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Is America working?

Is America working?

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“America Isn’t Working” screams the headline on this piece by David Wessel of the Hutchins Centre. One in six American men between the ages of 24 and 54 is out of work and the majority of these are not looking for work, either. About a fifth of them are receiving disability benefits. Apparently policies are needed to combat what Charles Murray dubs this “epidemic of idleness”.

But it isn’t that simple. As an aside, Wessel mentions that 70% of women aged 24-54 are working. Indeed they are – in fact it is over 70%. This chart has fascinated me for quite a while:

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The transformation in working patterns for both men and women is striking. Nor is this change restricted to the US. Here is the UK (this is from ONS as FRED’s data only goes back to 2000):

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And the ECB reports a similar change in working patterns for the Euro area, although their data only goes up to 2008. The pattern across both the US and Europe for nearly half a century has been declining male employment. For the first thirty years, that was accompanied by sharply rising female employment, but female employment has levelled off since about 1990. Wessel says the reasons for this are “unclear” but I think they might have something to do with this:

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That’s the proportion of the Chinese population that is employed in industrial production. I’m wary of the “lump of labour” fallacy, but it seems to me that stagnating female employment in Western countries is not unrelated to the industrialisation of China.

Leaving aside the effects of the Chinese labour dump, the changes in working patterns tell an interesting story. The fact that 17% of men are inactive certainly doesn’t mean “America isn’t working”. America is working – in fact considerably more than it was in the 1960s when male participation was nearly 100%. It is insulting to women to mention them only in an aside and imply that their work is not important.

Of course, what those charts don’t tell us is the relative output of men and women. It would be easy to assume that women are largely working part-time, so America remains dependent mainly on the output of men. But that’s not what the data say:

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Yes, part-time employment has increased – but nowhere near as much as full-time employment. It seems that women generally choose to work full-time, not part-time. The drop in full-time employment in 2009 and its partial replacement with part-time work is clear, but full-time employment is now rising again.

The reasons for the rise of female employment are well-documented – improvements in education, in access to jobs and in career expectations. In the 1960s the vast majority of women were married, and the vast majority of married women did not work - indeed it was a stigma for a man to have a working wife because it implied that he could not support his family. Now, many women choose not to marry, married women expect to work, and the crisis is more one of affordable childcare than access to jobs. And America is now nearly as dependent on the work of women as it is on men. I regard this as a very positive development.

But male employment has been falling more-or-less steadily since the 1960s. One in six men are inactive not because of the recent recession, but because of some kind of secular trend that we have not clearly identified. Wessel suggests that disability payments may be part of the problem. The proportion of men with a disability who are working has fallen since 2008:

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But it is hard to argue that the reason is over-generous disability benefits. It seems more likely that in a slack labour market, men with disabilities simply find it harder to find work.  Sadly FRED could not provide me with data from before 2008 so I am unable to establish whether putting older men “on the sick” as a way of avoiding redundancy payments has increased the proportion of “men with disabilities” who are not working, but this has been an issue in the UK. To his credit, Wessel does not suggest going down the UK route of dismantling disability benefits to force people back to work. On the contrary, he suggests maintaining disability benefits while helping people to find appropriate work. And he also outlines measures to help disabled people to remain in the workforce. This is both more humane and more effective than the UK’s slash-and-burn approach

Wessel argues that a bigger problem is that employers are not paying high enough wages to attract men, so they aren’t bothering to look for work. Therefore, he argues, the minimum wage should be raised and/or in-work benefits should be increased so that men’s incomes are high enough to make them want to work. I do think he is on to something here – but not just for men.  

When women first started to enter the workforce in significant numbers, there was a considerable gender pay gap across all industries. That pay gap has largely closed, especially for women who don’t have children. And feminists have rejoiced at the success of their mission. But suppose it isn’t actually success at all? Suppose, instead of women’s pay rising to meet that of men, men’s pay has actually fallen to the level of women’s – or rather, average pay levels have been DEPRESSED by the presence in the workforce of large numbers of women who have historically had lower pay?

And there is a further disturbing thought, too. One of the primary reasons for the gender pay gap was the assumption that a man’s pay needed to be enough to support a family, whereas a woman’s pay only needed to be enough to support her. He doesn’t say it, but this assumption underpins Wessel’s assertion that low incomes make men unattractive marriage partners. But women now have as much need to support their families as men do. It is no longer appropriate to devise policy on the assumption that men are always the primary breadwinners. Women now make a very significant contribution to household incomes, and a growing number of married and cohabiting women are becoming primary breadwinners. 

If I am right about this, then the incomes of both men and women are lower than men’s incomes would have been if women had not entered the workforce. In which case there is a strong argument for raising the incomes of both sexes, whether by means of a higher minimum wage, increased in-work benefits, or a basic income. I doubt if Wessel’s suggestion of raising the minimum wage and/or increasing EITC would make much difference to marriage rates, but that doesn’t make it a bad idea. If employers pay higher wages, or the state provides greater income support, both men and women will be better able to support their families.  And that would be a good thing. So by all means, increase the minimum wage and raise EITC. Or better still, introduce a basic income. But do it so that EVERYONE is better off – not so that men are better off.  And recognise the important contribution that women make to the economy, both as workers and as mothers.

Increasing incomes might encourage more men to look for work, but that doesn’t necessarily mean they will find what they are looking for. I don’t think wage rates are the primary cause of declining male employment. The real issue is the changing nature of work.  

Western economies are moving from a production-dominated model to a services-dominated model, and employers in service industries often prefer to employ women because they believe that they are better at the “softer” skills that are very important in these industries. Men, too, can be reluctant to do low-paid service jobs, especially if they are dominated by women, because they consider them to be beneath them. Old attitudes about the relative value of “women’s jobs” and “men’s jobs” die hard, and many men remain wedded to the idea that “making stuff” is men’s work and they should not have to do jobs that involve serving or caring for people. Until men change their attitude to service work, and service industry employers change their attitude to men, male employment will continue to decline. 

 

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