A little more than a week ago, the government released a report by the President’s Council of Economic Advisers on the declining labor force participation among prime-age men. “Prime-age” is defined as being between 24 and 54.
The gist of the report:
–the US has seen a continuing, steady falloff in labor force participation by prime-age men since the 1960s
–the trend is similar in other advanced countries, but more severe in the the US than anywhere other than in Italy
–the decline comes across all age groups and ethnicities, although the worst experience is among black men
–education plays a part. In 1964, labor participation among men with a college degree was 98%; last year the figure was 94%. In 1964, the rate among men with less education was 97%; last year it was 83%
–relative wages for less-educated men have fallen as well, from 80% of the college graduate wage in the 1970s to 60% now
–the mechanism for the decline in participation appears to be that jobs are eliminated during recession, with only some of the positions restored during the ensuing recovery
Two other points:
–the average country in the OECD (Organization for Economic Cooperation and Development = advanced nations) spends 6x the percentage of GDP that the US does on job search and job retraining for people out of work. That puts the US at the bottom of the OECD pile. If the unemployment people are anything like the VA, the situation is even worse than the figures imply.
–an unusually large number of US males have been in jail at one time or another in their lives. They have a particularly hard time finding jobs afterward.
–the situation described in the report is obviously not new, but, worldwide, we may have reached a tipping point in voter discontent
–economic theory maintains that the best position for a country is to allow free trade. It stresses, however, that for this openness to create real benefits, governments must step in when globalization causes job losses to retrain displaced workers and reintegrate them into the workforce. That’s the part Washington seems to have systematically ignored.
The poor employment situation for large chunks of the population is not going to go away by itself. The solution is probably not to elect a latter-day Ned Ludd, however. The government shakeup in the UK that appears to be happening in the wake of the “Leave” vote on Brexit may end up being a template for the US as well.