How did we end up here?
Part 2: Young working-age men exit the labor force, while young women crowd in
I’m doing a series of posts this week on economic factors that have driven political polarization in the US. Like many people, I’m sick of all the finger-pointing these days. There are genuine economic issues that need fixing. I’d like our political leaders to put their differences aside and work together to make the US a better place.
Yesterday’s post looked at the decline in labor force participation among prime-age (25 - 54) men in the US. This fall began after the global financial crisis and makes the US an outlier relative to most other advanced economies. In fact, the only major economy with a similar drop is Italy, which is well known for its dysfunctional labor market. It shouldn’t come as a surprise to anyone that a country with this going on is prone to political polarization. This should be a first-order issue for US policy makers.
The charts above show labor force participation rates (LFPR) for men (top) and women (bottom) in two age groups: 25 - 34 (left hand side) and 35 - 44 (right hand side). Young prime-age men have seen participation rates fall across almost all population groups, while the opposite is true for young women. There is academic work that links the fall in work hours by young men to video games, but - frankly - that seems unconvincing. As the charts show, participation dropped after the 2008 crisis, which likely makes it about less opportunity rather than better video games. At the same time, the rise in participation among young women - especially since COVID - is unambiguously positive, but - unfortunately - that doesn’t prevent the political polarization that’s happened because of what’s going on with young men.
It’s hard to know exactly what is driving the drop in participation among young men. No doubt there are many - perhaps countervailing - factors at play. However, given the turning point that 2008 represents, it seems fairly obvious that the drop is about a lack of opportunity, which would explain the drift towards populism among young men. US policy makers need to zero in on what’s going on and fix this.
Don’t have to be a rocket scientist to know the reason, it’s discrimination. People need to stop avoiding the issue, Human Resources discriminates against men. One will see clear instances of more qualified male applicants and HR won’t even interview them and opt to hire the less qualified female applicant.
When HR’s discrimination is addressed then people will begin to see a change in the unemployment number for men.
The irony is, of course, that the very moment politicians does something to take on a root cause of the problem, they are thrown into the polarization meatgrinder, which, paradoxically frequently cuts across party lines.
The most recent example is the effort of some House and Senate Republicans to trim back some of the prior Medicaid expansions under Obama (Obamacare) and Biden (“Pandemic emergencies”).
Not only would these initiate some much needed spending cuts.
They would also help address the declining LFPR problem as a significant part of the cuts now envisage would cut Medicaid from able-bodied men if they don’t begin to work.