Who’s Working And Who Isn’t?

All we heard about during the election and all we have heard about since the election is the idea that the Democratic Party deserted the working class and has done nothing to respond to the dispossession of the working class due to globalization and the disappearance of good jobs. Hence the failure of the Democrats to pick up crucial electoral votes in states (MI, WI) with large numbers of dispossessed and unemployed workers, hence the populist ‘revolt’ led by Trump. And this has become the new orthodoxy to explain the results of November 8th to the liberal elite.

Much of this message is a response to the attempt by the Republican noise machine to downplay the post-Recession economic recovery by harping on something known as the labor ‘participation’ rate, a number which is calculated by taking the total U.S. population, subtracting the number who have full-time jobs, and basically saying that everyone left over is not participating in the economy. The Labor Department has been tracking this number since the 1970’s it has been steadily going down.

Last week I wrote a story about the participation rate using the number of 94 million which is the number that our President says are not participating in the economy at all. Now he’s fixed the healthcare system he’s going to do something about this; the very first public appearance by Mike Pence after the healthcare debacle was a speech whose message was, “Jobs, jobs, jobs.”

It turns out that of those 94 million non-participants, there are at best only 10 million who could actually work if they wanted to, the rest are either too old, too young, too decrepit, or too involved in their schoolwork to even look for jobs, never mind hold one if they found a job at all. But a report on this issue that was released by the Obama Administration in June, 2016 (and got no press, which was a problem for everything done by the Obama Administration from Day 1, 2009) gives us a very interesting perspective on the whole issue of labor force non-participation and should be read and understood by all the self-appointed liberal experts who are busily trying to explain Donald Trump.

The report doesn’t look at overall labor participation, but at the participation of “prime age” male workers, i.e., men between the ages of 25 and 54. Because this is the population which is considered the backbone of the economy work force, and that 25–54 age cohort covers the most productive working years, so if the participation rate of this group is declining, then we are facing a serious problem relative to long-term economic growth.

In 1954, this population had a participation rate of 98%. In other words, virtually every single male in the most productive years of their lives had a job. The rate is now 88%, but it has dropped slightly in every year since 1965 and today we have the third lowest rate for this age and gender cohort of all 34 countries in the OECD. The only two countries with lower rates are Italy and Israel, the latter probably shouldn’t be listed because of the large number of Orthodox men who only do God’s work.

The non-participation rate of this group in the U.S. is not only getting larger, it is also increasingly chronic. In 1990, roughly 70% of the non-participators had also been out of work the previous year; in 2015 the rate was up top 83%. Notice, by the way, that when the rate started falling in the mid-1950’s, there was no talk about ‘globalization’ or job-loss overseas, or new technologies or anything else. Incidentally, non-participation is not the same thing as being unemployed, the latter refers to people out of work but actively looking for a job, and in this category the U.S. rate has not only remained relatively steady, but is at the lower end of this rate for all of the OECD. Finally, please resist the temptation to blame the non-participation rate on the baby-boomer surge (which seems to be a favorite explanation for everything that has recently occurred.) Most of the boomers have already lived beyond the 25–54 age cohort, and the non-participation rate of this group continues to go down.

I’m not going to get into the social effects of non-participation (poor health, addiction, homelessness, suicide) because that’s a story unto itself. But I do want to point out one more very significant statistic that may shed some light on why Trump was able to exploit what appears to be a generalized anger over issues like immigration and job loss in certain industrial states. It turns out that the non-participation rate is 8 times higher for high school as opposed to college graduates, and the participation rate for foreign-born, as opposed to native-born men has actually increased.

Whether new immigrants are willing to ‘work for less,’ which is a common refrain you hear from Trump supporters en masse, the decision to become a non-participating worker in today’s economy doesn’t seem to be driven by the lack of a decent wage. What happens is that when men in this age cohort stay out of work for any considerable period of time, they find it more difficult to return to the labor force for any kind of job. The fact that we invest less money in job retraining than just about any other country in the OECD means that when men leave the workforce because they don’t have necessary skills, they are probably going to be gone forever from the labor market whether they face competition from foreign workers or not.

Neither I nor this report is denying the fact that globalization and a post-industrial economy are factors which need to be addressed in order to deal with the long-term unemployed. But the data clearly indicates that this issue is not felt equally by all males between the ages of 25 and 54. I quote Page 11 of the report: “Although prime-age male labor force participation has fallen among all demographic groups, it has fallen noticeably more for those who belong to younger birth cohorts and those who are black, less educated, nonparents, native-born, living in the South, and veterans.”

To the extent that these groups voted, did most of them vote overwhelmingly for Trump on November 8th? They sure did, but that doesn’t mean they voted for him because the Democrats left them behind.