The American economy has been stagnating since the end of the 20th century and has grown especially slowly (2% per year on average) since the end of the Great Recession in June 2009. This slow growth has various unpleasant causes and consequences:
Men without Work. The political economist, Nicholas Eberstadt, has pointed out that the work rate for prime working age (25 – 54) men has dropped from 94.1% in 1948 to 84.3% in 2015. This translates into 9.5 million prime working age men who are not currently in the workforce.
Mortality Crisis. The economists, Anne Case and Angus Deaton, show that the mortality rate for working class whites in America, aged 45 – 54, has doubled since 1990, and that these new deaths are largely “deaths of despair.”
Complacency. The economist, Tyler Cowen, makes a strong case that too many Americans are so comfortable in their own worlds that they have become complacent about the structural problems facing American society.
Segregation by Class. The political scientist Charles Murray has described a separation of American society into a new Upper Class (20% of all Americans) and a new Lower Class (30% of all Americans) with the Upper Class enjoying the four deepest satisfactions of life: family, vocation, community and faith while the Lower Class is largely left out.
What can be done to improve the fortunes of America’s blue-collar workers? There are actually a lot of things:
Greatly improve vocational training for the millions of skilled jobs for which there aren’t enough qualified applicants.
Revitalize America’s job-generating capacities. More businesses have closed than opened each year since the Financial Crisis.
Reverse the perverse disincentives against male work embedded in our social welfare systems. The Earned Income Tax Credit should be extended to single adults without dependents. Eligibility for disability income should be tightened considerably.
Come to terms with the enormous challenge of bringing convicts and felons back into society. The huge increase in incarceration rates in recent years has coincided with a dramatic drop in rates for both violent crime and property crime.
Conclusion. It’s a scandal that so many blue-collar workers are struggling to live a fulfilling life. There are many different actions government can take to improve their lot.
Our economy is doing a little better recently but not nearly as good as it could be. In my last post, “Men without Work,” I present Nicholas Eberstadt’s data that a significant part of the problem is the very large number (9.5 million) of prime working age (25 – 54) men who are unemployed and not looking for work.
Statistically, such men are likely to be un-workers if 1) they have no more than a high school diploma, 2) are unmarried and without dependent children, 3) are not immigrants and 4) are African American.
Two other relevant factors are 1) the huge increase in employment for prime working age women, from 34% in 1948 to 70% in 2015 and 2) the very high male arrest and incarceration rates for blacks and those without a high school diploma.
Obviously, it is highly detrimental to society to have such a large number of men who are idle during their prime working years.
Here are several ways to address this problem:
Revitalize America’s job-generating capacities. More businesses have closed than opened in each year since the 2008 financial crisis. Furthermore, the growing regulatory burden is not a recipe for encouraging entrepreneurship.
Reverse the perverse disincentives against male work embedded in our social welfare systems. The Earned Income Tax Credits should be extended to single adults without dependents. Eligibility for disability income should be tightened considerably.
Come to terms with the enormous challenge of bringing convicts and felons back into our economy and society. The huge increase in incarceration rates in recent years has coincided with a dramatic drop in rates for both violent crime and property crime.
Conclusion. One good way to speed up economic growth is to put more unemployed prime working age men back to work. There are several very concrete steps which can be taken to do this.
As most of my readers know (but I’ll remind you anyway!), I have two major themes on this blog which are:
Slow U.S. Economic Growth, averaging just 2% per year since the end of the Great Recession in June 2009.
Massive Debt Accumulation, now 75% (for the public debt, on which we pay interest) of GDP, the highest since right after the end of WWII.
My last post, “The Economy Is Improving But Not Enough” points out that even the latest very good news, that median household incomes were up by 5.2% in 2015, doesn’t get us back to where we were before the financial crisis hit.
A new book, “Men without Work,” by Nicholas Eberstadt sheds much light on why our economy is growing so slowly. Says Mr. Eberstadt:
Between 1948 and 2015, the work rate for U.S. men age twenty and older fell from 85.8% to 68.2%. Even for prime working age men, age 25 – age 54, the work rate fell from 94.1% in 1948 to 84.3% in 2015.
This translates into 9.5 million prime working age men who are not in the workforce, even after correcting for the million or so of these men who are in school or training.
Statistically, men age 25 – 54 are more likely to be an un-worker in 2015 if 1) they had no more than a high school diploma, 2) were unmarried and without dependent children, 3) were not an immigrant and 4) were African American.
Looking for possible explanations for so many unemployed men, it is noteworthy that the work rate for prime working age women has increased from 34% in 1948 to 70% in 2015.
One reason for so many unemployed men is the high arrest rate and incarceration rate for working age men, especially blacks and those without a high school education. In fact, Incarceration rates are way up even though violent crime is declining.
Conclusion. It seems obvious that having such a large, and growing, number of prime working age men out of the work force is a very serious problem. Besides slowing down economic growth, they are losing their best opportunity for personal fulfillment. What should be done to turn around this deplorable situation? Stay tuned!
It is well understood that income inequality is increasing in the U.S. for a number of reasons: economic globalization, the rapid development of new technology and the slow recovery from the Great Recession of 2007 – 2009. The New York Times’ economics journalist, Eduardo Porter, discusses the social effects of this ominous trend in the article “Income Inequality Is Costing the U.S. on Social Issues.” For example:
The U.S. has the highest teenage birthrate in the developed world – seven times the rate in France, for example.
More than one out of four U.S. children lives with one parent, the largest percentage by far amongst industrialized nations.
More than a fifth of U.S. kids live in poverty, sixth from the bottom among the OECD.
Among adults, seven out of every 1000 are in prison, five times the rate for other rich democracies and three times the U.S. rate from four decades ago.
In 1980 the infant mortality rate in the U.S. was about the same as in Germany. Today it is almost twice the rate as for German babies.
American babies born to white, college educated, married women survive as often as those born to advantaged women in Europe. It is the babies born to nonwhite, non-married, non-prosperous women who die so young.
In other words, there is huge social disparity between the well-off and the poor in the U.S. and, furthermore, the resulting social breakdown is getting worse. Why has this been happening?
Conservatives say that it is the fault of a growing welfare state which has sapped Americans’ industriousness and sense of self-responsibility. Liberals say that welfare programs arn’t extensive enough to withstand the strict demands of globalization and technological development.
Mr. Porter concludes that, “the challenge America faces is not simply a matter of equity. The bloated incarceration rates, rock-bottom life expectancy, unraveling families and stagnant college graduation rates amount to an existential threat to the nation’s future.”
I tend to agree. Is our democratic political process capable of responding in a satisfactory manner? I will return to this theme often in the coming months!