I have reported in a previous article the well-known fact of a significant decline in the labor force participation rate of men between the ages of 25 and 54, i.e. ‘prime-age men’, over the last half-century. In particular, data show that the labor force participation rate of prime-age men has fallen from 98 percent in 1954 to 88 percent in 2016.
While the data are indisputable, the specific causes of the decline are a matter of dispute. This is not surprising, given that the decline has corresponded with a variety of long-term demographic, social, and economic trends that began in the 1960s. The 1960s were, of course, the decade of civil rights, counterculture, Vietnam, hippies, rock ‘n roll, and a convulsive tumult of social and political upheaval. As Nicholas Eberstadt notes in his book, ‘Men Without Work: America’s Invisible Crisis’, it was also a decade in which men began to leave the labor force in full force: ‘America’s great male flight from work began in earnest around 1965 and has continued virtually without pause since then.’
There has been no dearth of theories about the decline, and there are plenty of data that can be invoked to support the various theories propounded. But a consensus on the causes of decline has been elusive. Among the factors cited to explain the drop are globalization, technological innovation that has made many low-skilled jobs obsolete, insufficient job training and job search assistance, government programs like Supplemental Security Disability Insurance (SSDI), increased incarceration rates, and the increasing attractiveness of leisure activities (e.g. young men living in their parents’ basements and playing video games). The overarching question, however, is whether the decline can be explained by a labor market that has less use for prime-age men (e.g. because of globalization and technological innovation), or whether prime-age men have decided to check out and stop working (e.g. because government assistance programs like SSDI decrease the incentive to work). In other words, whether demand-side or supply-side causes predominate in explaining the decline.
The Council of Economic Advisors under President Obama issued a report in June 2016 that argues that demand-side factors explain much of the trend, i.e. ‘much of the long-run decline in prime-age male labor force participation may reflect a concerning trend of reduced labor market opportunities.’ The report largely dismisses the possibility that men are leaving the work force as a matter of choice (e.g. because they choose to be stay-at-home dads, go to school, or have greater access to social assistance from government programs, though it does acknowledge time-use data showing that prime-age men out of the labor force spend a lot more time on leisure activities like watching television than prime-age men overall). The CEA report discounts supply-side factors and argues that technological changes are creating a world in which there is less demand for lower-skilled workers, which not only makes employers reluctant to hire them, but also depresses wages and makes men less motivated to seek work.
According to Mr. Eberstadt, however, male flight from work has corresponded with two significant changes that arose in the 1960s: Lyndon Johnson’s ‘Great Society’ social programs and a crime wave that ‘began to sweep over the United States.’ Both events have much to say about the subsequent decline in the prime-age male labor force participation rate.
In the latter case, the consensus reaction to the national crime wave was to lock ‘em up. Federal, state, and local authorities enacted legislation that caused a rise in incarceration rates that ‘have been unique among advanced democracies’ and has been particularly hard among ‘people of color and/or those with low educational attainment.’ While crime rates have come down since, incarceration rates ‘are roughly five times as high today as they were in the late 1960s.’ But despite the rise in
incarcerations, the ‘average time served in state penitentiaries for an imprisoned first offender in recent years is just over two years,’ and ‘[m]ore than six hundred thousand convicts are released from prison every year, and many do not return.’ Moreover, many never go to prison, but instead receive probation. Thus, men go into the criminal justice system, and most of them come out of it, so that ‘[m]aybe 90 percent of all sentenced felons today are out of confinement and living more or less among us.’ One unpublished study ‘estimated that the cohort of current and former felons in America had reached nearly 20 million by the year 2010.’
These are men who go looking for work and apparently have a hard time finding it. Though comprehensive statistics are hard to come by, Mr. Eberstadt presents National Longitudinal Survey of Youth data from several studies that show prime-age men with arrest records, felony convictions, and prison experience are more likely to be out of the labor force than their counterparts without arrests, felony convictions, or incarceration on their record. This discrepancy in labor force participation rates holds across multiple demographic groupings of men, including by age, education, race, and ethnicity. But considering discrepancies in the likelihood of incarceration across demographic groupings, if you are a black male with less than a high school education, the odds are incredibly stacked against you. One study showed that ‘[f]or non-Hispanic white men with twelve years of education, for example, the odds of incarceration by age thirty-five were about 5 percent for those born between 1957 and 1964. On the other hand, the odds were about 18 percent for non-Hispanic whites with less than a high school education. For a non-Hispanic black man with a high school education, the odds were over 25 percent. The odds were 58 percent for a black high school dropout.’
The CEA report agrees that imprisonment is an important factor to consider, stating that ‘[t]he rise of mass incarceration has likely contributed to the larger decline in prime-age male labor force participation rates in the United States relative to other countries.’ But as Mr. Eberstadt notes, ‘…the great male flight from work had already been under way for more than a decade and a half before the U.S. male population of ex-prisoners and at-large felons began to soar in the early 1980s and…curiously enough, the explosive growth of that “criminal class” after 1980 seemingly did little or nothing to speed the pace of decline for prime-age male [labor force participation rates] over the following three-plus decades.’ In other words, it is not just men who have had trouble with the law who have had a hard time finding a home in the work force.
There also seems to be a cohort of men for whom government assistance provides a buffer on which they can rely as they withdraw from the labor market. In discounting supply-side factors, the CEA report notes that, ‘from 1967 until 2014, the percentage of prime-age men receiving disability insurance rose from 1 percent to 3 percent, not nearly enough to explain the 7.5 percentage-point decline in the labor force participation rate over that period.’ But Mr. Eberstadt argues that this assessment ‘hinges on the assumption that SSDI is the only source of disability support available to un-workers today.’ Mr. Eberstadt detects a pitfall in the CEA report’s analysis by observing that ‘a more comprehensive assessment would recognize that un-workers can access disability funds from a multiplicity of programs that currently exist and that disability payments, like other of income sources, are fungible, meaning men can live on disability checks sent to others in their household.’
Indeed, SSDI (Social Security Disability Insurance) is not the only disability program in America. There is also SSI (Supplemental Security Insurance), Veterans Administration disability payments, and state-level workers’ compensation payments. The result of these programs, states Mr. Eberstadt, is that ‘[t]he United States is currently spending hundreds of billions of dollars a year on disability payments and the bureaucracies that administer them.’ Indeed, Survey of Income and Program Participation data indicate that, in 2013, 66 percent of households with prime-age men not in the labor force ‘reported taking in money from at least one government disability program,’ compared to 52 percent in 1985, while 14 percent of households with prime-age men not in the labor force reported receiving benefits from two or more programs (compared to 10 percent in 1985). There is no central agency keeping track of it all, however, so ‘we do not know exactly how much money is being devoted to such claims or how many people in America are receiving payouts from one or more of these programs,’ especially since under-reporting is a problem in the data sources that attempt to track reliance on government assistance.
This is to say nothing of the dramatic increase in means-tested benefits. Mr. Eberstadt has examined data presented in an analysis by Brigham Young University professor Joe Price, and observes that there has been a dramatic increase among un-working prime-age men in the receipt of means-tested benefits (e.g. food stamps and Medicaid). Including their reliance on disability programs, prime-age men who have left the labor force are getting a boost from Uncle Sam sufficient to keep them afloat, and perhaps enough of a boost that there is a marginal incentive, after accounting for other factors like an affinity for leisure and a decline in demand for low-skilled labor, to remain out of the labor force.
The upshot is that, unlike the CEA report issued under the Obama administration, one should not be too quick to dismiss the role of Uncle Sam, i.e. government assistance, in trying to explain why so many prime-age men have left the labor force over the last half-century. Surely, there are many factors at work in the decline of prime-age male labor force participation. Teasing out the incremental contribution of each factor has proved difficult for researchers, but there is good reason to believe that Uncle Sam bears a not insignificant share of the responsibility for millions of prime-age men deciding to remain out of the work force.
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