A drop in labor force participation among men in the prime of their life has economists puzzled. For the past 60 years, the number of men between the ages of 25 and 54 either working or actively seeking work has steadily declined.
Sandra Black, professor of economics at the University of Texas at Austin and a member of the Obama Administration Council of Economic Advisers, spoke at an Oct. 6 event at American University hosted by the School of Public Affairs about this trend and the possible explanations behind it.
“It’s a wonderful teaching opportunity to have Sandy visit and talk with students and faculty at AU,” said Erdal Tekin, SPA professor and a friend of Black’s. “Sandy is one of the world’s leading experts in labor economics, economics of education and intergenerational mobility."
“What is most striking is that it has been going on for so long,” said Black, who headed a recent CSA report on the phenomenon. “It’s not part of the recession. It’s been an incredibly long-running pattern and it’s a puzzle as to what’s going on.”
Since 1990, the United States has had the second largest decrease in prime-age male participation among the 35 member countries of the Organization for Economic Cooperation and Development and the third lowest labor force participation rate in this group. While data in the report was not a surprise to researchers, Black says the trend is not widely known and the hope is that the report will create more awareness in the public sphere.
The drop in labor force participation among prime-age men, which peaked in 1954 at 98 percent, has troubling implications for the individuals not working, as well as for broader economic growth, the report noted. Evidence shows joblessness is linked to lower overall well-being and happiness, higher mortality, worse economic prospects for the future, and the negative consequences for families and communities. A combination of factors has likely contributed to the trend.
During the event, Black talked about those closely affected. The pattern is happening primarily for less educated men. At the same time, relative wages for this group have been going down while their labor force participation is going down – consistent with a decline in demand. There is no evidence to support idea that men are merely choosing to stay home to take care of children or relying on a spouse’s salary, as men not in the workforce are less likely to have a working wife at home than those in the labor force, Black says.
While some might suggest that these men are opting out of work to go on public assistance or disability, Black says the numbers and the fact that these programs have become less generous over time do not support that as a viable explanation.
“These men are at their peak productivity. It is costly to society for them not to be working because we are not harnessing that productivity,” said Black. “The evidence shows it may be costly to their families in the spill over to health and their children.”
The report mentions the decline in low-skill jobs and opportunities linked to globalization and technological changes in the marketplace. Increasing access to quality education would be one possible policy response, since well-educated men are not experiencing the same situation, says Black. Reforming community colleges and training systems – anything to link people more closely to the labor market - could also help people from getting discouraged when they drop out of the labor market.
Another strategy would be to make work more attractive by increasing aggregate demand with increased investment infrastructure or changing labor market policies, such as expanding unemployment insurance, says Black. Criminal justice reform is another policy remedy that could help those who have a difficult time re-entering the job markets after being incarcerated.
The report has been well received, says Black, the Obama administration budget for 2017 included a number of proposals that would invest in programs and reforms aimed at bringing more men back into the labor market.
For more information about Sandra Black, please visit: https://www.whitehouse.gov/administration/eop/cea/about/members