In this episode, we break down a startling labor market trend with Dr. Nicholas Eberstadt, a labor economist and Henry Wendt Chair in Political Economy at the American Enterprise Institute. We discuss why hundreds of thousands of Americans aren’t in the labor force (NILF) and—most importantly—the much deeper problem affecting prime-age adults (25–54), including the “NEET” group that is neither employed nor in education or training.Jeffrey Snyder, Broadcast Retirement NetworkWell, joining me now is Dr. Nicholas Eberstadt. He’s a labor economist. He’s also the Henry Wendt Chair in Political Economy at the American Enterprise Institute. Dr. Eberstadt, it’s great to see you. Thanks for joining us this morning. Thanks for inviting me. Yeah, I’m excited to talk to you.And we’ve talked to your colleague, Andy Biggs, who really focuses on social security and retirement. So we’re very familiar with AEI. We appreciate all the great work that you all do.The purpose for me reaching out is I was astonished by 832,000 people as of the June labor report that are not in the labor force or what they call a NILF. I’ve heard of NILF, never heard of NILF, but I wanna get your reaction to that because that’s a substantial number of people.Nicholas Eberstadt, PhD., American Enterprise InstituteWell, as an aging society, it shouldn’t be a surprise that we have very large numbers of people who are not in the labor force. I mean, we’ve got over 100 million Americans who are 65 plus. With a healthy aging, we should be able to expect a higher fraction of older folks like ourselves in the workforce.I’m in the workforce, I love it, love what I do. But I’d say that more of the concern at the moment is the high dropout rate for men and women of prime working ages, which are defined by the Bureau of Labor Statistics as the 25 to 54 group for pretty obvious reasons. We see basically 7 million prime age men who are neither working nor looking for work at this moment.And the employment rate, the employment to population ratio for these prime age men is about as low as it was at the tail end of the Great Depression. So this is a pretty significant situation.Jeffrey Snyder, Broadcast Retirement NetworkYeah, I mean, just from, you know, I’m not a labor economist clearly, but when I saw the number, the first question I asked is why would these people not wanna work? Doctor, are they disaffected with the, I don’t think they’re lazy. Are they disaffected with, you know, working in a corporation or not-for-profit?Is there any sense as to why they’ve dropped out or will not participate?Nicholas Eberstadt, PhD., American Enterprise InstituteWe can parse down in it a little bit and government statistics and data give us some insight, but not perfect insight into this. For one thing, this is not a new problem. This is a historical problem that has been building for two generations.For the fastest growing portion of the U.S. male 25 to 54 group is those dropouts. It’s been growing faster than any other group for two generations. About 15%, 10, 15% of the seeming dropouts are actually full-time students.So that’s not something I think to be concerned about. They’re acting as if they’re employed. They’re being serious about scaling up.They wanna go back into the workforce. They wanna improve their marketability and their productivity. The group we really need to be concerned about is this, what the Brits would call NEET, N-E-E-T, neither employed nor in education and training, which is close to about 6 million of the 7 million, maybe a little more than 6 million.And the way this group talks about itself in surveys, I think is kind of informative and disturbing. We do time use surveys for the government. Government wants to know when people go to work, when they don’t know, other sorts of things like that.The dropout men that I’m describing self-report that they basically don’t do civil society. They don’t do worship. They don’t do volunteering.They don’t do charity. They self-report that they do very little work around the house where they are all the time because they also self-report they don’t get out much. They self-report they don’t help out much with other people at home.What they self-report that they do is watch screens. We can’t tell from these limited surveys what they’re watching, what type of screens, but like 2000 hours a year, like a full-time job. And they also self-report sometimes in these components of these surveys that about half of them are taking pain medication every day.This is a very troubling picture of I think a distraught group. Surveys also ask the question, why aren’t you in the workforce if you’ve been dropout for a year or more? If you’re only asking seven or eight questions, you’re gonna get some pretty inadequate answers, right?But for 6 million people, seven questions. But one of the questions is dropped out because couldn’t find work. Tiny fraction, tiny fraction of the respondents say that’s the reason, like less than 10%.So there are things going on. And obviously this is a group which is facing great trouble, but it’s not a trouble which is caused by a lack of available jobs apparently.Jeffrey Snyder, Broadcast Retirement NetworkYeah, I worry about, I know your expertise is not in mental health, but I worry about the isolation, the mental health, that’s for a different day. The other thing that I think about and I wanna get your reaction to this is if they are, how are they saving? What are their plans when, we’re living longer as you know, doctor, and working longer too.So what are their plans in terms of being able to support themselves? Are they expecting, for example, to go on the government rolls in terms of disabilities or security, welfare, et cetera? I mean, any indication there?I mean, that would, to me as a policymaker, would be an area of concern.Nicholas Eberstadt, PhD., American Enterprise InstituteWell, if, I mean, there is probably more gray economy income than the official data shows. I know that the IRS has asked questions about this group from time to time. It doesn’t look like we’ve got a lot of people who are like cleaning up and have second homes and boats and places.If they’re working on the side, my impression is it’s more for pin money than it is for real support. So these men seem to be supported by friends, including girlfriends, and by family, including Uncle Sam, if you’d call him part of the family. We don’t have very good numbers in America for some strange reason about disability program benefits.We’ve got a bunch of different programs. They don’t play nice with each other. They don’t talk to each other.There’s no office in Washington that you can go to where there’ll be somebody who will tell you how many people in America are getting one or more disability program payments and how many are getting like three of them. Some work that I did a while ago suggested that over half of the dropout men are obtaining one or more disability program benefit. That’s not enough to lead a princely lifestyle.It apparently is enough to finance not being in the workforce. And I should say one other thing about this. The dropout men, in terms of spending, if you look at spending rather than income and purchasing power, they’re not at the very bottom of the US spectrum.The households that seem to be at the very bottom are like headed by single mothers. The dropout men are a rank above that. Ironically, they’re kind of in the rank that used to be described as working class, but they’re not working.Jeffrey Snyder, Broadcast Retirement NetworkAre there some lessons here, Doctor, from this research, this data for policymakers, those in Congress, Senate, even in the White House, regardless of political affiliation? It would seem to me, regardless of what side of the aisle you’re on, this is worrisome. But I wanna get your, you’re the expert, I’m not.So what’s your perspective on the policymakers’ perspective?Nicholas Eberstadt, PhD., American Enterprise InstituteNo matter where you are on the political spectrum, I think you should realize that this is a serious problem for our nation, and it’s one that we should have compassion for for these people. I mean, there’s nothing good that comes out of this. This slows down economic growth.It widens economic and wealth gaps. It reduces social mobility. It puts pressure on fragile families.It increases welfare burden. It probably increases the national debt. I don’t think it can be terribly good for our political situation either.So everybody should have an incentive for looking at this problem and trying to see what can happen to draw these men back into society, into economy, into families. We have ignored this problem for two generations because these are stay-at-home men. They’re not out burning cars and causing riots.This is more like quiet despair. And so it’s a problem that people have been able to kind of unfortunately overlook. There are a couple of parts to it.We can do something about education and skills. Obviously, more skills of vocational, what used to be called vocational, might be helpful here. We can look at reform of our disability programs to the extent that this is disincentivizing people.We had a welfare reform a generation ago for single mothers that brought millions back into the workforce. Why can’t we look at the disability programs? There’s one other thing that is a huge blind spot and this is a crime and punishment.We don’t collect figures regularly on the number of Americans who have a felony conviction in their background. They’re often invisible. Very rough calculations since we don’t have good data.Very rough calculations suggest that at this point, if you can believe it, one in seven adult men has a felony conviction in his background. Think of what that impact is. I can tell you for sure that they are overrepresented in this pool of dropouts.And we’re getting to a point in the United States where labor is getting pretty scarce. We’re heading towards population stagnation and maybe even population decline. We can’t afford to be cavalier about our human resources.If it’s possible to draw people back in to reintroduce them to society, I think that the economy, I think that’s all for the good for all sorts of different reasons.Jeffrey Snyder, Broadcast Retirement NetworkYeah, I would tend to agree. Last question. I mean, I could ask you, we’ll have to bring you back because I think this is a, to be continued, TBC.Force me, force me. Of course, we’re not gonna solve the issues all today, but I think it’s important to get this out. Are we unique as a country?You mentioned there’s a China, or excuse me, Asia, Europe. I mean, are we unique as a society in this circumstance? You mentioned that there’s a certain term in the UK, but are we unique?Or are other countries going through the same situation? And can we actually share, I know they’re maybe a little bit different economically in terms of how they run their systems, but can we share notes? Sure.Nicholas Eberstadt, PhD., American Enterprise InstituteThere’s a problem everywhere in the modern world with declining labor force participation for prime age men that has to do with structural transformation of economies, technological innovation, outsourcing, globalization. But we’re the guys where the labor force participation rate has fallen fastest and sharpest, most dramatically of the OECD countries. The only country that kind of parallels us or could kind of like compete with us at the moment, I think is Italy.And honest to God, I don’t really believe Italy’s employment statistics because there’s so much gray economy work there. In Britain, I did mention the NEET acronym. In Britain, there is a similar problem to some degree in Canada and Australia, a similar problem.Ours is more acute. We certainly could benefit from learning and discussing with other countries.Jeffrey Snyder, Broadcast Retirement NetworkYeah, it certainly is. I’m glad we had an opportunity to chat with you about this. As I said earlier, we’re probably not gonna be able to solve the issue, but I think the more we kind of bubble this up, and I know you’re out doing regular press events, we appreciate your time, but I think this is really an important conversation.Dr. Eberstadt, we’re gonna have to leave it there. Thank you so much for joining us. And we look forward to having you back on the program again very soon, sir.Nicholas Eberstadt, PhD., American Enterprise InstituteIt was a pleasure. Thanks for inviting me. I’ll look forward to the next one.I’d love to make it a tradition.
832,000 Out of the Workforce: Why Prime-Age Men Are “Quietly” Dropping Out
