Men Not Working

by Russ Roberts on July 31, 2006

in Work

Lou Uchitelle and David Leonhardt at the New York Times have an interesting piece on the phenomenon of men dropping out of the labor force for extended periods of time because they can’t find a job they think is worthy of them. They interview a Mr. Beggerow who explains:

“I have come to realize that my free time is worth a lot to me,” he
said. To make ends meet, he has tapped the equity in his home through a
$30,000 second mortgage, and he is drawing down the family’s savings,
at the rate of $7,500 a year. About $60,000 is left. His wife’s income
helps them scrape by. “If things really get tight,” Mr. Beggerow said,
“I might have to take a low-wage job, but I don’t want to do that.”

Millions
of men like Mr. Beggerow — men in the prime of their lives, between 30
and 55 — have dropped out of regular work. They are turning down jobs
they think beneath them or are unable to find work for which they are
qualified, even as an expanding economy offers opportunities to work.

About
13 percent of American men in this age group are not working, up from 5
percent in the late 1960’s. The difference represents 4 million men who
would be working today if the employment rate had remained where it was
in the 1950’s and 60’s.

How are these men financing their leisure? Some are using home equity or relying on the earnings of their wives. But a lot of them are being subsidized by the rest of us:

But the fastest growing source of help is a patchwork system of
government support, the main one being federal disability insurance,
which is financed by Social Security payroll taxes. The disability
stipends range up to $1,000 a month and, after the first two years,
Medicare kicks in, giving access to health insurance that for many
missing men no longer comes with the low-wage jobs available to them.

No
federal entitlement program is growing as quickly, with more than 6.5
million men and women now receiving monthly disability payments, up
from 3 million in 1990. About 25 percent of the missing men are
collecting this insurance.

The ailments that qualify them are
usually real, like back pain, heart trouble or mental illness. But in
some cases, the illnesses are not so serious that they would prevent
people from working if a well-paying job with benefits were an option.

The
disability program, in turn, is an obstacle to working again. Taking a
job holds the risk of demonstrating that one can earn a living and is
thus no longer entitled to the monthly payments. But staying out of
work has consequences. Skills deteriorate, along with the desire for a
paying job and the habits that it requires.

And it’s not just happening in the US:

This same trend is evident in other industrialized countries. In the European Union, 14 percent of men between 25 and 54 were not working last year, up from 7 percent in 1975, according to the Organization for Economic Cooperation and Development. Over the same period in Japan, the proportion of such men rose to 8 percent from 4 percent.

In
these countries, too, decently paying blue-collar jobs are
disappearing, and as they do men who held them fall back on government
benefits for income. But the growth of subsidies through federal and
state programs like disability insurance has happened largely without
notice in this country while it is a major topic of political debate in
Europe.

“We have a de facto welfare system as Europe does,” said Teresa Ghilarducci, a labor economist at the University of Notre Dame. “But we are not proud of it, as they are.”

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{ 35 comments }

Martin July 31, 2006 at 4:02 pm

Speaking as the holder of a low wage job who works through a medium penetration Gilles de la Tourette Syndrome, one would have thought that the best way to avoid this phenomenon would be to prevent the 'decently paying blue-collar jobs' from disappearing.

But then the Hayek juju wouldn't work, and mass immigration and outsourcing wouldn't be making us richer.

John Dewey July 31, 2006 at 4:22 pm

Martin,

Who would prevent decent paying blue collar jobs from disappearing? How would they prevent them from disappearing?

Suppose American consumers preferred automobiles welded and painted by robots to those welded and painted by human hands. Let's assume they enjoy the higher quality craftmanship of the robots. Let's also assume they prefer the lower prices that such lower cost robots allow. How would you prevent the disappearance of welding and painting jobs in the automotive industry?

Here's another scenario for your consideration. Suppose voters got fed up with paying high construction costs and, through their elected representatives, passed right-to-work laws in their state. Let's assume that such right-to-work laws then allowed non-union workers to compete for jobs. The increased competition might then lead to lower wages for all construction workers. How would you restore the "decent pay" those blue-collar workers formerly received?

Half Sigma July 31, 2006 at 4:43 pm

As I said at my own blog: "I respect these guys who are enjoying their leisure instead of working. They haven't let themselves be brainwashed by conventional middle class values which say that every man has to work otherwise he's a loser."

Peter July 31, 2006 at 5:23 pm

Half Sigma:
Of course they are not losers!
The point is that if they choose to live a certain way, it should be their own choise, and it should not be backed up by the government through one form of subsidies, or another. How a peron chooses to live life is irrellevant to me, as long as I am not a part of it, and if I pay taxes supporting his life, it makes me a part of it!

Bruce Hall July 31, 2006 at 5:30 pm

Recent news about the economy may shed some light on the "bigger picture".

“Housing is going from being far and away the most important contributor to growth to being a measurable drag, and it’s happening gracefully so far,” said Mark Zandi, chief economist of Moody’s Economy.com, a research company. “But there’s now a growing and measurable risk that things don’t go according to plan.”

The biggest risk, economists say, is that the optimism that fed the real-estate boom will reverse dramatically. The number of homes for sale has surged in recent months, particularly in once-hot markets, like the Northeast, Florida, California and parts of the Southwest. As builders delay land acquisition and construction it could reduce employment and spending in the coming months.

For much of the last five years, housing — along with health care — was also one of the only reliable generators of jobs. From the start of 2001, when the Fed began cutting its benchmark rate to steady a faltering economy, until early last year, the housing sector added 1.1 million jobs.

The rest of economy lost 1.2 million jobs over the same period, according to an analysis by Moody’s Economy.com.

————-

There is a economic fragmentation of our society that is getting more acute. The highly-skilled and well-placed are gaining significantly (and part of that is the rewards for having the power and wherewithal to outsource middle-income and low-income manufacturing jobs). The moderately skilled or those with "commodity" skills (engineers, welders, die makers, etc.) have become expendable and marginalized.

The level of this marginalization hasn't reached a "critical mass"… yet. But the recent downturn of the housing sector, which has sustained a larger part of the service industry, will soon make the obvious obvious. At some point, we will have a "critical mess" (not a typo).

John Dewey July 31, 2006 at 6:03 pm

Bruce Hall,

Your scenario sounds awfully pessimistic. But I'm reading different economic news:

- GDP grew 2.5% in 2Q06, not gangbusters as in 1Q06, but still healthy;

- nonresidential fixed investment increased 2.7% in 2Q06;

- unemployment rate remains low;

- inflation is low by historical standards;

- corporate profits reported recently seem strong.

Why should I believe your gloomy assessment?

bbartlog July 31, 2006 at 6:07 pm

I find it fascinating that the percentages for the EU and the US are so very close together (13% of 30-55 yr olds vs 14% of 25-54 yr olds is basically a wash). It does make you wonder about the official unemployment figures; clearly the published percentages may be somewhat misleading.
I also wonder how many of these guys are living off their savings and/or home equity. It seems like something has to give eventually, but maybe there's a constant inflow and outflow of people from this pool of nonworkers such that the drawdown of equity can basically be repeated ad infinitum.

John Dewey July 31, 2006 at 6:40 pm

The New York Times article stated:

"About 13 percent of American men in this age group are not working, up from 5 percent in the late 1960’s."

That's really not surprising to me at all. My guess is that the percentage of women in that age group who are working has increased by far more. Despite all you hear to the contrary, it is possible for couples to survive on one income.

Certainly entitlements and the run-up in home equities have allowed many men and women the freedom to not work. I also think we've seen a cultural change. Forty years ago men found their identity in their jobs. But many of yesterday's flower children have rejected such identities. Work has become a means not an end. I suspect that many boomers will retire and resume playing as soon as they can.

Noah Yetter July 31, 2006 at 6:42 pm

"…one would have thought that the best way to avoid this phenomenon would be to prevent the 'decently paying blue-collar jobs' from disappearing."

RESURRECT THE BUGGY WHIP INDUSTRY!

oh wait

Bruce Hall July 31, 2006 at 6:55 pm

Eh, John. The assessment was not mine. It was a quote from Mark Zandi, chief economist of Moody’s Economy.com and printed in the New York Times (that communist bastion).

I'm willing to entertain the concept that Mr. Zandi and the New York Times have both erred significantly. What are your qualifications?

Half Sigma July 31, 2006 at 7:13 pm

John Dewey: "My guess is that the percentage of women in that age group who are working has increased by far more. Despite all you hear to the contrary, it is possible for couples to survive on one income."

That demonstrates a double standard. If a man works but his wife doesn't, that's the American Way and Traditional Values. But god forbid a woman works and her husband doesn't, the the poor guy is condemned as a big loser who's not living up to his manly responsibilities.

Aaron Krowne July 31, 2006 at 8:43 pm

I predict this population of non-working young men will drastically shrink, if not vanish, in the next two years, as the home equity withdrawal option goes away.

Now, I wonder if more will grudgingly enter the labor force (or whats left of it) than will simply end up unemployed and disaffected.

loikll July 31, 2006 at 8:54 pm

These guys aren't "discouraged workers" and they shouldn't be counted among the "unemployed". Clearly they've simply retired early, but don't want to admit it. Nice deal if you can get away with it I suppose.

save the rustbelt July 31, 2006 at 9:49 pm

Many of these men cannot get jobs, because they are 1) over 40, and more importantly 2) have a history of union membership, which is the kiss of death for most jobs.

If the labor market were as robust as the Bushites claim, this would not be an issue. The unemployment rate is as phony as a three dollar bill.

(Ohio lost jobs again last month, but the unemployment rate continues to decline. If you can't move the numerator, fudge the denominator).

ex-steelworker July 31, 2006 at 11:40 pm

You know, I used to work in a dying industry. I had one employer go into chapter 7 in 2001.

I moved to another state, got a job making half as much as I was at the mill, and worked my way up to making almost as much as I did back then.

If you can't find work, and you are able-bodied and can think reasonably well, then you aren't looking hard enough.

metis314 July 31, 2006 at 11:55 pm

Half Sigma:

"That demonstrates a double standard. If a man works but his wife doesn't, that's the American Way and Traditional Values. But god forbid a woman works and her husband doesn't, the the poor guy is condemned as a big loser who's not living up to his manly responsibilities."

John Dewey implied no such thing in his statement. He merely noted (correctly) that it is not suprising that the percent of men in this category has increased since 1960 given the fact that the percent of women (say in this age group) working has increased by even more and it is possible to live on a single income.

Save the Rustbelt:
"(Ohio lost jobs again last month, but the unemployment rate continues to decline. If you can't move the numerator, fudge the denominator)."

Note that the total (seasonally adjusted) nonfarm employment of the US has increased (since July-Aug 2003):
March — April — May — June
134905 135017 35109(p) 135230(p)
(BLS Establishment data)

So it is not only due to changing the denominator as you suggest.

liberty August 1, 2006 at 12:08 am

If indeed part of the reason that these men are retiring early is because "decently paying blue-collar jobs are disappearing," one has to wonder which came first: many job disappearing or many men retiring early – and going on welfare.

Suppose a trend begins in the prosperous early eighties for some wealthy men to retire early and enjoy leisure time; then some blue collar workers realize that they can claim disability and do the same; then as welfare rolls grow this hurts the job market and causes the loss of some number of "decently paying blue collar jobs," this causes more men to choose to retire early rather than take a job which is below them; and the cycle continues.

Martin August 1, 2006 at 12:47 am

Yetter,

Your point about the buggy whip makers, if meant to patronise, was actually quite profound.

When the cars came, two things would have happened to the buggy whip makers. Most would have got jobs at the auto plant. The rest would have developed into niche manufacturers, probably with grants because of their contribution to 'local heritage'.

The sons of the buggy whip makers would have become foremen, the grandsons doctors and the great-grandsons software engineers…

Then someone discovered the H1-B and the so-called 'skills shortage'…and Cafe Hayek…

Yes, bring back the buggy whip makers. Those days weren't so bad after all.

JohnDewey August 1, 2006 at 6:20 am

Bruce Hall,

The only part of your post that you attributed to someone else was the two sentence passage by Mark Zandi. It certainly didn't seem as pessimistic as the rest of your post, the part I disagree with.

Even when an economist offers a prediction, we shouldn't just accept it as a certainty. I'm sure that economists will admit they don't get it right all the time. The U.S. and world economies are just too large and too complex for anyone to know what is going to happen. The old joke is that economsts have predicted ten of the last three recessions. IMO, economists do a better job of explaining past recessions than of predicting future ones.

What part of your gloomy post from yesterday afternoon was your writing and what part was someone else's? Was the part about the acute "economic fragmentation of our society" really an economist's writing? Was it the New York Times or Bruce Hall who said the moderately skilled "have become expendable and marginalized"? What about the opinion that the downturn in housing will create a "critical mess"? I'm just wondering why I should believe those opinions rather than the economic facts I posted are more relevant in an assessment of the economy. That's all I asked.

Helen's_kid August 1, 2006 at 7:44 am

I think machismo deters a lot of men from seeking a 9 to 5. Chances are he'll be supervised by a woman. No Thanks.
Another thing, no permanent goal associated with employment. There was a time when you could expect a pension. Expect to be promised a pension, then expect to be cheated out of it. No Thanks.
Consider one more discouragement. You will sweat yourself to death enriching the executives. No Thanks.
To quote one such disaffected individual I knew, "I would rather carve myself a wooden beak and peck shit with the chickens." His disability claim eventually came through.

Noah Yetter August 1, 2006 at 10:41 am

"Yes, bring back the buggy whip makers. Those days weren't so bad after all."

Yes, actually, they were bad. They were terrible, in fact. The era of the buggy whips was one of desperate poverty and disease compared to the present. It is purely through economic progress – the very kind that destroyed the buggy whip industry – that we have gained the wealth and prosperity we enjoy today.

I have no sympathy or compassion for those who romanticize the savage past and wish a return to it. Those who believe the myth of "the good old days" are fools.

Shame on you for your dangerous ignorance.

joe August 1, 2006 at 12:52 pm

Americans With No Abilities Act

WASHINGTON , DC

Congress is considering sweeping legislation, which provides new benefits for many Americans.

The Americans With No Abilities Act (AWNAA) is being hailed as a major legislation by advocates of the millions of Americans who lack any real skills or ambition.

"Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society," said Barbara Boxer. "We can no longer stand by and allow People of Inability to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they do a better job, or have some idea of what they are doing."

The President pointed to the success of the US Postal Service, which has a long-standing policy of providing opportunity without regard to performance. Approximately 74 percent of postal employees lack job skills, making this agency the single largest US employer of Persons of Inability.

Private sector industries with good records of nondiscrimination against the Inept include retail sales (72%), the airline industry (68%) ,and home improvement "warehouse" stores (65%) The DMV also has a great record of hiring Persons of Inability. (63%).

Under the Americans With No Abilities Act, more than 25 million "middle man" positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.

Mandatory non-performance-based raises and promotions will be given, to guarantee upward mobility for even the most unremarkable employees.

The legislation provides substantial tax breaks to corporations which maintain a significant level of Persons of Inability in middle positions, and gives a tax credit to small and medium businesses that agree to hire one clueless worker for every two talented hires.

Finally, the AWNA ACT contains tough new measures to make it more difficult to discriminate against the Non-abled, banning discriminatory interview questions such as "Do you have any goals for the future?" or "Do you have any skills or experience which relate to this job?"

"As a Non-abled person, I can't be expected to keep up with people who have something going for them," said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint, MI due to her lack of notable job skills. "This new law should really help people like me." With the passage of this bill, Gertz and millions of other untalented citizens can finally see a light at the end of the tunnel.

Said Senator Ted Kennedy, "It is our duty as lawmakers to provide each and every American citizen, regardless of his or her adequacy, with some sort of space to take up in this great nation."

liberty August 1, 2006 at 2:30 pm

joe,

funny but that was exactly what they tried in the USSR …

Patrick R. Sullivan August 1, 2006 at 3:28 pm

The major problem with the Times article is that's it's anecdotal, and hence misleading. The real decline in labor force participation is for young people. Teens and early 20s.

Men aged 35-54 had about the same LFP rate in 1996 as in 2005–i.e at the same point in the business cycle; 4 years after the previous peak.

And men over 55 had a 13% higher LFP rate in 2005.

Martin August 1, 2006 at 4:09 pm

Yetter,

We might have fewer diseases as a result of economic progress (although I have never yet been able to find out how much Alexander Fleming made from penicillin nor, indeed, my compatriot Adam Smith from 'The Wealth of Nations'), but the savage past had two good things going for it.

Firstly, the work was relatively secure.

Secondly, the money had value.

John Dewey August 1, 2006 at 5:07 pm

martin: "the work was relatively secure"

When hundreds of steel mills and railroads failed in the Panic 0f 1893, how secure were all those workers? What about the 1920-1921 Depression when prices dropped 40% and unemployment quickly rose from 2% to 11%? Any idea what the unemployment rate was in 1933?

Are these the good things from the savage past that you're referring to?

Martin August 2, 2006 at 10:04 am

John,

No, not at all – just as the great labour arbitrage of 2000 to date (Roach) and mass migration's effect on the skills of the low waged (Borjas) can hardly be called triumphs of the civilised present.

BTW, didn't the steel plants come back?

Bigger and better than ever?

Didn't the Depression end?

And doesn't the fall of the unemployment rate at its end indicate that an economy doesn't really need to sell itself lock, stock and barrel in order to create jobs?

Just thinking out loud…

Martin August 2, 2006 at 10:05 am

And that, of course, should read 'the wages of the low skilled'…

John Dewey August 3, 2006 at 8:48 am

martin: "doesn't the fall of the unemployment rate at its end indicate that an economy doesn't really need to sell itself lock, stock and barrel in order to create jobs?"

What does this mean? How does an economy sell itself? Sorry, but I really don't understand what you're talking about.

John Dewey August 3, 2006 at 9:03 am

Martin, you have genuinely confused me.

First you said:

"We might have fewer diseases as a result of economic progress, but the savage past had two good things going for it. Firstly, the work was relatively secure. Secondly, the money had value."

Naturally I assumed you were referring to the early 20th century, before all the medical advances and economic progress of the past 60 years, and presumably before we left the gold standard. But when I responded to that post, you shifted gears and started talking about the tiny period since the year 2000.

Here's my response to your questions:

"BTW, didn't the steel plants come back?
Didn't the Depression end?"

Well, certainly. But only after years of high unemployment. Your claim was that "work was relatively secure". Waiting years for a job to return cannot be described as even a "relatively secure" situation.

The truth as I see it is that work – meaning well-paying jobs – are more available now (the past 25 years) than at any other time in our nation's history. Our standard of living for everyone, not just the wealthy, is much higher than any time in history. Our health is obviously much better than any time in history.

Quite frankly, I don't see how any period before "economic progress" – any period in whatever "savage past" you refer to – could be better for us than what we're living in right now.

Martin August 4, 2006 at 10:43 am

John,

Selling itself lock stock and barrel = offshoring.

The standard of living argument doesn't wash. Having stuff doesn't mean much when wage growth is stagnant and it requires to be purchased on credit. That is not real wealth.

And how do you define 'well-paying'?

John Dewey August 4, 2006 at 12:52 pm

Martin: "Selling itself lock stock and barrel = offshoring."

Are you familiar with the concept of comparative advantage? Are you also aware that more blue collar jobs have been eliminated through automation than through offshoring?

Martin:"And how do you define 'well-paying'?"

A well-paying job is one that allows a household to enjoy large amounts of discretionary income. That would be income for vacations, big screen televisions, eating out at restaurants, new vehicles, new clothes, and all the other goods that Americans consume. By my defnition, at least 80% of American workers have well-paying jobs. Most of the remaining 20% will eventually have well-paying jobs.

Martin, how do you define "well-paying job"?

When you say that wages are stagnant, what period are you referring to? My post was triggered by your reference to the "savage past", which you still have yet to clarify.

Martin August 5, 2006 at 1:34 pm

John

Sure I'm aware of comparative advantage. I'm also aware of the writings of (gasp!) Paul Craig Roberts (gasp!) who makes a (gasp!) very cogent case that the offshoring process is not 'comparative advantage' in any Ricardian sense but the creation of absolute corporate advantage.

Shouting 'comparative advantage!' three times while waving the Mises stick in your opponent's face doesn't really cut it in the offshoring debate anymore.

Automation's an interesting phenomenon, isn't it? It seems that there is absolutely no difficulty in automating an extremely complicated process like building a car, yet more and more people just HAVE to be imported to do nothing more complicated than pick fruit from the trees.

Ah, but we are now talking creative destruction! Woo-Hoo! I am not aware of specifics, but for these purposes I will take your observation that more jobs have been lost to automation than outsourcing at face value. When the jobs were automated, the guys who lost their jobs found other ones. Then they got outsourced, in many cases not because they were unprofitable or unproductive (Lazy American humans! Go you Korean robots!), but because some numbskull economists started to misinterpret comparative advantage and when that happened all the executives could see were $$$$$$$$$$.

By the way, is your job-loss-through-automation- argument specifically based on such losses in the offshoring era (2000 onwards, the same as the 'stagnating wages' period), or over a longer period?

How ironic that you mention 'high discretionary income' on the day that slower job growth is reported. According to those other economists I read, such as Stephen Roach, the consumer boom has been fuelled by cheap money and factors such as the home equity extraction industry, leaving a gap in domestic savings which has had to be plugged by the import of so-called 'cheap' goods. The principal reason for the gap is (cue Kermit the Frog) – stagnating wages!

And if cheap money ends then your high discretionary income fantasy will come to an end with it!

We'll have more important things to worry about than paying our ISP bills!

And where will 'Cafe Hayek' be then?

By the way, I'm the civilised present guy, not the savage past guy.

JohnDewey August 6, 2006 at 5:38 am

Martin: "Shouting 'comparative advantage!' three times while waving the Mises stick in your opponent's face doesn't really cut it in the offshoring debate anymore."

Well, I neither shouted nor waved a stick. And I certainly don't consider you an "opponent".

Martin: "because some numbskull economists started to misinterpret comparative advantage"

Is it really necessary to use the term "numbskull"? I think that would make people less likely to continue responding to your posts. But perhaps that's what you wanted.

Martin August 6, 2006 at 7:34 am

Not at all.

But I do so love baiting globalists.

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