furman, who has written about the need for a more “supportive labor market,” would like to see higher spending on job training and job search assistance programs. He supports making “labor markets more flexible,” in part through more generous paid leave and sick-day policies. Another solution that both Eberstadt and Summers advocate is stronger vocational training. As Eberstadt put it, “college is not for everybody, but skills certainly should be for everybody.”
On the labor supply side, reforms of certain government programs might increase the number of men working. Eberstadt advocated “reforming disability insurance towards a sort of a work-first principle for those who can,” and Furman mentioned the need to “reform public programs like the unemployment insurance system to integrate job search assistance into it.”
Lastly, it is critical to address the role of mass incarceration in shrinking the labor force. Furman logically suggested that the immediate priority must be to avoid unnecessary incarceration. However, he added that it will require more than basic criminal justice reform, and that a more fundamental solution exists: “To some degree, it will just be changes in attitude that are needed on the part of employers.”
Ultimately, there exists no perfect way to counteract the trend of prime-age men leaving the labor force. But if left unaddressed, this problem and its effects are almost certainly going to worsen. In fact, Summers has predicted that by 2050, over one-third of prime-age men will not be working. If the decline in male workforce participation has already contributed, even if only partially, to social and political destabilization, then such a large exodus might have a catastrophic effect. Summers’ grim prediction should be sufficiently alarming to demand action from political leaders of all stripes. While some elements of this decline do receive significant attention––the opioid epidemic and the need to reform the criminal justice system for instance––those serving in government haven’t spent much time highlighting the broader problem. Eberstadt wisely pointed out, “more important than any particular recommendations … is the imperative of getting people from all over the political spectrum, from all around the public square, involved in this and committed to this and offering their own solutions.”
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