The Missing American Worker

Roughly 10 million American men are “missing” from the workforce. They are in the prime of their careers from ages 25 to 54, yet do not hold a job and are not looking for one. Their ranks reflect a degree of disruption and social ill in this country that are unique in the developed world. “One in six prime-age guys has no job,” said AEI’s Nicholas Eberstadt to NPR. “It’s kind of worse than it was in the depression in 1940.”

Yet policymakers pay this matter little mind. With the unemployment rate hovering around 5 percent, attentions have turned elsewhere. But with the number of Americans out of the workforce already on the rise from nearly 78 million a decade ago to more than 94 million today, the plight of the non-working man is a graphic snapshot of a crisis affecting all Americans.

Since the 1970s, the share of out-of-work men in the prime of their careers has doubled to more than 15 percent. Compare this to the 1960s, when nearly 100 percent of prime age men were working. While jobs have come back for younger men between the ages of 25 and 34 since the end of the Great Recession, many older men aged 35–44 and 45–54 are out of the labor force for good. (Labor force participation rates among prime-age women have also slipped in recent years, though nowhere near these levels.) Compared to the rest of the OECD group of developed countries, America’s employment among working age men is heading in decidedly the wrong direction.

What’s Going On?

One reason for this is that America’s economy and its demands on the workforce are changing. Just look at the employment to population ratio: for college graduates it is 74.2 percent while just 45.7 percent for high school dropouts. Meanwhile, manufacturing employment, traditionally a key source of work for a broader swathe of the labor pool has fallen by 5 million workers since 2000 to just 12.3 million.

Mass incarceration also plays a role. The United States imprisons its population at more than five times the OECD average, and the bulk of those behind bars are in the prime of their working years. After release, ex-offenders face formal and informal limits to work and social inclusion. Rough estimates by Eberstadt suggest that one out of every eight adult men are burdened by a felony conviction.

The distribution of government aid not only shows the growth in joblessness but hints at its own pernicious effects. Disability recipients, for instance, have risen from 4 million to 9 million since 1995; only 35 percent of them are in the workforce. For far too many of these recipients, a program like Social Security Disability Insurance (SSDI) all too often acts as a permanent discouragement to work. While critics of the program may worry about fraud, we should all be worry about people not working.

Not Good Enough

Unfortunately, policymakers are not focused on jobs, but on wages. President Obama’s 2016 State of the Union address, for instance, spoke of “equal pay for equal work, paid leave, [and] raising the minimum wage.” No doubt these measures matter to working families. But how many of them will be working after these policies are implemented?

Let’s be clear: unemployment is not a happy state of leisure. It is a trap of misery. Idleness is a recipe for channel-surfing and video game-playing more than, say, devoting oneself to service or education. In fact, the farther down the economic ladder one goes the greater the likelihood that aimless hours will be poured into online browsing; households making $25,000 to $35,000 a year spend 92 more minutes a week online than households making more than $100,000 in income. For as enjoyable as binge-watching Netflix may be, it is hardly a route to life satisfaction.

The weight of unemployment is a far heavier burden than stagnant wages. It may even undermine a sense of purpose in life, often with disastrous consequences. One sees dramatic reductions in happiness and family formation with unemployment. There are also increases in suicide, divorce, and drug abuse. As The Economist found, “More than a third of inactive men live in poverty; less than a quarter have a working spouse.” Early joblessness can be a long-lasting blemish on careers and earning potential, particularly on the youth. There are also social costs to worklessness as civic engagement and voluntary association suffer.

“The government should stop bribing people for being idle,” argued Harvard’s Edward Gleaser in his recent remarks to the Manhattan Institute, and he has a point. Take unemployment insurance (UI), a vital resource to many who find themselves out of a job. Evidence points to it discouraging the pursuit of work the longer it pays out to individuals. In states that saw cash run out for UI in the early 1980s, workers suddenly looked for jobs. Other essential webbings in the social safety net, such as food stamps and housing vouchers at times impose a nearly 30 percent marginal tax on earnings. As a result, more generous benefits may ultimately hurt those they are intended to help.

Bids for a $15 minimum wage are also rife with good intentions, but they come with a cost. Michael Wither and Jeffrey Clemens looked at data from the 2007 minimum wage hike and found that it reduced the national employment-to-population by 0.7 percent (which is significant), and led to a 6 percent decrease in the likelihood that a low-wage worker would have a job. Two years later, the same workers were 5 percent less likely to make at least $1,500 a month. Employers often respond to wage mandates by hiring higher skilled workers, who can be more productive, or simply automating more tasks. And because lower-skilled workers get less work experience under a higher minimum-wage regime, they are less likely to transition to higher-wage jobs down the road.

Worse yet, minimum wages and other such employer-centric supports are a form of redistribution that falls heaviest not on taxpayers, but on the customers of, say, Kmart or Dollar General. Since their customers tend to be poorer, it suggests we are doing redistribution on the backs of the poorer consumer. We must ask, then, who really pays for the minimum wage.

Some experts have called for a guaranteed basic income that strips the safety net to its essence: a check, likely for everyone, every month. While theoretically a more efficient and effective means of caring for those in need, a basic income would mean introducing confiscatory tax rates unless policymakers succeeded in closing every welfare and pension program in America. That is an unlikely prospect, to say the least. More significantly, the opportunities for creativity and leisure that a basic income opens up could also be the chasms through which human flourishing falls.

Call for Ideas

We clearly do not have all the answers to addressing joblessness. What we need instead is a flourishing of ideas and a willingness by policymakers to adopt a humble, experimental approach to restoring work.

For one thing, we should focus more on preventing a lack of work than increasing salaries alone. Low-skilled workers should no longer face upwards of a 70 percent effective marginal tax rate for starting a job. Even after welfare reform in the 1990s, America’s means-tested aid programs retain a powerful disincentive to work.

Instead, an expanded Earned Income Tax Credit could provide individualized assistance to lower-skilled workers. Such reforms could include offering more benefits to childless adults, an allowance for the EITC to be earned regularly, and eliminating the marriage penalty. Many households would find that working more paid more. Making the EITC simpler would also make it easier for families to navigate.

Entrepreneurship, which is in the midst of a three decade long decline in America, should be an additional vehicle for bringing more work to more people. Edward Glaeser recently proposed “entrepreneurship zones” that encourage enterprise and empower communities in urban neighborhoods, primarily by reducing policy barriers to people getting ahead and promoting the accumulation of skills. “America is a country of entrepreneurial people,” said Glaeser, and “every unemployed person is a failure of entrepreneurial imagination.”

New technologies may also play a role. While the last forty years have been biased toward the highly skilled, companies such as Uber offer an example of how new technologies can provide opportunity for lesser skilled workers. We need more Ubers, not more regulation.

Whatever regulations do exist must be crafted to minimize their impact on mobility. People are far less likely to move in search of jobs than they were in the early 1990s, even when they live in regions sapped of opportunity. Land-use restrictions limit the development of economical housing in our most productive cities, thereby closing windows of opportunity to those in pursuit of it, and setting aside gains in wealth to the already wealthy. Removing burdensome occupational licenses, or at least the often dramatic variance in standards from state-to-state will also help. For the millions of able-bodied men who are no longer in the labor force, they need to have more options and availability to live where they are most likely to find work.

Last but not least, skills development may also play a role in shaping generations to come for a changing labor market. Closing the skills gap between what’s on offer in the labor market and what companies seek in their talent likely involves a clearer, more coordinated focus between educational institutions and hiring firms. Offering more avenues to gain recognized certifications and experience, such as through coding academies or apprenticeship programs could also help.

A workforce without work is an idle army sapped of hope and opportunity. We must become more aware of the silent weight of worklessness borne by millions of American men and women today, and pursue every avenue available to open up opportunities for earned success. It is not just a paycheck that is at stake, but people’s lives.