President Obama’s top economic advisers released a fascinating report this week, one which had an inconvenient conclusion for any Democrats looking to boast about the success of the Obama-era: The backbone of the U.S. economy — men of working age — are employed at historically low rates, and a historically large number of them aren’t looking for work at all.
Republican politicians have been banging the drum about this problem for years, pointing out that the steadily dropping unemployment rate masks serious weaknesses in the American economy. The ranks of the unemployed are shrinking only in part because people are finding jobs. In reality, millions of Americans simply have left the labor force.
Obama partisans often try to debunk this complaint by pointing out that the labor force participation rate — the share of adults either working or looking for work — is also dropping because Americans are getting older and the Baby Boomers are retiring.
But that is far from the full story, as the Council of Economic Advisers report clearly shows. An unprecedented number of American men are neither working nor looking for work, which undermines the liberal narrative of a slowly but steadily improving economy.
The problem is stark: Look at how, over the last couple decades, each generation of men is working less and less.
The reasons for this are both “cyclical” —because this most recent generation has suffered from a historic recession — and “structural” — think of the growth in disability benefits replacing work; weak growth in wages for unskilled workers; and more.
This goes beyond political point-scoring and fussing over what the unemployment rate really means. Making the problem even worse, the CEA report notes, employment rates are dropping the most among the Americans we might worry about most: those without a college degree, immigrants, black Americans and veterans. It is a serious problem for America in terms of our economy, our culture and our society. Neither political party is talking about it enough.
So it’s commendable that the Obama administration is taking a break from cheerleading a lackluster economy to highlight this problem. The report contains some important, depressing analysis. For instance, men aren’t leaving the workforce to help out more at home; they’re watching a lot more TV.
Unfortunately, many of the solutions the CEA serves up are disappointing. Some are actually unrelated or simply counterproductive.
An unprecedented number of American men are neither working nor looking for work, which undermines the liberal narrative of a slowly but steadily improving economy
The good news first: The CEA report has a number of ideas that Republicans, to varying degrees, also support. Many more jobs than in the past, for instance, require occupational licenses, including jobs that really don’t need them. Conservatives have made clear they share this concern, and both the White House and Congress have made progress on it, although any fixes reside primarily with the states.
Part of the reason men, especially unskilled men, work less than they used to is that their wages just haven’t grown very much in the last few decades. The reports suggest a couple good ways to fix that through the tax code, which many Republicans have shown interest in: expanding the Earned Income Tax Credit and the Child Tax Credit.
But of course it’s best to try to address the problem of low demand for unskilled workers more fundamentally, and that’s where the report falls short.
Despite explicitly noting that wages have stagnated in part because there just isn’t as much demand for certain unskilled work as there used to be, President Obama’s economists praise his proposal to admit millions more new unskilled workers into the country to compete with those who already can’t find good-paying jobs.
Meanwhile, the report praises stronger unions as a route toward higher wages, without taking into account the fact that unionized industries and firms have historically shown lower growth in employment than non-unionized ones. There may be a role for organized labor in boosting the fortunes of unskilled American workers in the 21st century, but the Democrats’ ideas aren’t going to do it.
One issue the report raises, but never offers solutions for, is the staggering rise in the number of Americans receiving disability insurance. The CEA correctly points out that disability isn’t a big enough problem to explain most of the workforce decline, but the program is almost certainly playing a role. Recipients of Social Security Disability Insurance aren’t allowed to have a job at all, and it’s acting like a one-way ticket out of the labor force for too many Americans who might still be able to work. Disability insurance should support Americans who simply can’t work, but given the explosive growth the program has seen, reforming it — which the Republican House declined to do when it had a chance to last year — is absolutely necessary.
Recipients of Social Security Disability Insurance aren’t allowed to have a job at all, and it’s acting like a one-way ticket out of the labor force for too many Americans who might still be able to work
There are some ideas in here that are just downright bad or out of place. The CEA proposes automatically doubling the standard length of unemployment insurance during recessions, arguing the program’s requirement that beneficiaries look for work might boost labor-force participation. But when temporarily extended unemployment insurance expired a couple years ago, there was little evidence to suggest it caused more people to leave the work force — it may have even helped them find jobs.
In almost a caricature of unbalanced Democratic priorities, the report discusses expanding early-childhood education — a costly proposal that has no clear link to boosting the skills of American workers anytime soon. Yet the report is completely silent about expanding vocational education. The fact that Obamacare is expected to cause millions of Americans to leave the labor force goes unmentioned, too.
As the economists’ report says, “A higher labor force participation rate is not an objective of economic policy in and of itself.” But the fact that so many American men are not working should strike Americans as a serious worry in and of itself. Unfortunately, the CEA’s work just goes to underscore that Democrats’ stale solutions aren’t up to the task of trying to reverse this trend. And Republicans, if ahead of the game, have some work to do, too.
Patrick Brennan is a contributor for Opportunity Lives. You can follow him on Twitter @.