Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Insanity

Why are 12% of America’s Men Not Working?

Around 12% of America’s men have effectively dropped out of the labor force. Seven million men of prime working age are not employed or actively looking for work, a new study from the Brookings Institute indicates.

The latest data shows that around one in 10 American men between the ages of 25 and 54 is not involved in the labor force. That means they have no job and are making no effort to find one. To make matters worse another two million men in that age bracket have no job but claim to be looking for work

If these figures are accurate nine million men in the United States are out of work. That’s a level of unemployment rivalling that of the Great Depression. Those numbers call the official US unemployment rate of 4.9% into serious question. Part of the reason why the “unemployment rate” is so low is that only unemployed people actively searching for work or receiving benefits are counted.

It also casts doubt upon the whole notion of an economic recovery. If the economy is getting better shouldn’t those men be going back to work?

Why so Many Men Have Left the Labor Force

So what is the cause of this phenomenon, why are so many men who should be working spending their days on the couch watching TV or playing video games? There are a number of causes including:

  • Loss of labor and manufacturing jobs. The US has lost around five million manufacturing jobs since 2000 largely because of automation, CNN reported. The job loss can be blamed on automation because US production of durable goods hit an all-time high in 2015, Marketwatch contributor Rex Nutting noted.


  • Technology US factory production has nearly doubled since the 1980s yet the number of factory workers has fallen by one third because of automation.


  • Lack of education. The men on the labor sidelines are disproportionately undereducated; either high-school dropouts or those who never went beyond a high school diploma, Jason Furman, who serves as Chairman of President Obama’s Council of Economic Advisors noted.


  • The modern economy simply is not creating jobs for such people. The fastest growing job categories in America include nurses, operations managers, and personal care aides. Those positions require a level of education that many of those men lack.


  • A large percentage of the new jobs are in fields that many men find distasteful or beneath them. This includes personal care aide, retail salespeople, cooks and waiters.


  • A related problem is that many of the new jobs require skills or attributes that many lower class men lack. For example knowing how to cook, or being good with people.


  • Many fields that once employed large numbers of these men; such as auto repair and manufacturing, now require high levels of education and skill. Mechanics have been replaced by highly skilled auto technicians and factories are now computerized.


  • Many of the new jobs pay so little that many men refuse to work at them. This includes most minimum wage positions.


  • The new jobs are often located in places where the unemployed men cannot afford to live. This includes cities like San Francisco, or Denver where housing costs have skyrocketed.


  • Our current welfare system provides benefits to the unemployed not available to the employed. This includes Social Security Disability and in some states Medicaid. In states like Colorado, Medicaid is a better deal than the insurance sold through the Obamacare exchanges. This effectively rewards men for being unemployed.


Are There Really Nine Million Unemployed Men?

Something that must be pointed out here is that those unemployed men may not necessarily be poor.

A portion; probably a large portion of these gentlemen, have enough income from sources other than jobs that frees from the necessity of employment. This includes disability payments, investments, inheritance and crime. Men who are employed as drug dealers or gang members are not going to list those occupations on a government form.

Another group swept up in the criteria are fulltime students over 24; for example a 35 year old who has gone back to school to get his master’s degree. He gets lumped in with the unemployed construction worker on the couch.


Under the government’s criteria a 50-year old man who made a large amount from a job or a business and decided to retire would be listed as unemployed. A related problem is men who might be working under the table in order to keep benefits like food stamps, Medicaid or Social Security disability. Such a guy might be working for cash or tending bar for tips and not reporting it.

The situation is complicated by the growing gig economy in which men can make money without having a “job.” A man who makes his living from Uber or Airbnb might not be counted as working. The current welfare system which provides benefits to the unemployed encourages working men to claim to not be working.

A related problem is that some of the seven million outside the labor force might be living comfortable middle or even upper class lifestyles. Meanwhile a guy who is barely scraping by for minimum wage (under $10 an hour) is counted as “fully employed.”

Is Basic Income the Solution?

Disturbingly our leaders seem to have no real solution for this problem. Furman suggested more education which would help but it’s not a total solution.

Donald Trump’s suggestion of trade restrictions would make the situation worse by eliminating many more working-class jobs. Hillary has ignored the issue possibly in hopes it will go away.

One potential solution might be basic income, particularly a system that augments wages. It would at least give the men outside the labor force some income and allow them to participate in the economy. Basic income would also be a recognition that our real employment rate is much higher than the government claims.

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It would also be hard to implement because of hostility particularly from blue collar types whose whole identity is wrapped up in their work. A recent Los Angeles Times and American Enterprise Institute poll found that 44% of people described as “white with no college degree” thought the poor preferred welfare to work.

The same poll indicates that many of those people agree with such statements as “there are plenty of jobs available to poor people.” A claim easily refuted by the nine million unemployed men.

There would also be stiff resistance from some of the middle class elements that are rallying to Trump and Hillary particularly if they feared basic income would raise their taxes. Also opposed would be all the bureaucrats who make a good living from the social services system. Resistance to such efforts can be violent if it is seen as threatening social status.

A classic example occurred in Ancient Rome around 122 BCE when a radical politician called Gaius Gracchus set up a program that distributed subsidized grain to the people. This was the Roman equivalent of a basic income system and it got Gracchus killed. He was eventually savagely murdered by armed thugs hired by reactionary politicians.[1]

We have to hope that America’s reaction to basic income is not as violent. Yet it might be particularly with all those unemployed men roaming around.

Basic income would not put all those men back to work but at least it would get them back in the economy. In this age of rising technological unemployment that might be the best we can hope for.

[1] For a good description of Gracchus and his efforts see Mary Beard’s book SPQR: A History of Ancient Rome, available from Amazon and in public libraries.