Enduring mystery of US recovery: men without work

By most accounts – and despite Donald Trump’s rhetoric to the contrary – the American economy is on the upswing. The unemployment rate is back to the lows before the Great Recession. On Tuesday, the Census Bureau said that median household income rose 5.2 percent last year, bringing it closer to its peak in 1999.

But behind this bump in incomes and employment is a more troubling tally: For decades, an increasing number of adult men have been dropping out of the civilian workforce. From a postwar peak of 98 percent, the share of men aged 25 to 54 in the workforce has fallen to 88 percent.

In all, 7 million prime-age males have given up looking for work, according to Nicholas Eberstadt, a political economist at the American Enterprise Institute, a right-leaning think tank in Washington. In a new book, “Men Without Work: America’s Invisible Crisis,” he says the situation is similar to 1940, when a similar-sized pool of idle workers languished at the tail-end of the Great Depression.

Why these men remain unemployed – and how they survive without a paycheck – poses a conundrum for policymakers in today’s post-recession economy. And it’s one reason many Americans express frustration about the recovery, now in its seventh year. When Mr. Trump claims unemployment is much higher than the official 4.9 percent rate, this might be the population he’s thinking about. Certainly, part of that pool dovetails with the demographic of his strongest base of supporters, namely white males without a college degree.

A stronger economy and higher wages would likely get some of these men back to work, but others seem to have opted out altogether, presenting a challenge that goes beyond stoking demand for labor. “The acute problems of the recession are past, and we’re left staring at these chronic problems,” says David Wessel, a senior fellow at the Brookings Institution, a Washington think tank.

Here’s what is known about these nonworking men: They are disproportionately poorly educated and unmarried, living in households that are poorer than the average, though not necessarily the poorest. A significant share are African-Americans, which Mr. Eberstadt and others say is partly a result of the massive expansion in the prison population and the subsequent difficulty for felons – roughly 1 in 8 adult men – to find work. Latinos and foreign-born men are more likely to work, says Eberstadt.

“The bottom has fallen out for men in America with a high school education or less,” he says.

Why they don't work 

Automation and foreign trade have also played a role, reducing the need for low-skilled factory workers, the White House’s Council of Economic Advisers found in a report released in June. The CEA report notes, however, that similar declines in manufacturing jobs in other industrialized countries have not idled such large share of adult males.

The headline unemployment rate, which has hovered around 5 percent for the past year, does not include these men. It is purposefully drawn narrowly in order to gauge the strength of hiring among workers actively looking for jobs.

How these men get by is also a mystery. Some may be working off the books or drawing a pension from a former job. And while more women are in the workforce, less than 1 in 4 nonworking men have a working spouse, according to the CEA.

Parental support is another possible source of income. The share of men aged 25 to 34 living with parents rose from 15 percent in 2006 to 22 percent in 2014, higher than for women, according to the Pew Research Center. Among those with only a high school degree, the rate was much higher than among college graduates.

More controversial is the role of disability payments in providing for nonworking men and their families. Eberstadt estimates that a majority of idle adult males are in households that receive some form of disability check. The CEA says disability insurance has gone up at the same time as men have opted out of work, but that the impact is too small to explain the decline.

Search for solutions

What would it take to get these men off the sidelines? Trump has promised to bring back manufacturing jobs by revising trade deals and penalizing companies that outsource production to other countries. But economists say that trying to gin up manufacturing jobs is only a partial solution. A massive public works program, building and refurbishing bridges, roads, and other infrastructure, would do more to boost jobs, the CEA says, and both Trump and his rival, Hillary Clinton, support the idea.

The CEA says the government has a role to play in creating jobs, expanding tax benefits for working men without children, and providing adult retraining and unemployment insurance. It also recommends greater workplace flexibility and more spending on childcare and early education.

Mr. Wessel says the first part – job creation – is an important element. “If the economy was stronger, employers who were more desperate for workers would be more aggressive in looking for people … who might otherwise be considered unemployable,” he says.

The Economic Policy Institute (EPI), a left-leaning think tank, keeps its own tally of “missing workers” who it says are discouraged from seeking work since the Great Recession. Its latest tally is 2.2 million workers who, if counted as unemployed, would raise the benchmark rate to 6.2 percent.

“I fully expect those couple of millions of workers to return to the workforce,” says Elise Gould, a senior economist at the EPI. But that number doesn’t capture all the prime-age men who have dropped out altogether, she adds.

For Eberstadt, the growing ranks of nonworking men, and the likelihood that some may never return to work, is a thorn in the side of the economy. Their participation in the workforce would raise tax revenues, ease pressure on entitlement programs, and improve social mobility. But he sees little appetite among policy circles in Washington to take on the challenge. “America has been able to treat these men as being dispensable,” he says.