What Are the Long-Term Economic Consequences?

Why are so many prime-age men checked out, neither working nor looking for work? Nicholas Eberstadt discusses his book Men Without Work and a hidden employment crisis with host Samuel Gregg.

Sam Gregg:        

Welcome to Liberty Law Talk. My name is Sam Gregg and I am Distinguished Fellow in Political Economy at the American Institute for Economic Research, and I’m also contributing editor at Law & Liberty, part of the Liberty Fund Network. Thanks for joining us today. It’s long been known that work has major economic significance, but also a great deal of significance for human’s social and even moral development. Of all the creatures in this world, humans alone work. Animals don’t work. Plants don’t work. Minerals don’t work. That alone should tell us that work is something fundamental to who we are as humans. It should also tell us that when people work, where they’re paid or unpaid but can’t work or don’t work, we can expect many negative consequences that go beyond work’s economic dimension. America’s long prided itself on its relatively low unemployment rate compared to, for example, western European countries, and at this present moment in time, unemployment is extremely low in the United States. Yet, we also know that many Americans, especially young American men aren’t working, and in some cases are choosing not to do so. One reason we know that is because of the research conducted into work and employment patterns in the United States economy by our Liberty Law guest today, Dr. Nicholas Eberstadt. Dr. Eberstadt holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute, where he researches and writes extensively on demographics and economic development generally, and more specifically on international security in the Korean Peninsula and Asia. Domestically, he focuses on poverty and social well-being. His many books in monographs include Poverty in China, 1979, The Tyranny of Numbers, 1995, The End of North Korea, 1999, The Poverty of The Poverty Rate, 2008, and Russia’s Peacetime Demographic Crisis, 2010. He has a PhD in Political Economy & Government, an MPA from the Kennedy School of Government, and an AB from Harvard University. In addition, he holds a master of science from the London School of Economics. In 2012, Dr. Eberstadt was awarded the prestigious Bradley Prize. Today, we’re going to be talking about his latest book, or more precisely, his updated new book. Originally published in 2016 as Men Without Work: America’s Invisible Crisis published by Templeton Press, Dr. Eberstadt’s book cast a spotlight on the collapse of work for men in modern America. Rosy reports of low unemployment rates and full or near full employment conditions, he contended, “We’re overlooking a quiet continuing crisis.” That is Depression-era work rates for American men of prime working age, between 25 and 54. The grim truth he’s stated at that time was that over 6 million prime-age men were neither working nor looking for work. “Conventional unemployment measures,” he said, “ignore these labor force dropouts, but their ranks had been rising relentlessly for half a century.” Now, republished and with a new introduction as Men Without Work: Post-Pandemic Edition, again published by Templeton Press, Dr. Eberstadt now says, “Six years and one catastrophic pandemic later, the problem has only worsened. Moreover, it’s seemingly spreading among prime-age women and workers over 55.” In a brand new introduction, Dr. Eberstadt explains how the government’s response to COVID-19 has exacerbated the flight from work in America. From indiscriminate pandemic shutdowns to almost unconditional unemployment benefits, “Americans,” he says, “were essentially paid not to work.” So, just today, despite all the vaccines and all the developments that we’ve had in combating COVID, inexplicable numbers of working-age men, but also women are sitting on the sidelines while over 11 million jobs go unfulfilled. That means that our current low levels of unemployment are grievously misleading, and the truth is that fewer prime-age American men and it turns out women are looking for readily available work, than at any previous juncture in our history. Nick, welcome to Liberty Law Talk.

Dr. Nicholas Eberstadt: 

Sam, it’s a pleasure. Thanks for inviting me.

Sam Gregg:        

Well, I’d really like to begin where I begin with most conversations of this nature, which is when you began exploring this topic, which I think it’s fair to say is on a lot of American’s minds now, what was it that originally attracted you to this subject? What was it that first alerted you to this problem, which you suggest was essentially and least originally a problem with American men?

Dr. Nicholas Eberstadt: 

Well, Sam, I think that what laughingly passes as my career is looking at problems that are hiding in plain sight. Whether it’s the mismeasure of poverty or social crises and what was once the Soviet Union, I kind of stumbled onto this by recognizing that I was hearing an awful lot of happy talk around 2015 about unemployment levels being at almost historic lows, that we were at near full employment back in 2015. It seemed to me that this was contradicted by the evidence of my senses, not the least of these being that almost half of the American public back in those days was saying that we were still in a recession, the kind of subjective impression. I’m certainly not now, nor have I ever been a labor economist, but I’m a pretty good trespasser, so I started getting into some of the data indicators, and all of a sudden I realized, gee-whiz, guess what? Working-age men between 25 and 54 were suffering employment rates that were more or less mirroring the tail end of the Great Depression. So, in 2015, 2016, prime-age men, as they’re called, the 25 to 54 group, were reporting work rates that were more or less the same as the rates in the United States in early 1940 when the national rate of unemployment was about 15%.

Sam Gregg:        

We weren’t that far away from the depression.

Dr. Nicholas Eberstadt: 

Yeah. It was the tail end of the depression. It wasn’t the depths, but it was part of the depression. So, the reason that we were getting these happy talk numbers on unemployment is because one factor in the whole tableau was being omitted, the men who were not in the labor force to be either in the numerator or the denominator. The original unemployment rate was constructed in such a way as to do unemployment over workforce. It was inconceivable by the people who put together the unemployment rate statistics back in the late ’30s that able-bodied men would be sitting on the sidelines, yet by 2015 and 2016, more than 10% of the civilian prime male workforce was checked out, neither working nor looking for work.

Sam Gregg:        

Well, one issue, which I suspect is on the minds of many Liberty Law listeners, is the degree to which this phenomena that you’re talking about, in the pre-pandemic era, how much was this a question of some of the cultural change, for example, that started manifesting themselves say, in the late 1960s as part of which I might call the general questioning of what many people would call traditional American ideals, including the ideal about work, and how much do you think this owes to specific policies implemented by different administrations over time? So, what’s really driving this? Is it culture? Is it policy, or is it some combination of both?

Dr. Nicholas Eberstadt: 

The conventional wisdom then, and I think still today in academic and policy circles, is that the retreat from the workforce by prime-age men is mainly driven by economic and structural change, which is to say declining demand for less skilled work, decline in manufacturing, share of the workforce, China’s entry into the world trade order.

Sam Gregg:        

Arguments that we hear today, right?

Dr. Nicholas Eberstadt: 

Yeah, exactly. I mean, it’s the same, I think, received wisdom more or less today, and obviously globalization, offshoring, all of that. Obviously, there’s plenty of truth in that, but it’s not the whole story and it’s not even, I think, most of the story. If you look at the data, which is sometimes helpful, you can see that from 1965 to 2015 and actually onto today, you can trace out an almost straight line in the proportion of men who are no longer in the workforce. I mean, between us nerds, if I say that the line has got an R-Squared of 0.96, you’d know that, that’s a social science straight line because human beings are a little bit untidy, but it’s practically a straight line, which would be 1.0. And we don’t see any shock. We don’t see the economic shocks, the recessions, the China entry into the WTO, or any of the other things that you’d expect from this demand-driven received wisdom. What is causing this? Well, of course, culture is always the last refuge of scoundrels, and when we can’t describe anything convincingly in economic terms, we’ll say it’s culture. So, I won’t go there quite yet, but let me say this first, what we do know is that for years and years and years, if you ask in surveys, as the government does, men who are not in the labor force, why they are not in the labor force, only a tiny minority of them say this is because they could not find work, only a tiny minority. There are many other reasons that are given. The surveys are a bit procrustean that they only give you eight options. You’ve got 7 million lives and eight options, so it’s a little bit awkward. But lack of employment opportunities is not a big factor according to the men who are dropped out of the labor force. So, what we have seen over the period since ’65 were a couple of big changes. We’ve seen a revolution in the family, of course, and it has always been true that never-married men and men without children at home are less likely to be part of the labor force than married or counterparts with kids under the same roof. That’s certainly part of it. We’ve also seen the explosion of social welfare benefits that began with the war on poverty and the Great Society. Our friends in Europe and other OECD countries say that we’re painfully stingy in our social welfare benefits, but that doesn’t necessarily mean that the incentives and disincentives have some influence on our activities in the workplace. We’ve also seen a big explosion, a new wave of immigration in the United States. We, Americans, think of ourselves as a nation of immigrants, but from really the ’20s until the 1960s, we were at a very low ebb in accepting newcomers. We’ve had a big surge of newcomers since the ’60s, and that’s affected all of these patterns as well. Finally, there’s been an explosion of crime and punishment since the 1960s. It started with the crime spree that began in the ’60s. It continued in the ’70s, and into the ’80s. And then, a few years later, there was a wave of punishment, and this wave of punishment has meant that we have now well over 20 million adult Americans with a felony conviction in their CV, so to speak.

Sam Gregg:        

And that rules them out for work in some cases, in some forms of employment.

Dr. Nicholas Eberstadt:  They are invisible in most of our government statistics and our national statistics, but that does not mean that they are not disadvantaged in the workplace, as you just mentioned. So, we had all of these trends in conjuncture moving together, and certainly, it’s reasonable to surmise that these had a major impact on some of the outcomes that we’re discussing today. I cannot go into the blank pages of paper that I look at with all the decimal points on it and divine culture out of that, but I think we can tell a story that is consistent with a change in mentality about family, work, meaning in life, and other things like that.

Sam Gregg:        

You mentioned the word invisible, and I’d like to focus on that a little bit because in the 2016 edition of Men Without Work, in the original introduction, you wrote, quote, “The collapse of work for America’s men is arguably a crisis for our nation, but,” you added, “largely an invisible crisis.” Now, when I first read that, the thought that sprang to my mind was, “Why invisible?” Is it because Americans simply don’t want to talk about it because it starts to raise questions about how faithful we are to certain American ideals? Is it because talking about it would spark some awkward questions, or is the invisibility to do with the fact that it was affecting a segment of American society that we simply aren’t used to thinking about as experiencing a major problem, in other words, men, particularly say, white men, for example, or is it some sort of combination of these things, or is it something different altogether that accounts for this invisibility phenomena?

Dr. Nicholas Eberstadt: 

That’s a really good question, Sam. I think it’s a number of different factors, some of which you’ve already mentioned. I mean, quite obviously, many of these invisible men missing from the workforce and really from society were getting ready for deaths of despair, not deaths of rage and anger. We didn’t see rioting in the street by these men. We’re more likely to see opioid overdoses. So, because they were not a public menace to society in quotes, they didn’t come into the evening news, in the way that crime blotter activity so often does. So, that made it a little bit more easy to ignore. But I think also, as you intimate, our preconceptions were in play here as well. I mean, in the academy, of course, working-age men are not a privileged victim class. They’re going to be overlooked when one is talking about disparities. They’re kind of the baseline against which one judges disparities, and it’s certainly also true that more or less, since the beginning of civilization, working-age men have naturally been regarded as providers, rather than as a vulnerable dependence.

Sam Gregg:        

Making a sense of shame, if you’re not working or if you don’t seem to be supporting people through your work.

Dr. Nicholas Eberstadt: 

Shame and stigma, that may also lead to quietude. Though, for all of these reasons, I don’t think that the general public or even well-informed readers, policymakers were prepared or predisposed to recognize this problem. So, for actually about two generations, they didn’t.

Sam Gregg:        

That’s fascinating. I mean, another word that comes to my mind, and you’ve alluded a little bit to this in some of your previous comments, when it comes to this invisibility and the particular demographic that this was affecting… We’re going to go on and say more about how you’re arguing now that this phenomena is starting to affect other demographics, but one word that came to my mind when I read your book was the word, alienation. Now, when many of us hear that word, we think of course of Karl Marx, who wrote a great deal about how work for particular people and particular economic settings produced what he called, alienation, by which he meant a sense of distance between ourselves, our work, and the product of our work. Now, I happen to think that Marx was wrong about that, but he was pointing to us a certain type of… Let’s call it experience. But your book pointed, and the new version of course also points to a different type of alienation, the alienation that’s experienced by not working when you can and perhaps should be working. So, how would you describe the type of alienation that Americans today experience from being nonworkers, even if they don’t even use the word alienation to describe the experience?

Dr. Nicholas Eberstadt: 

Well, I should confess that there was a time when I would’ve called myself a Marxist-

Sam Gregg:        

I never knew that.

Dr. Nicholas Eberstadt: 

… but I knew I’m kind of bilingual because of that, so I’m not going to give you a whole thing about the labor versus labor power, the consequences of Marxian alienation here. I think we’re kind of talking more about Émile Durkheim than Karl Marx in this particular circumstance. So, really, I think the best portrait comes from the self-reporting of the people involved to the US government, from the Bureau of Labor Statistics’ Time Use Surveys. The BLS asks all adults for reasons of their own, “What do you do between the time you wake up in the morning and the time you go to bed, and how long do you spend doing it?” And the picture which prime-age men, who are neither working nor looking for work, paint through their self-reporting is not just troubling. It’s kind of horrifying. According to self-reporting in these surveys, these men who are neither working or looking for work, and let’s add another layer, and not in training or education, about a 10th of the men who were out of the workforce or full-time students getting ready for another job-

Sam Gregg:        

You’re talking about people who are not even preparing to go into the workforce.

Dr. Nicholas Eberstadt: 

I think over on the other side of the ocean, they call it NEET, N-E-E-T, neither employed or in education or training. If we look at that group, which is not a small group, well over 6 million, they basically don’t do civil society. Almost no time invested in either worship, or volunteering, or charity work. Although you might think they have practically nothing but time on their hands, they do surprisingly little help around the house with other people, other family members, or with housework, a lot less than employed women with kids, who are more or less the most time-scarce, time-poor people in America. They don’t even get out of the house that much. They’re getting out of the house less and less according to their self-reporting. What they do is they spent a lot of time in front of screens. Now, these clunky surveys won’t tell us what they’re watching or what sorts of devices they’re watching, but they’re reporting, spending about 2000 hours a year in front of screens. Now, for many people, that’s like a full-time job. And when we bear in mind that other reports indicate that about half of these men say that they’re taking pain medication every day… I mean, not necessarily prescription or illicit, over-the-counter, maybe in some cases, but half of them are taking pain medication every day. We’ve got this vision not just of people spending all day playing World of Warcraft or Call of Duty. They’re doing it stoned, and it’s a kind of picture of life in limbo in purgatory. It’s miserable, and certainly, these are not the sorts of skills that are going to get you back into the workforce. They’re going to make you much more likely A, a long-termer, and B, possibly a candidate for deaths of despair.

Sam Gregg:        

Well, you’re really talking about people. Their alienation is their living outside reality.

Dr. Nicholas Eberstadt:  Increasingly detached from family, certainly detached from work, detached from the community or at least from one of the apertures that many involved themselves in the community, and the volunteering and charity, and worship, and so forth. One of the things which I don’t think we do very well in modern economics is talk about poverty. We’ve got all of this emphasis on lessons learned, and very little on lessons forgotten. When we talk about poverty, we’ve forgotten all of the lessons the Victorians knew. And one of the things the Victorians took as obvious was that there is a distinction between poverty and misery, and what we’re describing here are people who, in any other sort of historical era, would be seen as fairly well off in a material sense, but living in this life of degradation and misery.

Sam Gregg:        

And deep unhappiness, I suspect as well.

Dr. Nicholas Eberstadt: 

In many cases, perhaps.

Sam Gregg:        

So, one aspect of the problem, of course, that you addressed particularly in the first version of your book, is you focused very much upon the demography of the unworking American man. Now, I know you’ve worked a great deal on questions of demography throughout your entire career, especially for example, the very real problems associated with population decline, but in the 2022 edition of Men Without Work, you point out, and this is where I started to get very worried, that the unworking problem is now going beyond that demographic of American men. It’s now working its way into other demographic sectors, particularly, I thought this was interesting, prime-age women and older workers. Now, is this something that you believe reflects the pandemic or more particularly government responses to the pandemic, or did you suspect that at some point, these trends were going to emerge anyway?

Dr. Nicholas Eberstadt: 

I think it’s too soon to tell how deeply embedded new mores are being felt about work and working in the rest of the American population. I think that we’ll only know that in the fullness of time, but we’ve had at least a shock in the wake of the pandemic, and we may also be experiencing a shift. The evidence that we’ve had something big occur is screaming on the headlines in the business section every day, the 11 million unfilled jobs in the United States. We have a piece-time labor shortage, unlike anything we’ve ever experienced in the history of our country before. And the number of unfilled jobs has shot up by 4 million and more since pre-pandemic times, and by some fascinating twist of fate, our labor force in the United States is about 4 million or so shy today of where it would have been on pre-pandemic trends. So, the upsurge in unfilled jobs, mirrors and almost matches the slump in workforce availability that we have in post-pandemic America today. What is striking about this is it’s not just the continuation of the old men without work story. I mean, that’s there, but we’re now seeing a whole new face on the flight from work in post-pandemic America because prime-age men account for only a very small minority of the 4 million or so shortfall that I just mentioned. I mean, depending on how you calculate it and what your baselines are, 10%, certainly under one-sixth. The overwhelming majority of the shortfall is men and women 55 years of age and older, and the rest is mainly prime-age women, women 25 to 54. Now, the 55-plus group is one of the few good news stories in the United States labor market before the pandemic. Work rates and labor force participation rates for the rest of the population were kind of heading south from the turn of the century until the pandemic. It’s only the 55-plus whose rates were going up, but those were shocked by the pandemic, and bizarrely, they have stayed at their summer of 2020 levels for a couple of years now.

Sam Gregg:        

Wow, that’s fascinating.

Dr. Nicholas Eberstadt: 

Despite the rollout of the vaccines.

Sam Gregg:        

Right. Right.

Dr. Nicholas Eberstadt: 

And despite everything else. So, explaining and understanding what has caused this enormous setback for our silver workforce is kind of important. And then, there’s the question about what’s going on with the shortfalls for prime-age women as well.

Sam Gregg:        

So, looking ahead then, there’s an issue I suspect is on many people’s minds, which is what are likely to be some of the long-term consequences, if these trends that we’re talking about today are not slowed down, let alone reversed? We’re going to do a little bit of crystal ball gazing here. I don’t know if it necessarily guarantees low unemployment forever, but I suspect it might have some productivity implications. So, what do you regard, first of all, as the most serious economic consequence, and second, the most serious social consequence of these trends? I appreciate that we’re speculating now, but on your understanding of the data and your study of this very complicated question, what do you think of the long-term economic consequences and long-term social consequences?

Dr. Nicholas Eberstadt: 

The long-term economic consequence I think is the risk of stagnation and division in our society. If you take a look at any sort of growth accounting in any way you want to do it, you’ve got to have growth of capital, growth of labor, growth of productivity. If you’re going to get economic growth, then you can kind of divide up a growing pie. We may not divide up a growing pie the way that everybody would like, but if you have a growing pie, you can at least have a debate about this. Since the turn of the century, America’s per capita growth rate has been not much over 1%. Okay. That means that we’re on a path right now to doubling our incomes or output per capita about every 70 years. So, that means that in one’s working lifetime, one is likely to have to scale back expectations a lot. Not likely to see a doubling of one’s own incomes with that sort of pace of growth. You may not even really see much improvement for your kids. You have to wait until you see it for your grandkids. I mean, that’s-

Sam Gregg:        

That’s depressing.

Dr. Nicholas Eberstadt:  That’s a pretty depressing tableau, and of course it will lead, I think, in any sort of open society, with the sorts of history and expectations that we have, trying to figure out how you’re going to increase living standards otherwise, and I think the way you do it otherwise is through government and redistribution. So, you end up fighting over a stagnant pie. I think that’s a pretty grim prospect, and that may also be the answer to the social side of your question, but the notion that living longer and working longer is not something that’s part of a fulfilling life. I think it gets us into some territory in which we’re going to find a lot of trouble. It’s very hard for me to imagine how the traditional historical American optimism squares with that. We’re going to be a more… There’s nothing that we can do to stop becoming a grayer society. So, putting that into the tableau, I think, is pretty sobering.

Sam Gregg:        

Yes. I mean, I often think about the productivity implications of this, and of course, you mentioned government redistribution, et cetera. Of course, that has its own implications for productivity of its own nature. We’re getting near to the end of our own conversation, and I think the obvious place to end is the question that Americans, ever pragmatic as we are, the question that a lot of Americans will ask is, what can we do to reverse these trends? Is there in fact anything that we can do at this point, and if so, is it a culture-first approach? Is it about altering incentives, or are we primarily looking to lower-end legislation to tackle certainly what you describe as a very complicated and intertwined set of social, economic, and cultural issues?

Dr. Nicholas Eberstadt: 

Well, in policy research, one is supposed to exclude magic wand solutions. Right? You’re only supposed to be able to talk about the buttons you can push on the dashboard. So, I have to exclude the magic wand solution of fixing the family in America, and I have to exclude the magic wand solution of restoring the profile of religious confidence and belief to say, Circa 1960 levels. Those we have to leave out. On the dashboard, improving educational skills, in particular, what we’re not allowed to call vocational skills. I mean, that phrase is no longer politically correct. It’s a scandal that so many people graduate from high school in the United States without a skill. College isn’t for everybody. We know that. But everybody who goes through a US education should have a skill that they graduate with. By the way, maybe the worst thing about the policy response to the pandemic was the irresponsible and arbitrary shutdown of schooling for kids in the United States. People are going to have a lot to answer for on that one, and the long-term costs of that are going to last with us, not just for decades, for generations. So, there’s the education portion. There’s the question of, I hate to say, rethinking because it’s kind of pompous, but we have to, I think, really reinvent our entire disability insurance system because the system now is kind of a sprawling, incoherent archipelago based on good intentions, but now very largely incentivizing helplessness and dependence.

Sam Gregg:        

And probably designed for a different time, I imagine is where-

Dr. Nicholas Eberstadt:  For a completely different time. Absolutely, Sam. I mean, in our social welfare system as a whole, we need to think about the virtue of a work first principle. I’m not the guy who thought of that. It’s the Swedes up in Scandinavia. After they ran out of other people’s money, they thought about it. It probably will cost more than our current system, but its social benefits I think would be much greater than our current system. We’ll want to cast a spotlight on the tens of millions of invisible Americans who are ex-cons. I don’t know that all of them can be rehabilitated, but many, many, many of them can and can be reintroduced to society, to family, to the workforce. Because they’re invisible, we can’t have the evidence that we need for evidence-based approaches to this. It’s preposterous. It’s kind of disgraceful. And then, there’s something which I don’t think government can do at all here, but we as citizens can, and that is to kind of commit truth, to recognize the obvious importance of work to a healthy, robust, optimistic society. It’s far beyond economic, the virtues of work. It’s moral. I mean, employment is a service to others that helps to complete oneself, and if one does not recognize that, one misses an enormous amount of the virtue and the benefit for a virtuous open society.

Sam Gregg:        

I was going to say the word, virtue, actually with myself because when we work, it’s not just a question that we’re shaping the world around us. Right? We’re also shaping ourselves. We become more industrious. We take risks. We are more patient. We have to be prudent, et cetera.

Dr. Nicholas Eberstadt: 

We’re helping to complete ourselves, just the same way that family does, just the same way that being engaged in society does. It’s a fuller life. I mean, to people who don’t take this as self-evident, it may be hard to explain, but it is true. It has the virtue, the small-

Sam Gregg:        

The truth.

Dr. Nicholas Eberstadt: 

… but important virtue of being true.

Sam Gregg:        

Well, thank you, Nick. That’s a great place to end. I’d like to end by reminding our Law Liberty listeners, we’ve been listening to Dr. Nick Eberstadt and discussing his new post-pandemic edition of Men Without Work: Post-Pandemic Edition, published by Templeton Press, and available at Amazon, as well as all good bookstores. I’m Sam Gregg for Liberty Law Talk. See you next time.