I spent a few minutes on Twitter today tweeting out some figures and links relevant to this issue of non-work among prime-age adults (25-54 year olds). The issue is getting a ton of attention, well-deserved, for sure, but why now (this NYT survey provides a useful summary, though as Dean Baker points out, women’s employment rates have also declined of late)? After all, the negative trend for men (see fig 3 below) is long-term.
Clearly, one explanation relates to the the election and the belief that much of Trump’s support comes from non-college educated white guys disconnected from the job market.
These are the figures I tweeted out, all employment rates of prime-age workers, the first two from OECD data, the third a longer term look at US prime-age men (EPOP is employment/population, or employment rate):
What’s important about the first two figures is that the German labor market has been hit with the same two factors typically raised to explain the increase in non-work: globalization and technology. Why have German prime-age men and women fared so much better than those in the US?
–Much more union coverage, and German unions work with both management and government to support employment through apprenticeships, training programs, and export-oriented manufacturing policies.
–This last bit is supported by their undervalued currency; as the strong man in the eurozone, the German currency would rise if it could float. As it is, their current account surplus is a whopping 8% of GDP, meaning they’re essentially importing labor demand from weaker eurozone economies.
–They’re just more “we’re-in-this-together” when it comes to labor market policies. One reason their employment rates didn’t tank in the recession was because workers essentially shared the problem of weak labor demand: instead of concentrated layoffs, broad swaths of workers took reduced hours with part of their lost earnings replaced through gov’t support. Our unemployment insurance system actually offers that option, but it’s way underutilized.
–Don’t assume that accelerating, labor-saving technology–faster productivity growth, robotics–in manufacturing is what’s dinging these guys long-term. At least not before you’ve read what Sue Houseman has to say about it. Yes, automation is in play, but so is that fact that much of our demand for manufactured goods is met through imports:
The reason for manufacturing’s anemic performance is that U.S. consumers and businesses are buying more imported products, and American exports have not risen commensurately. Instead of manufacturing their products in the United States and exporting them to foreign markets, U.S. multinational companies now often locate production overseas to take advantage of lower labor costs and taxes, among other factors.
Conservative Nick Eberstadt, according to the NYT would “…like to intensify social pressure on the cadre of men who have stopped looking for work. “Why haven’t we had the same sort of conversation about stigmatizing or shaming unworking men that we had 20 years ago about mothers on welfare?” he said. “They were not idle; they had little kids.”
I say before we go to the shaming place, let’s get the policy right. The third figure shows a clear cyclical response to ups and down in job opportunities around the negative trend, and here I show that the cyclical responsiveness has increased over time. That makes sense to me, given that our welfare system has shifted more towards in-work benefits. While disability insurance often gets raised in this context, the highly regarded CEA report on this topic assigned less than 10% of the decline in prime-age male work to the disability rolls.
No question, “agency,” or personal responsibility, is always in play, but from where I sit, the evidence of jobs leaving workers is more persuasive than that of workers leaving jobs.