The report, which was widely covered by economic commentators yesterday, showed that American men aged 25-54 have been dropping out of the labor force steadily for the past 60 years. In 1954, 98% of such men were either working or looking for work; today, that figure is only 88%. This decline has been sharper among black men and men with less education—for men with only a high school degree or less, the labor force participation rate is now only 83%. It doesn’t take much imagination to understand the cascade of negative effects that come from having huge numbers of prime working-age men who have completely dropped out of the quest for employment.
There are quite a few factors that partially explain this trend, including our huge incarceration rates for men and the general decline in good blue collar manufacturing jobs in America over the past half century. Globalization, racism, vindictiveness, inequality—this trend has it all! But as Neil Irwin points out, one of the most interesting aspects of this decline is that it raises questions about an article of faith in the pro-business American mainstream: our country’s relatively lax labor laws, which make it easy to hire and fire workers. Though economists typically think that easier hiring and firing makes business more likely to hire and should therefore increase the labor force participation rate, our nation is not bearing that out:
In the United States, 12 percent of 25- to 54-year-old men were neither working nor looking for work in 2014. That number was 7 percent in Spain and France, and 4 percent in Japan. And that’s despite a more generous social safety net in those countries that would, you might think, make it easier to drop out of the work force.
I am not smart enough to parse all of the factors that could be driving this trend but it sure is something to think about.