Sandra E. Black, Jason Furman et al — The long-term decline in US prime-age male labour force participation and policies to address it

Labour force participation among men ages 25-54 in the US has been falling for more than six decades. This column examines this longstanding decline, its potential causes, and its implications for public policy and the future of the US labour market.

The share of men between the ages of 25 and 54 either working or actively seeking work—the prime-age male labour force participation rate—has been falling for more than 60 years in the US—from a peak of 98% in the 1950s to 88% today.1 In the last 25 years, the prime-age male labour force participation rate has fallen more quickly in the US than in all but one of the OECD economies, and is now the third lowest among this group. When individuals are in their prime working years, they are at their most productive; as a result, their labour force participation has outsized implications for broader economic growth, as well as for individuals’ earnings prospects and well-being. 

Very little of the decline in the participation rate can be accounted for by improvements in options outside the labour market and related reductions in labour supply. These men are not increasingly relying on a spouse’s income or government income, nor are they increasingly engaged in caregiving. Instead, the evidence is consistent with reduced labour market opportunities for lower-skilled workers, a factor that is also consistent with the decline in relative wages of lower-skilled workers. Though this demand shift has happened in other OECD economies, the consequences for participation have been larger in the US, suggesting that the relative lack of support provided by US institutions has played a role.…

Detailed analysis by members of US Council of Economic Advisers.

All advanced economies have faced similar changes in technology and globalisation, but the US has seen a larger decline in prime-age male labour force participation rates than just about any other advanced economy, along with a larger increase in inequality. This suggests that these changes cannot be explained by supply and demand factors alone but must also depend on institutional differences between different countries and how they have processed their common demand shock.…

This is a real black eye for the US.

vox.eu

The long-term decline in US prime-age male labour force participation and policies to address it
Sandra E. Black, Jason Furman, Emma Rackstraw, Nirupama Rao