The U.S. Labor Participation Problem

The superlatives come fast and furious in the spate of reports coming out on the dwindling participation in the labor force by Americans still in their prime working years.

• The fall in men’s participation in the United States has been going on for decades but has been steeper here than in all but two advanced economies (Israel and Italy) in recent years. “We have won the race to the bottom,” says Nicholas Eberstadt, an American Enterprise Institute scholar and author of “Men Without Work: America’s Invisible Crisis.”
• A more recent drop in labor force participation for American women is “unique” – in the rest of the developed world, women’s participation continues to rise, according to a Brookings Institution report.
• Men with no more than a high school degree make up 40 percent of workers but 60 percent of those who have dropped out of the U.S. labor force.
• The decline in participation has been steepest among men without a high school education, particularly black men.

Economists count not only working people as being in the labor force but also people who are trying to find a job. Something is amiss when millions of Americans in their prime – between ages 25 and 54 – are doing neither, especially in a strong economy like the United States is experiencing now.

This issue is not new, but the election has brought it front and center. Also, the prolonged decline in men’s labor force participation had been partly masked by increasing women’s participation, which pulled up the aggregate figures. Now that women have begun withdrawing, the trend has become increasingly obvious – and ominous.

The Brookings and AEI scholars offer myriad, often overlapping, explanations for why this is happening:

• U.S. manufacturing today employs two-thirds as many people as it did in the 1980s – that’s a loss of 7 million jobs. Technological innovation, rather than trade, is the primary cause, research finds.
• New jobs are being created all the time, but some men might not want to move into growing fields such as home health care, which they view as women’s work. Others might be unwilling to accept these lower-paying jobs or are unable to move to where the jobs are.
• People who’ve been out of work for extended periods have a harder time getting rehired, research shows. The deep post-2008 recession has contributed to this problem, particularly for men without a high school education.
• A prison record is a barrier to finding a job, and more than 25 percent of male high school dropouts who are black have been incarcerated.
• There is a “skills gap” between what employers need and what people with low education levels possess. Some experts blame employers for a lack of training.
• More than half of the men who are not in the labor force say this is because they are ill or disabled.
• These men get income from spouses, food stamps, disability benefits, and friends and other family, a 2014 survey found.
• Men not in the labor force spend much more time than working people watching television and videos – “not the best way to get back in the game,” Eberstadt said.

Labor force participation has revived in the past couple of years as more people are pulled by the strong economy. But can this positive trend continue for long enough to ease the problem?

This blog only skims the surface of this complex issue. Here are links to the full Brookings report and a summary of Eberstadt’s book.

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