1. Why ever fewer low-skilled American men have jobs

Of all the big, rich Group of Seven economies, America has the lowest share of “prime age” males in work: just over 80% of those aged between 25 and 54 have a job. In the late 1960s 95% worked.

This collapse of work partly reflects the recession of 2008-09, which drove America’s unemployment rate into double digits. It is still high—9.3% for men—and almost half of the jobless have been out of work for more than six months. But there is another cause, less noticed and of longer standing. To count as unemployed, you have to be looking for work, yet ever more men have simply dropped out of the recorded labour force. Some, it is true, work “off the books”; but many receive disability insurance, are in prison or have otherwise given up looking for a job. America has a smaller share of prime-age men in the workforce (i.e, in a job or seeking one) than any other G7 economy.

The decline of the working American man has been most marked among the less educated and blacks. If you adjust official data to include men in prison or the armed forces (who are left out of the raw numbers), around 35% of 25- to 54-year-old men with no high-school diploma have no job, up from around 10% in the 1960s. Of those who finished high school but did not go to college, the fraction without work has climbed from below 5% in the 1960s to almost 25%. Among blacks, more than 30% overall and almost 70% of high-school dropouts have no job.

One reason for this is that less-educated men are disproportionately likely to work on building sites and in factories, where lots of jobs were lost in 2008-09. Another is that the recession fell heavily on poorly educated young people. Teenage employment rates slumped to the lowest on record. Those who enter adulthood without a job or a college place are much less likely to work when they are older. Larry Summers, Barack Obama’s former chief economic adviser, worries that even when “full employment” returns later this decade, on recent trends around 15% of all men, 20% of men who have not been to college, 35% of those who did not finish high school and more than 60% of black male high-school dropouts will probably not be working.

Widespread male worklessness has huge economic, fiscal and social costs. It reduces America’s economic potential. It deepens its budgetary hole, because less tax is raised and more is spent on those out of work. The fraction of prime-age men on disability benefits, for instance, has more than tripled from 1.5% in 1970 to 4.9%. Federal spending on such benefits amounts to $120 billion a year, almost 1% of GDP.

Falling behind

The main reason why fewer men are working is that sweeping structural changes in rich economies have reduced the demand for all less-skilled workers. Manufacturing has declined as a share of GDP, and productivity growth has enabled factories to produce more with fewer people. Technological advances require higher skills. For the low-skilled, low demand has meant lower wages, both relative and absolute. This in turn reduces the incentive to find a job, especially if disability payments or a working spouse provide an income.

Men have been hit harder than women by these shifts. They are likelier to work in manufacturing; women have been better represented in sectors, such as health care and education, where most job growth has taken place. Women have also done more than men to improve their academic credentials: in most rich countries they are likelier than men to go to university.

The Economist