Mike O'Donnell | Mar. 07, 2018

The Federal Reserve Bank of Kansas City recently published a studious Economic Review article looking at why...

... the labor force participation rates among prime aged males has declined so rapidly over the last two decades.

The author of the article argued that the primary reason why fewer and fewer 25 to 54 years olds are working, or looking for work, is a decline in the demand for middle-skill workers because of automation and global trade. In 1996, approximately 4.6 million men aged 25 to 54 did not participate in the labor force. By 2016, this number had risen to 7.1 million.

That is a very large number of unproductive men needing to be supported by the rest of society. And most of them, 83.8% in 2016, weren’t looking for a job either so they weren’t actively looking to re-enter the work force.

Two very interesting statistics that I took away from the study:

  1. About half of the non-working males self-reported the reason for their non-working was an illness or disability requiring pain medication on a daily basis, and mostly prescribed pain medications.
  2. Men aged 25 to 34, in particular, along with those in the “middle education” group, which was described as those with at least a high school degree and some college or associates degree, experienced the largest increase in non-participation rates over the last two decades.

While the hypothesis presented, that fewer males are working because there are fewer jobs available that they are capable of doing, is interesting academically, it completely ignores the economic basics of how a labor market works and the incentives that exist for someone to work versus someone not to work.

If someone can make more money by not working than working, they probably will (human nature 101), and this is what is happening in the United States today for a large cross section of potentially productive employees. The costs to this nation in lost productivity and additional welfare dependence is staggering, and will be a burden borne for many generations to come.

The Federal Reserve article makes no mention of a flawed education system that is unable to prepare men (and by extension, women) for productive employment.

The article also makes no mention of capricious minimum wage legislation that uses the force of law to require employers to pay someone more than they are worth, which is causing the elimination of many jobs around the nation entirely.

Nor does the article mention the dependence many Americans have on a health care system that itself encourages dependence and waste while discouraging people to take responsibility for their own health.

And finally, the underlying premise that it is society’s fault that there aren’t enough of these routine and repetitive type of jobs to keep 7.1 million American males gainfully employed, is ludicrous to the extreme.  

The author acknowledges that there are plenty of low skill jobs available and plenty of high skill jobs available, just fewer middle skill jobs. Logically that would suggest that middle skill men could move into low skill or, with the right training and education, higher skill jobs if they wanted to but there doesn’t appear to be much incentive for either approach. And the article offers no suggestions or solutions to redress this perceived polarization of jobs other than the underlying and nonsensical jab that if unions were stronger, fewer of these routine, middle-skill jobs would have gone away.

Here’s two suggestions:
  1. Remove a flawed incentive system that allows otherwise productive men to choose non-work over work
  2. AND remove the plethora of government regulations that prevent employers from freely hiring new employees.

QED.