Rising Male Non-Employment: Supply, not Demand
Tyler recently approvingly quoted Brad DeLong paraphrasing Larry Summers:
My friend and coauthor Larry Summers touched on
this a year and a bit ago when he was here giving the Wildavski lecture. He was
talking about the extraordinary decline in American labor force participation
even among prime-aged males-that a surprisingly large chunk of our male
population is now in the position where there is nothing that people can think
of for them to do that is useful enough to cover the costs of making sure that
they actually do it correctly, and don’t break the stuff and subtract value when
they are supposed to be adding to it.
But this story is hard to reconcile with one of my all-time favorite Tyler Cowen Assorted Links, “Why the poor don’t work, in the words of the poor“:
Each year, the bureau asks
jobless Americans why it is they’ve been out of work. And
traditionally, a only a small percentage of impoverished adults actually
say it’s because they can’t find employment, a point that New York
University professor Lawrence Mead, one of the intellectual architects
of welfare reform, made to Congress in recent testimony.
In 2007, for instance, 6.4 percent of adults who lived under the
poverty line and didn’t work in the past year said it was because
they couldn’t find a job. As of 2012, the figure had more than doubled
to a still-small 13.5 percent. By comparison, more than a quarter said
they stayed home for family reasons and more than 30 percent cited a
Poor men are admittedly more likely than poor women to say they don’t work because they can’t find a job. Yet only 20% of men below the poverty line in 2012 said this. This is a far cry from explaining steadily rising male non-employment year in, year out. While I am very open to concerns about involuntary unemployment, the long-term story really does seem to be that most non-employed men (a) produce output worth more than the minimum wage, but (b) prefer idleness to their market wage.
Nov 25 2013 at 9:10pm
The problem with Mead’s argument is that it assumes that not answering “could not find work” implies that the respondent would have found gainful employment had they bothered to. But the census says no such thing. We don’t know whether someone who answers “family reasons” would find a job if they started looking for one. And asking this question gets us back to the beginning, namely whether “there is [something] that people can think of for them to do”.
The same can be said about his claim in his testimony that the poor typically blame themselves for not being able to holding on to available jobs, instead of saying that they cannot find jobs. If Summers’ claims are correct and we’ve run out of jobs for unskilled Americans to do, there is still no inconsistency there. If there is one job for ten poor people, then it matters little whether each of them manages to hold on to it for a month before being replaced, or whether one of them remains employed the whole time; at any given time, there are still nine unemployed people.
Note: I don’t believe in the lump of labor fallacy and I’m skeptical of Summers’ claims. But Mead’s data provides no evidence against them. Unless you assume that Summers is wrong and that the unemployed would find jobs if they were really looking for them.
Nov 25 2013 at 10:01pm
As the previous commentor suggested I don’t know that the answer to this question provides any valuable insight. Many people might be aware they can get a job at McDonald’s but it might be more cost-effective to stay home instead of paying for daycare at that salary and be forced to cite ‘family’ reasons. That is just one possibility but it eludes to the fact that the survey is too vague.
Nov 25 2013 at 10:40pm
I could be true-and seems to me to be true-that it is both the case that some additional people are out of work because of a lack of available jobs, and that there are an increasing number preferring idleness to their market wage. It is also perhaps the case that there is not so much a lack of available jobs as a lack of match between the jobs demanded, and the kind of skills that those out of work can supply.
It seems to me an unfortunate but inevitable fact that the particular preferences of those demanding labor for certain qualifications can change more quickly and easily than the supply can structurally change to meet it. My personal belief is that employers who are still demanding labor will eventually want to step forward to see to training the workers they want. There are also private initiatives not connected to any particular employee or industry I see as directed at this problem. They should be allowed to do this, and not obstructed.
I would add, getting the State involved probably increases the structural rigidity of the labor supply, and exacerbates this mismatch.
Nov 26 2013 at 12:30am
“While I am very open to concerns about involuntary unemployment, the long-term story really does seem to be that most non-employed men (a) produce output worth more than the minimum wage, but (b) prefer idleness to their market wage.”
So not to work for a wage or monetary compensation is to be idle. So all retired people are idle. All people who volunteer their time are idle. All people who care for sick family members, or grow vegetables for food, or hunt or fish for meat are idle. Someone who adds a room to their house is idle. I honestly now believe that the longer one teaches at a university the less one knows about life. According the the theory of value illustrated here the first and only question one should ask anyone, whether physician, professor, janitor, or leaf-blower, is: “How much do you earn?” She who earns most is best.
Nov 26 2013 at 9:38am
“Idleness” covers both household production and black market activity.
Nov 26 2013 at 10:06am
To add to what Hopaulius and Philo said I have, perhaps because of the circles that I run in, in my adult life known people who work for cash out side the taxed economy, some while collecting unemployment and some while on SS disability and some who are risk takers and think it worth the risk to not pay taxes.
Nov 26 2013 at 10:54am
To be fair, I am an employed male and I would rather be idle.
Nobody wants to work, that’s why they have to pay you to do it.
Nov 26 2013 at 11:59am
Yes, my well named friend. That’s called “labor is onerous.”
But if you preferred idleness to what you are being paid, you probably wouldn’t be working.
It is of course a worthwhile point that some people who aren’t employed aren’t quite “idle.” But it is a mistake to think that this somehow erases large numbers of people that are idle in a more conventional sense, too.
Nov 26 2013 at 12:58pm
“According the the theory of value illustrated here the first and only question one should ask anyone, whether physician, professor, janitor, or leaf-blower, is: ‘How much do you earn?’ She who earns most is best.”
I was under the impression that Bryan was merely trying to better understand the labor market. I don’t think he’s judging, or ascribing some more metaphysical value as you seem to be keying in on.
Nov 26 2013 at 1:47pm
Survey Questions are difficult to develop but then add to the problem the population you intend to survey. This could also be part of the problem.
Family reason could describe that my family (me) does not have adequate transportation. It might not have anything to do with Daycare or some other socially acceptable answer. If I have to walk three miles to get to work and I am already in an at-risk population it might not be worth it to me.
In other words, the chronically poor often have many issues. They are often poorly educated. They may have poor work ethic. They may not understand the idea of showing up on time. They may lack saleable job skills.
Now you want this population to answer questions to a survey about why they are poor? Then throw in questions such as, “Do you walk to school or carry your lunch?” I think you may get answers that fail to quantify or clarify the problem you are trying to understand.
Nov 26 2013 at 5:49pm
One issue not mentioned is what I’ll call geographical lock-in. If one spouse has a job but cannot transfer, then the other spouse may not be able to find a local job. I saw this a lot in Memphis, especially among African-American families. The competition for non-skilled jobs was very high. The wife had an OK job such as a payroll clerk, and the husband stayed home, took care of the kids, and tried to save money by doing minor house and auto repairs.
Nov 27 2013 at 1:07pm
Unemployment benefit is contingent on one looking but not being able to find a job. Congress has extended the benefit coverage several times since the Great Recession. I have to wonder if the benefit was not extended, what the chart would look like or the unemployment level as a whole.
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