Being \”in the labor force,\” in the economics jargon, refers either to having a job or being unemployed and looking for work. Conversely, being \”out of the labor force\” means both not having a job and not looking for work. In the US economy, it used to be that almost all \”prime-age\” men in the 25-54 age group were in the labor force, but the share out of the labor force has been rising for decades. Here\’s the data from the Bureau of Labor Statistics.
Several recent studies document and try to explain the decline in labor force participation of prime-age men over time. In a 2017 study, for example, Alan B. Krueger finds that health conditions, disability, and the rise of opioid prescriptions may be important contributing factors. In another 2017 study, John Coglianese suggests that much of the decline in prime-age men’s labor force participation is due to the increase of “in-and-outs”—that is, men who temporarily leave the labor force between jobs. He credits the rise in this phenomenon to the increase in young men living with parents and to a wealth effect from married or cohabiting men’s partner’s growth in earnings. Mark Aguiar et al. posit that more recent declines in the labor supply of young men are due to the advancement of video game technology. In a series of studies, David H. Autor et al. argue that the pain of more recent trade shocks is often locally concentrated, causing a decline in manufacturing employment in those local areas, which particularly affects those with lower levels of education. Katharine G. Abraham and Melissa S. Kearney provide an extensive review of the literature on the decline in employment over time and evaluate which factors they believe are most important for the decline from 1996 to 2016. They posit that factors associated with labor demand, primarily related to trade and automation, are the most responsible for the decline over this period. Labor supply factors related to disability caseloads and compensation (Social Security Disability Insurance and the U.S. Department of Veterans Affairs disability compensation program), the real value of the minimum wage, and the rise in incarceration and the growth in the number of people with prison records also had an impact. Ariel J. Binder and John Bound point out that declining labor force participation rates are more pronounced among prime-age men who are less educated. They argue that feedback between labor demand, marriage markets, and the increase in men living with parents or other relatives plays a role in declining labor force participation rates of prime-aged men with less than a college education. Jay Stewart provides descriptive statistics of male nonworkers and their sources of financial support. He uses the National Longitudinal Survey of Youth 1979 (NLSY79) to look at work behavior from 1987 to 1997 and finds that a small fraction of men account for the majority of person-years spent not working. Using data from the CPS, Stewart finds that a substantial proportion of nonworkers live with family members and receive financial support from those members.
The Binder-Bound paper she mentions was published in the Spring 2019 of the Journal of Economic Perspectives, where I work as Managing Editor, as part of a three-paper symposium.
- \”The Declining Labor Market Prospects of Less-Educated Men,\” by Ariel J. Binder and John Bound (pp. 163-90)
- \”When Labor\’s Lost: Health, Family Life, Incarceration, and Education in a Time of Declining \”Economic Opportunity for Low-Skilled Men,\” by Courtney C. Coile and Mark G. Duggan (pp. 191-210)
- \”The Tenuous Attachments of Working-Class Men,\” by Kathryn Edin, Timothy Nelson, Andrew Cherlin and Robert Francis (pp. 211-28)
Rothstein offers some new evidence by looking at data from the National Longitudinal Survey of Youth, which tracks people over time. In particular, this survey started interviewing people in 1997 who had been born between 1980 and 1984. This allows Rothstein to focus on the experiences of men who were in the 30-34 age group in 2015 and who were out of the labor force. Some of the most common patterns are that earlier life experiences are correlated with being out of the labor force as an adult:
[W]orkers and nonworkers differed early in their lives, in terms of family and neighborhood resources, delinquency, experiences from ages 12 to 18, and expectations about their futures. On the whole, nonworkers appear to come from less advantaged backgrounds than workers. Nonworkers were more likely to have a mother with less than a high school diploma, compared with their working peers (31.0 percent versus 16.9 percent). Nonworkers were also less likely to live with both of their biological parents at the time of the 1997 (Round 1) interview, and they were more likely to have a mother who was age 18 or younger when they were born. Compared with workers, nonworkers were much more likely to report that they had been shot at or had seen someone shot at with a gun when they were between the ages of 12 and 18 (26.9 percent versus 12.5 percent). Nonworkers were also much more likely to have been arrested at some point when they were age 18 or younger (41.2 percent versus 26.9 percent), and they were more likely to have used marijuana by age 19 (63.1 percent versus 54.3 percent). Nonworkers were less likely to have graduated from high school by age 20, compared with their working peers (50.4 percent versus 78.1 percent). …
Nonworkers tend to have grown up in less advantaged neighborhoods than those of their working peers For example, 24.6 percent of nonworkers grew up in a neighborhood with a poverty rate of between 20 and 40 percent, compared with 13.5 percent of nonworkers. In addition, 7.5 percent of nonworkers grew up in a neighborhood with a poverty rate of 40 percent or more (often referred to as concentrated poverty), compared with 2.7 percent of workers. Compared with workers, nonworkers grew up in neighborhoods with a higher percentage of minorities and a lower percentage of people with a bachelor’s degree or more. Male employment was also lower in nonworkers’ childhood neighborhoods, compared with workers’ childhood neighborhoods. For example, 13.4 percent of nonworkers grew up in a neighborhood with very low male employment (less than 50 percent), compared with 5.8 percent of workers.