Will Indiana Lose its Male Workers?
For release June 15 and thereafter (664 words)
One of America’s biggest economic problems is the decline in work among men. Among industrialized countries, we have the lowest share of prime-age males working in the labor force — just over 80 percent of those between the ages of 25 and 54 have a job, as compared with 95 percent in the late 1960s.
Reflecting the 2008-2009 recession, unemployment is still 9.3 percent for males, and almost half of the jobless have been out of work for more than six months. Others have dropped out of the labor force, receive disability insurance or are in prison. Almost 35 percent of men age 25-54 with no high-school diploma have no job, up from 10 percent in the late 1960s.
In sheer numbers, male unemployment has increased relative to females in the Great Recession; this is particularly the case in Indiana where male employment dominates in the automobile, manufacturing and construction industries. The declining trend of male participation rates, however, is a separate issue. The pattern of the past four decades suggests a ratchet effect in which the share of poorly educated men in work falls in recessions and fails to recover fully in subsequent expansions.
The Economist reports that based on recent trends 15 percent of prime-age men in the U.S. will not be working when official full employment is realized later in this decade. The fraction of prime-age men receiving Social Security disability benefits, a number supposedly rigidly constrained by health, has tripled from 1970 to 4.7 percent. Federal spending on such benefits amounts to almost 1 percent of Gross Domestic Product. Marriage rates have also fallen, arguably related to male joblessness.
As of March, 2011, the Indiana labor force participation rate for males and females combined is not significantly different from the national average. However, with respect to neighboring states there is a difference. Indiana residents are more likely that those in Kentucky or Michigan and less likely than those in Illinois or Ohio to either have a job or to be seeking one.
The U.S. decline of male labor force participation in recent decades parallels a corresponding decline in male graduation rates. According to a 2006 report from the Business Research Center at Indiana University’s Kelley School of Business, males account for just 40 percent of Hoosiers holding bachelor’s degrees. In addition, women significantly dominate among Hoosiers who attended college or hold an associate degree. Young women are more likely to graduate from high school than males and this difference persists into in the 25-34 age group, which includes those earning a GED.
It is not case, therefore, that young men are delaying work to successfully pursue training. Declining male work participation in recent decades has been compensated by rising rates of female participation. However, the issue is not one of male versus female labor participation. Total work force participation by both males and females is undoubtedly coming under closer scrutiny, rightly or wrongly, as the need for tax revenue increases.
Is the decline in the percentage of employed U.S. males due to structural changes in the economy? Men have been harder hit by the decline in labor demand for low skilled manufacturing work. But this is true in all industrialized countries. In the U.S., however, the decline in male labor-force participation has been more recent. Declining high school and college graduation combined with increasing imprisonment rates explains part of the problem. Additionally, government policy has reinforced decreased incentives to work or hire males.
Getting oneself declared officially disabled is a one-way street to permanent detachment from the world of work. In addition, single low-skilled men face a lower effective real wage rate than single parents, more likely female, who receive earned-income tax credit (EITC). Child-support payments are necessary, but deducted directly from pay they offer a plausible partial explanation for why non-custodial males avoid paid employment.
There is always the possibility that overall declining male labor force participation may self-correct. Donald Coffin at Indiana University Northwest studied the unexpected increase of older males in labor participation. Males, ages 55-64, decreased their work participation from 90 percent to 64 percent between 1949 and 1994. Currently, however, 71 percent of men, ages 55-64, remain in the labor force. Your co-worker complaining about having to postpone retirement is not joking.
With respect to younger men, Barack Obama’s goal of increasing the percentage of those graduating from high school and college is admirable and may ultimately foster more work. But the link between education and labor-force attachment is not a given. What comes first the chicken or the egg? Both graduation and labor-participation declines may be indicators of a yet unknown factor. Hope for an interesting career, tailored to the unique interests and capabilities of the individual and yielding good post-tax income, could offer Hoosier males the best incentive to persist both in educational certification and labor-force participation.
Industry-specific training with employer cooperation seems to be most effective in encouraging low-skilled men to return to the labor market. For younger men, intervention at several stages is necessary to encourage at-risk males to connect with work in the first place. Unfortunately, many men never fully connect with the job market.
Maryann O. Keating, Ph.D., a South Bend resident and an adjunct scholar of the Indiana Policy Review Foundation, is co-author of Microeconomics for Public Managers, Wiley/Blackwell, 2009.