My recent white paper on productivity identified a major drag on economic growth which is the decline from 67% in 2000 to 62.5% today of working age individuals who are actually employed. However, the overall decline masks a major underlying problem which is the absence of working age men in the labor force. The labor force participation rate is defined as the percentage of individuals who are either employed or looking for work. The overall participation rate for males decreased from 86.6% in 1948 to 68% in 2024, and the percentage of employed males of prime working age (25 to 54) fell from 98% to 89%. In absolute numbers, 6.8 million working age men are not in the labor force! What is going on?
The following graphic depicts the result of a survey of prime-age men:
First, 28% indicated they were not working by choice which raises a serious question regarding what has been historically lauded as the American Work Ethic. Second, the large percentage who cite health issues points to the prevalence of obesity, diabetes, and heart disease as well as to the opioid epidemic which disproportionately impacts males. Next, 48% of those looking for work say they are having difficulty finding work. The Bureau of Labor Statistics reports that there are 7.8 million open jobs in the U.S. as compared to the 6.8 million men who are not in the labor force. Obviously, there is a major disconnect somewhere. Experts attribute this gap to a lack of education, obsolete skills, and in many cases, inconsistent work history. Finally, there are sociological issues. Specifically, men who are married are much more likely to be gainfully employed. According to the Pew Research Center, the percentage of 40-year-old males who have never married is now 25% as compared to just 6% in 1980. A related statistic is that 19.7% of men between 25 and 34 are currently living with their parents which may decrease their motivation to enter the workforce.
There are no easy solutions to this problem but here are a few recommendations cited by experts. First, a lack of education is a major factor in the low male participation rate, and it is being exacerbated by the fact that only 39% of male high school grads currently are enrolled in college as compared to 47% as recently as 2011. We need to determine a way to make higher education more affordable and desirable. Second, the U.S. spends about one-third as much as a percent of GDP on retraining compared to other OECD countries, and 29% of those not in the labor force state that retraining opportunities would stimulate them to re-engage. Retraining will become particularly important with the proliferation of Artificial Intelligence. Finally, employers need to carefully examine pay and benefit levels given that 28% of those not in the labor force state that compensation is not sufficient for them to seek employment. While considering compensation, we also need to re-examine disability and other safety net programs to ensure they do not create disincentives to work.