America’s overall unemployment rate today is lower than at any time since the 1960s, and the official unemployment rate for prime-age men is just 3%. Yet for every prime-age man who is out of work and looking for a job, there are four more who are neither working nor looking. This is not a problem that can be solved by more Keynesian stimulus, a new industrial policy, or other so-called “demand-side tools.”
. . .Barely half of native-born, prime-age American men with no high school degree are in the job market at all. By contrast, labor force participation rates for their foreign-born dropout counterparts are as robust as for native-born college graduates.
Turning to supply-side factors, he writes,
the vast and yet somehow invisible army of former convicts; the new normal of unfathomably slow advances in educational attainment—these are just some of the major problems hiding in plain sight.
Let me add these possibilities to the list:
1. The cumulative effect on the worth ethic of people experiencing significant assistance for not working and high marginal tax rates on those benefits when they do work.
2. Assortative mating, with the lower portion of the male skill distribution made much less attractive as husbands because of (1).
3. A mismatch between demand and supply. Perhaps the demand is for working with people (elder care, child care) and those out of the labor force, particularly men, prefer working with things.
Arnold–
The first of your added possibilities is right on the mark. Bread and circuses don’t make for a long-run sociopolitical equilibrium.
Todd Moodey
The plight of American low-skilled workers together with the opioid crisis are perfect test cases for yesterday’s Null Hypothesis watch. Does there exist a consciously designed intervention that can slow or reverse these two negative sum trends?
Solving the first phenomena and giving low-skilled men a reason to get out of bed in the morning probably addresses the issue underlying the deaths of despair phenomena. If one were to look at these issues through a very dark eugenic-like lens, we could claim that these phenomena indicate a return of natural selection to our species.
2) Assortative mating
Or is it society no longer gives men especially married men the benefit in the hiring decision? Assortative mating has been the society norm and it did get modified from 1945 – 1975 (it moved from born class to education levels) but it is really the historical normal.
Normally Collin, you focus on the mega-trend of female participation in the workforce since 1945. I wonder if assortative mating is because “…society no longer gives men especially married men the benefit in the hiring decision” or if it is due to society overcoming the biological constraints that prevented women from fully participating in our economic meritocracy.
Both and we underestimate the number of women in the workforce most of the 20th century. (The numbers do include single women though.)
In 1950, the overall participation rate of women was 34 per- cent. The rate rose to 38 percent in 1960, 43 percent in 1970, 52 percent in 1980, and 58 percent in 1990 and reached 60 percent by 2000.
I tend to think historical assortative mating was closer to the Bush Sr. marriage between Barbara and George Bush and the modern one like The Clintons, Bill & Hillary. And in modern society Barbara Bush would have socialized in her youth for a career.
Anyway, the reality in the post-WW2 many women goal was the return to normalcy taking care of their family and society did a lot to promote this. (The end of League Of Their Own was true for a number of women.) And the higher you go up the income scale the more likely you see women taking care of family. So the poorest families, such as Southern African-Americans, had wives working but doctor & lawyers had women at home. Note, part of their role was the home but also they were the leaders at local church and charities. The wives cooked the spaghetti dinner for Wednesday service and worked with problematic youth to get jobs. This is one reason local institutions are weakened because they don’t have as many of these volunteers.
Now, society does not enforce this discrimination. The discrimination was reasonably enforced but if you had the same good candidates for promotion, the family man was chosen.
(I still wish we considered Post WW2 economy with increasing working class wages as the historical outliers.)
Perhaps the word “plight” in the title here should be replaced with the word “Choices”.
I wonder if it could be the case where uneducated (really educationally un-credentialed) American men don’t have something to fight for (e.g. not hurt socially by being unemployed, family isn’t depending on them) whereas uneducated immigrant men do (e.g. can’t benefit from welfare programs as easily, family is depending on them especially from their home countries).
This is a great point. Some measure of skillset/intelligence/conscientiousness coupled with a measure of family responsibilities and interdependence should show this relationship. Immigrant remittances and trust in social safety nets are great proxies for this.
While low skill immigrants tend to have low earnings in the first generation, they at least have relatively lower levels of crime and divorce, at least compared to lower low skill natives. These “peasant virtues” tend to go away in the second generation of immigrants, who get a slight income boost (still low) from learning English, but divorce and committed crime in greater amounts. Amongst Muslims in Europe, it’s also this second generation that commits most terrorism as well.
There is one measurable exception to this phenomena. Puerto Ricans. They have high crime, etc in the first generation. They are also the only low skill immigrant group whose home country is already “part of the USA” and they have access to USA welfare before coming to the mainland. They appear to be pre spoiled with none of those first generation peasant virtues. So perhaps a case can be made that while the low skill will likely always have low earnings and perhaps be net tax drains regardless, something about being part of the USA/Western World turns low skill people bad in a moral/behavioral sense.
One aspect to consider the impact of downscaled economic mobility on different classes of people. The one benefit of Immigrants to the US and why many appreciate this country despite very low wages is it is better than back home where earning were less or, in many case, their home country is waging war or revolution.
The WWC in the Rust Belt grew up in different circumstances in which many in the family talk about past economic gains but face less future opportunity. And on top of that, the WWC grow with w younger brother who did better at school and moved away from the town earning a college degree. (FYI this is over-simplification example.) So not only are they facing a decline in current fortunes but also comparative success.
Some related data points.
The percentage of the population diagnosed with autism spectrum disorders has grown significantly: https://www.ncbi.nlm.nih.gov/books/NBK332896/
Labor force participation has rebounded under Trump. See: “The recent rebound in prime-age labor force participation” by Audrey Breitwieser et al at Brookings dated 8/2/2019. I would argue that this is most likely as a result of corporate tax rate reductions. It has been demonstrated repeatedly that corporate tax incidence is primarily on workers.
But note that the Brookings piece also reports that half of prime age female non-participators and over one third of the overall prime-age non-participators, so a good chunk of males too, list caregiving as their reason for nonparticipation.
I can’t find anything on trends in the prime age population who are actually attending school, but another Brookings paper states “Almost 30 percent of nonparticipants report being ill or disabled, while 8 percent are students, and 5 percent are early retirees.”
At any rate I think some caution is warranted before dumping umpteen more trillions down the educational industrial complex wastehole.
There are loads of theories why the autism spectrum is increasing but as a father of high functioning child on the autism spectrum, the big change is he would have not be diagnosised in past generations.
On the demand side, Joel Kotkin has a good piece at Quillette on how anti-growth enviro-policies and general disdain for average people in flyover country has played an important role in limiting opportunities: “ The abandonment of growth as a goal reflects progressives’ increasing lack of interest in, if not disdain for, the aspirations of the working- or middle-classes. Obama’s Treasury Secretary Lawrence Summers has admitted that Democrats have little interest in the middle echelons, preferring to serve a “coalition of cosmopolitan elite and diversity.” Under Obama, Summers’s “elite” did well even with painfully slow income growth, as assets like urban real estate and tech stocks rose, sometimes dramatically, while share of the country’s wealth going to workers continued to decline.”
Of course a simple question:
When in history did the United States not have the plight of low wage workers? Maybe in the Post WW2 years when nations fell into three categories: Bombed out by WW2, Under the Soviet bloc and also bombed, or third world with minimal manufacturing.
Well, this gets close to the idea that the Great Depression was really the Big Holiday.
No doubt, many of the poor people in the US can be defined as lazy and no good.
On the other hand, “free trade” and open borders has been a setback for the employee class of America. Michael Pettis points out that nations compete in international markets by reducing labor share of income. That is a non-PC observation.
And really, what is the purpose of importing 40 million illegal workers into the US in the last 40 years? We all know the upper classes want cheap labor.
These open borders policies have succeeded in reducing labor costs. Indeed, adjusted for inflation, the minimum wage is less today than in the 1960s.
All across the developed world, labor share of income is declining.
While we hear sanctimonious sermonettes on the supremacy of free markets, no one really wants to tackle ubiquitous property zoning, and the resulting economic rents attached thereto.
America’s employee class is no longer reproducing, the same as the employee class in other developed nations. The response and solution of America’s Elite to the situation that the employee class no longer replaces itself is to sacralize immigration.
America’s free marketeers and libertarians are feckless, worthless apologists.
From WaPo:
“Barely half of native-born, prime-age American men with no high school degree are in the job market at all”
How significant, if it can be assessed, is this segment at making money outside the measurable ‘job market’? I may not understand enough, but don’t the undocumented make money outside the job market in significant numbers. Are others learning how to make that ‘outside the job market’ work for them?
We have figures like this in Israel and we tend to attribute them to selection bias in “no high school degree”. A generation ago many capable people were in this category. Today, when there is much more opportunity and encouragement to finish high school, the category is assumed to be a proxy for people with grave issues. This also explain the gap between natives and immigrants. Many capable people from undeveloped countries didn’t finish high school, but few capable American men don’t finish high school.
Reasons for the difference: A couple of generations ago the opportunity cost of high school was much higher. Teenaged males could make meaningful sums at work, and many families were severely liquidity constrained and needed this income right away. Probably the return to high school was also much lower. Also, schools did not provide adequate education to intelligent youngsters with learning disabilities. Today they do a better job.
So skipping high school was a sensible choice for lots of capable young men fifty years ago, but for very few today.
Anecdote: a neighbour, sometime in the late 70’s I think, quit school at the age of 16 to work full-time at a large unionized passenger rail company. His father was a train engineer/driver/operator at this company for many decades (if not lifelong, I don’t remember or too young/naive/stupid to ask) and no doubt was instrumental in the process. This young man retired at the age of 46 with a full company pension after completing 30 years of service (a common full pension clause).
As far as choices go, this young man made a decision that worked out brilliantly. The story is real but you can think of it as a theoretical edge case of one viable life path and compare it to alternative Freedom45 paths by early employees of high-growth startups that retire when their options vest.
The number of options for a reasonable NoHighSchool-Freedom55 path are becoming rarer and rarer but still exist. Public Service Unions (police/fire/ambulance) are probably still an option depending on the minimum requirements for cadets but most fiscally conscious people know that this is a flaw in the “defined benefit” style pension plans (vs. defined contribution).
The post WWII blue-collared era was less of a golden age than a blip in history that will not repeat and had made built-in assumptions that proved to be transient. Asher, Tom G, and Collin all have great insight into the nature of this blip but I don’t think their formidable combined brain-power could come up with an intervention that slowed the current trend (i.e. improved on the Null Hypothesis).
Fast food/ McDonald’s jobs are always available, tho this might be (3) working with people rather than things, and less or much less desirable for non-HS men.
(1) The young men might well think the job’s money is not worth it, because the gov’t help for the poor non-work, plus under table cash for non-recorded work, plus criminal work, means a real job with more hours spent but no or little increase in spendable cash.
Was “work ethic” changed/ typo to worth? The cumulative effect on the worth ethic
I argue in favor of a National Service corps, similar to the military, to impart a better work ethic of habits, but also to allow the men to earn their own self-respect. To increase their own self-worth. It would be voluntary, but those who don’t volunteer become ineligible for other gov’t handouts.
It’s implied and talked around, but let’s be clear: illegals are usually a preferred hire over an US ex-con without HS diploma. Better work ethic, more easily trained, much better behaved, much fewer problems needing any police involvement. Usually smarter.
Where is IQ talked about here with jobs? We should be more honest about the social need to have jobs for low IQ people. Like “Forrest Gump”, tho probably less well behaved. Generally these people need clearly defined jobs and special help in learning how to do them, plus more management plus support for when they have questions.
Bigger gov’t tax reductions for those who hire problematic folk is part of the increase in incentives to have more jobs. Reducing benefits for those unwilling to work should be on the table as a relative negative incentive / taking away a (bad) positive incentive for not working.
With respect to the “working with people rather than things” aspect – one wonders whether males might be automatically disqualified or at least downgraded for many such jobs, as a result of the ongoing moral panic over molestation and the like. Maybe we should simply downgrade the moral panics – not just that one, but also the one over employment itself – and let automation and robots handle even more of the work.
I recall visiting an automobile plant a long time ago to help install some computer equipment. There was an enormous sea of parking for employees. Nowadays, a plant of that capacity would only have hundreds of employees and the sea would be just a lake. Unless one is completely caught up in the moralizing, that ought to be cause for celebration: people no longer need to waste as much time, in the aggregate, nailed down to “jobs” of a mindless nature.
Indeed, we could even pay more attention to spreading the remaining work around, since so many folks are able to consume so much that “more” is, on the whole and in the developed world, no longer the absolute priority it used to be. Of course, that would require setting aside a third moral panic, namely the one in economics over the “lump of labor” “fallacy”. And in the puritanical USA, maybe setting such things aside is an insurmountable problem for the time being.
Arnold, is there a reason that any of the suggestions (1)-(3) should have a differential impact on foreign-born vs. native dropouts?
I can’t speak for Arnold but a number of commenters have suggested that foreign-born and native dropouts probably start out differently in terms of motivation, what they feel is expected of them, etc. Everyone’s bones start thinning between the ages of 30 and 40, but the effect will be very different in a 50 year old and a 75 year old.
One has to distinguish between different immigrant groups as 2nd, 3d generation immigrants are quite different. Most Asian origin groups converge to the US average or higher. In contrast, most Hispanic groups with only a couple of exceptions, converge to well below the US mean but generally above the African-American mean. Those two groups have cultural characteristics as well as deficits in cognitive ability that seem to persist for a century without leading to convergence to the white majority norms and outcomes.