Our Decimated Labor Force
12:00 AM, Jun 14, 2014 • By IRWIN M. STELZER
Until Eve’s encounter with the serpent, Adam did not spend a lot of time looking for work. Didn’t have to. Expelled from Eden and cursed with the necessity of earning his bread “in the sweat of his face,” he found work. Had to. Therein lies a partial, but only partial, explanation for one of the strange developments in America’s labor markets.
Since the recession ended, the American economy has added 8.8 million jobs, bringing total employment back to where it was when the recession started. The unemployment rate has plunged from 10 percent at its peak in October 2009 to 6.3 percent. That sounds more encouraging than it actually is: many workers have been forced to accept part-time work, and the decline in the unemployment rate is due in good part to a mass exodus from the labor force, driving the so-called labor force participation rate to near-record low levels, with about one-third of the decline due to withdrawal from the market by discouraged job seekers.
Worse still, it is not the old, weary, and retiring workers who have retreated to the couch, but younger workers, supposedly in the prime learning and productive years of their working lives, who seem either unwilling or unable to find jobs. Only one-in-three young men and women between the ages of 16 and 19 are working or actively seeking work, and 20 percent of that small group is unemployed. Move up to the 20-24 age group and the unemployment rate remains in double digits, at a bit over 11 percent. These are the groups that should be learning trade skills or the equally important social skills of punctuality and proper attitudes towards co-workers, employers, and customers. They are the nation’s future. Yet in massive numbers they are not learning to work. Why?
Back to Adam, before The Fall. Many just don’t have to. Unemployment benefits, food stamps, and a variety of other benefits are theirs for the taking. So is health insurance: youngsters are now covered for medical costs by their parents’ policies until the age of 26 instead of 16. Thanks to generous student loans, this cohort has no reason to seek between-term employment to help cover tuition and other costs. Better to borrow now at tax-payer subsidized interest rates, with the promise that repayment will be scheduled not to place a strain on budgets, or forgiven entirely for students who choose to work anywhere but in the wealth-producing private sector. Become a dues-paying member of a public-sector union, and the taxpayer, probably unaware of his beneficence, will pay off your student loan.
In short, the incentive that drove earlier generations of young people to find work has been significantly diluted. So, too, have their opportunities. Recent increases in the minimum wage in many states and cities, and the threat of similar federal action might be a boon to those youngsters who keep their jobs, but it forces employers to reduce the total number of such jobs on offer. Some fast-food and other restaurants are experimenting with computer tablets in lieu of menus: tap on your choices, no order-taking waiter needed, and a reduced work force will be quite able to handle the remaining chore of delivering orders.
Then there is the federal government-trade union-egalitarian partnership that has combined to eliminate another source of entry-level jobs and training. Unpaid summer internships have long been a first step on the employment ladder, a sort of apprenticeship program unencumbered by government red tape. No longer. The government has outlawed such internships, partly in response to trade union pressure, partly in response to the new egalitarians who claim such positions were reserved for the offspring of the wealthy and well-connected, although how it advances the nation’s interests to make sure than no one has training rather than a select group is unexplained. By the way, non-profit organizations—presumably purer of motive than the profit-making firms that make the contributions and pay the taxes that fund the non-profit sector—can still offer unpaid internships as can, get this, the government that has made it illegal for others to do the same.
Let’s move up the age scale. Some one-in-six men between the ages of 25 and 54 don’t have jobs. This is an enormous change. In the 1970s only 6 percent of the men in this age group were without jobs; that figure now stands at around 15 percent. And the important labor-force participation rate for this age group is low and headed down.
So we have a situation in which teenagers can’t or won’t find work, while workers—men and women—in the prime of their working years are dropping out of the work force. The reasons for the latter phenomenon are varied. Generous and extended benefits might not have turned the couch into the equivalent of Adam’s garden, but it surely narrowed the gap between income from work and income from benefits, with a consequent reduction in the incentive to remain in the work force. Still, millions of Americans haven’t suddenly become work-shy: there is a shortage of available jobs, especially for the unskilled. Property developers and oil-and-gas drillers complain that they can’t find skilled workers, and Silicon Valley tech companies whine that they need more visas to import skilled workers, which they naturally prefer to incurring the cost of training American workers. But some eleven million workers do not have a high school degree, and the unemployment rate for that group is almost 50 percent higher than the national average and triple the rate for those with a bachelor’s degree or higher. Alas, surveys show that unemployed workers spend a mere 1 percent of their time job hunting, 5 percent on their further education, but 12 percent watching television and 15 percent on other leisure activities.
Only the oldies seem willing and able to remain in harness, perhaps because the physical component of labor has been reduced by modern technology, perhaps because for many replacing the life-long habit of work with leisure is unattractive, perhaps because the recent financial recession has whittled the value of pensions while the zero-interest monetary policy of the Federal Reserve Board has reduced the income-flow from lifelong thrift.
In the end, says Diana Furchtgott-Roth, formerly chief economist at the Department of Labor and now a senior fellow at the Manhattan Institute for Policy Research, the way to increase jobs and reverse the decline in the labor force participation rate is to grow the economy. Such growth would have other benign effects wrote Irving Kristol, the godfather of neoconservatism, “Only growth, through tight labor markets, rising wages, and the material improvement of all, can lessen class envy and class conflict, moderate sentiments of resentment, and deprive the liberal aristocracy of political ammunition.” And give those evicted from Paradise the chance, as my father put it, “to make a living,” which includes far more than merely earning money.
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