Insights into the economy can be found in surprising places. In a brothel, for instance, how services are priced and who ends up working there can reveal a lot about the state of the business cycle. It also reflects structural changes in our economy and society.
When I spent time at the Moonlight Bunny Ranch in Nevada while researching a book a few years ago, I was struck by how many of the women came from families where the men didn’t work. Many had husbands, boyfriends, brothers and male cousins who weren’t in the labor force — without a job and sometimes not even looking.
This pattern has emerged in a growing number of American households lately. During each recession for the last 40 years, a sizable number of men — more than women — have left the labor force and not come back. So far, this has been true for the pandemic too, despite rising wages and the best job market in decades. The male prime-age labor force participation rate — the share of men age 25 to 54 who are either working or looking for work — has fallen over the years from 96% in 1970 to about 89% in 2020 before the pandemic.
And despite plentiful opportunities now, the numbers haven’t recovered to pre-pandemic levels. As of the last estimate in November 2021, only 88.2% of prime age men are participating in the U.S. labor force. Which makes it clear we need a new approach to jobs.
Less-educated men are the most likely to drop out; the rate of prime-age male high school graduates in the labor force is still 1.37 percentage points lower than before the pandemic, and only 84% of men without college degrees are in the labor force. Some women left the labor force too, but not as many. Women’s participation rate dropped 0.62% — even while bearing the brunt of irregular schooling. The numbers look worse in some areas: in November only 83% of prime age men were in the labor force in West Virginia and Vermont, and just 79% in Mississippi, while 92% of prime age men were engaged in the job market in Utah.
Economists have offered many reasons to explain why fewer men are working in their prime career years. One is that technology and globalization destroyed the routine jobs that provided employment to many. The idea is that these jobs disappeared and men aren’t getting the skills they need to thrive in the new economy. Some men live in areas with poor job prospects and Americans have become less likely to move. There’s another theory that better leisure options, like video games, reduce the desire to work.
Also, changes in the disability program made it easier to claim benefits and never return to the labor market, and Americans are generally sicker: 35% of disabled Americans report a mental health disorder and 30% report disabilities that may be related to obesity. Opioids also play a role, but how that plays out isn’t clear. The burden of an opioid addiction could keep people from working, or some economists speculate that a grim labor market like we had at the start of the pandemic might make more people turn to drugs.
Regardless of the cause, the results are terrible for families and the economy. Time out of work is associated with depression and poor health. Keeping people employed and productive is also important for a growing, vibrant, inclusive economy that offers the possibility of upward mobility. If prime-age males keep dropping out, we risk a permanent underclass that can’t work to get ahead.
Policy so far has not been very effective in mitigating the trend. Mostly, we’ve relied on monetary policy with the hope that a tight labor market and higher wages will induce more people to work. But monetary policy is not well suited to deal with big structural problems. The labor market is very tight now and we still have a not-working problem. Ideas floated by the Biden administration and some conservatives also will fall short. For example, offering free community college to teach skills has a mixed track record — in large part because they often don’t teach the skills people need — and drop-out rates are high. Guaranteed jobs won’t do the trick, either, since the problem is not lack of jobs.
We need to think bigger and create an economy where people of all skill levels can thrive and reach their potential. And that starts with better and more rigorous secondary school education and reviving vocational high schools. High school drop-out rates have been falling. These are the years when it’s easiest to reach young men, engage them and teach them the skills they need. The community college solution is just trying to make up for mediocre to poor high school educations. It would be more effective to make the time spent in high school more valuable and useful.
The pandemic intensified the challenges in our changing economy, and further alienated more young men from work. It also showed we need to try to something new.