Judging from the headlines, things don’t look so bad. The job market continues to strengthen, with the economy adding 161,000 jobs last month.
Annual wage growth has surged to levels not seen since the Great Recession (though it is still below its pre-2008 strength), while the unemployment rate dipped to 4.9 percent in October from 5 percent the previous month.
Democratic candidate Hillary Clinton and Republican candidate Donald Trump naturally put their spin on the state of the economy.
The Clinton camp argues that we are seeing the longest streak of overall job growth on record, while the Trump camp points to the economy’s sub-3-percent growth during President Obama’s term in office.
In my last blog, What This Country Needs, I lamented how new business startups have been slowing in this country for the past three decades, dropping sharply over the last 10 years.
Millions of Dropouts
That’s not good, as I view entrepreneurship as a strong indicator to the health of a local economy. But what could be even worse is that millions of men in their prime working years have dropped out of the workforce — meaning they aren’t working or even looking for a job.
While it is true that “unemployment” is down, the work rate for men in this country has been spiraling downward for the past 60 years, according to a June 2016 report by President Obama’s Council of Economic Advisers. Appropriately, it is entitled “The Long-Term Decline in Prime-Age Male Labor Force Participation.”
The report said 83 percent of men in the prime working ages of 25-54 who were not in the labor force had not worked in the previous year. So, essentially, 10 million men are missing from action, not counted among the jobless, because they are not seeking work.
America’s Invisible Crisis
“One in six prime-age guys has no job; it’s kind of worse than it was in the depression in 1940,” said Nicholas Eberstadt, an economic and demographic researcher at American Enterprise Institute, in an interview with National Public Radio on Sept. 6, 2016.
Eberstadt has written a book on the subject, book, Men Without Work: America’s Invisible Crisis.
Historically, working-age American men fell into two basic categories: those holding a paid job or those unemployed.
“There was no ‘third way’ for able-bodied males. Today there is one: neither working nor seeking work—that is, men who are outside the labor force altogether,” wrote Eberstadt in an article called The Idle Army: America’s Unworking Men in the Wall Street Journal on Sept. 1.
“Unlike in the past, the U.S. is now evidently rich enough to carry them, after a fashion. The no-work life hardly consigns these men to destitution.”
At current trends, one in five – or 20 percent of working-age males — will be out of the labor force in less than a generation. African-American men are twice as likely to be in this condition as either whites or Latinos
Consider that more than a fifth of American men — about 20 million people — between 20 and 65 had no paid work last year.
Also, there are 20 million men with felony records who are not in jail, with dim prospects of employment, and more of these are African-American men.
Finally, men now account for only 42 percent of college graduates, meaning that men in the current generation will be enormously underrepresented in the well-paying professions that require a college degree.
Former Treasury Secretary Lawrence H. Summers, now professor of economics at Harvard, estimates that a third of men between 24 and 54 without college educations could be out of work by midcentury.
Now you don’t have to be an economist or a professor to know that there have been big changes in the U.S. economy, including millions of manufacturing jobs lost. Good-paying jobs that do not demand more education and training after high school have been shrinking for decades.
Who are They and What are They Doing?
Not a whole lot is known about these missing men. But there are factors that make men less likely to be in the labor force — lack of college degree, being single, or being black.
So what are they doing? Not much, according to Eberstadt.
“About a tenth are students trying to improve their circumstances. But the overwhelming majority are what the British call NEET: “neither employed nor in education or training.”
“Surveys indicate they are almost entirely idle—helping out around the house less than unemployed men; caring for others less than employed women; volunteering and engaging in religious activities less than working men and women or unemployed men,” Eberstadt wrote.
Certainly falling work rates among men portends to slower economic growth and widening gaps in income and wealth. Indeed, many of these nonworking men have little or no work skills at all, and support themselves by government disability benefits.
I shudder to think of a future in which a large segment of a generation of men have only a tenuous connection to the discipline and rewards of work. The impact on future generations of young men is beyond frightening.
And it’s not just Eberstadt saying that men are in danger of becoming a hidden underclass. Again, the Council of Economic Advisers has reached the same conclusion, as has other academics.
“Over the last three decades the labor-market trajectory of males in the U.S. has turned downward along four dimensions: skills acquisition, employment rates, occupational stature and real wage levels,” wrote MIT economists David Autor and Melanie Wasserman in “Wayward Sons: The Emerging Gender Gap in Labor and Education.”
In short, in every important category men are losing ground.
A Business Solutions Center
I opened my remarks to my audience by saying that it was “good to be back in the cradle of Western Civilization,” admittedly a lame attempt at humor. But I was in Dayton, Ohio, home of the Wright Brothers and so many inventions that it would make your head spin.
And as a dutiful guest speaker at the grand opening of Montgomery County’s aptly named Business Solutions Center, I rattled off many of those inventions, which touch our lives today.
In my role as a consultant, I have toured many incubators, accelerators and makerspaces, all of which I applaud as worthwhile attempts by a community to grow its own business sector.
But the Business Solutions Center is a different sort of animal, fitting in no category that I have ever run across. This is a connecting place to essentially get help, be it with training, informational courses, meeting places for local businesses.
In short, it was apparent to me that this Business Solutions Center is truly the next level of business retention and expansion (BR&E). This truly is the walk and not just the talk.
No doubt, the Center will evolve over the years, but its purpose will fundamentally remain the same, to assist local business.
Now some people might think that local government should not take such an active role in helping its business community, but I disagree. Most job growth comes from existing businesses, and assisting in the process of business growth can only bode well for a community.
I believe that economic development organizations from all over this country will eventually be beating a path to Montgomery County, Ohio to see how it is done at the Business Solutions Center. And then they can further explain it to me.
I’ll see you down the road.
Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at email@example.com or at 972-890-3733. Mr. Barber is available as a keynote speaker.