Why are Fewer Men Active in the Workforce?
According to The Washington Post, the national unemployment rate has been cut in half since it peaked at 10 percent in 2010. It now stands at only 4.7 percent. But the labor market is not as healthy as it might seem from this single statistic. Despite the decreasing unemployment rate, the labor force participation rate has also been falling.
In other words, a growing share of the employable population has quit looking for a job, and so is not counted in unemployment statistics. A mere 62.6 percent of the population either has a job or is looking for one. Only 88 percent of men ages 25-54 are in the workforce. This is the third-lowest participation rate among all developed countries, ahead only of Italy and Israel. The Post listed several theoriesEconomists have offered for why the American participation rate continues to decline.
The first theory is that fewer men are working because of an increasing number of women in the workforce. This theory conflicts, however, with a study that revealed that fewer women are working after the recession. The study also revealed that less than a quarter of prime-age men who are not working have a working spouse.
Next, economists started to look at federal aid programs like Social Security Disability Insurance. This study showed that the number of recipients of disability insurance has increased by 2 percent since 1960, but this would only account for around half a percentage point of the decline.
The conclusion reached by the Council of Economic Advisors (CEA) boils down to education. There is a decreasing demand for low-skill workers, and as a result only 83 percent of men with a high school diploma or less are in the workforce compared to over 90 percent of men in the workforce with a bachelor’s degree or higher.
There is also one other main contributing factor: the number of men incarcerated right now is extraordinarily high. According to Business Insider, the United States has about 700 inmates per 100,000 residents. To put that in perspective, the country with the most inmates after the United States is Israel, which has only 250 inmates per 100,000 residents. The CEA even cited several pieces of research noting that a “potentially large fraction of this group is not participating in the workforce as a result of their incarceration, likely due to both discrimination and the degeneration of employment networks, resulting in long-term employment and earnings losses.”
Inevitably, there are many opinions on how to best encourage men to get back out into the workforce, but the question many economists are now asking is whether or not the trend can actually be reversed as the number of men in the workforce continues to shrink.