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INFORMATION FOR THE ENTERPRISE AND INVESTOR
JUNE 7 , 2017
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We continue a series on “Work in America.” Please feel free to go to the IntelDigest Archive to review earlier letters on this subject, beginning with the May 17 issue.
Men Without Work
As we have discussed in this series, large numbers of American men in their prime have left the workforce. This situation has developed over several decades, but has reached crisis levels over the early part of this century. It is now one of the greatest problems in American society.
The collapse of work opportunities for American men has two main causes: technological advances and greater opportunities for women in the workforce.
To a great extent, technological progress has eliminated opportunities for the low-skilled, especially in manufacturing. Technological innovation has been marching forward … with ever-increasing speed … since World War II. And it will continue apace into the future, affecting service industries and white-collar professions in addition to low-skilled manufacturing.
Increased opportunities for women in the workforce grew steadily from the 1950s through the 1990s. Participation of women caused the overall work rate for U.S. adults to steadily increase, which camouflaged the steady decrease of men in the workforce over the same time period.
Comparing statistics from 1965 and 2014, more than eight times as many prime-age men were “economically inactive” and not pursuing education in 2014 than there were in 1965. This trend has relentless intergenerational momentum; Labor Force Participation Rates tend to deteriorate with each succeeding cohort in every age group
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The detachment of so many adult American men from the ranks of regular paid labor poses a threat to the future prosperity of the United States. It can only result in lower living standards, greater economic disparities, and slower economic growth than we might otherwise expect.
Everyone should applaud the March of Progress for both technology and women in our society. However, we should apply the vaunted American Ingenuity to finding ways to pull forward those who have fallen behind in recent years.
Personal and Societal Crises
If the trends discussed above should continue, nearly a quarter of all men between the ages of 25–54 will be jobless by mid-century. This won’t be good for our society … large numbers of unoccupied young males are rarely beneficial to social order.
We discussed last week the acute impact on society and community life of Men Without Work. However, the personal costs for those affected by unemployment and underemployment are plain for all to see right now, and should provide an impetus for solving this most pressing of societal problems.
Among the many demons which plague the unemployed, we will briefly discuss: Lack of Education, Disincentives to Work, Addiction, Criminal Records.
Education
Many of the aimless, predominantly-male Americans who are trapped in an unemployment cycle have no college education or specialized training to help them succeed in competition for good jobs. Whether one’s plight is due to lack of resources or dedication or luck, prospects are unlikely to improve as time goes on. Many do not progress beyond manual labor or low-end service work.
Too many become completely discouraged in their work life and retreat to a couch to play video games. When they retreat from the workforce, the government stops counting them … what could be lower than being too insignificant to be called “unemployed.”
Disincentives
Our Great Society has adopted several well-intentioned social programs to provide Safety Nets for citizens who endure adverse circumstances, including unemployment. These programs are created on the national, state, and local levels of government. However, some of the programs actually create a disincentive to work.
The point of these programs should be lending a temporary hand to those who fall on hard times; society benefits by making them productive again. But, open-ended benefits can do more harm in the long run, both to the recipient and to society-at-large.
In the wake of the 2008 Financial Crisis, claims for Disability Benefits skyrocketed, and the rolls of benefit recipients grew to approximately 14 million. It is arguable that a significant percentage of recipients are not genuinely disabled, particularly in the group of prime-age non-working males who have been the subject of these letters.
Unfortunately, disability checks and means-tested benefits … although far from lavish … have come to represent a permanent alternative to paid employment for growing numbers of American men.
With regard to all government benefit programs, it is fair to question whether they represent helpful and productive incentives for the recipients. And, we should not hesitate to change programs in order to improve efficacy … without falling back on ideological arguments, whether from the Left or the Right.
Addiction
Just as disability programs have inadvertently facilitated the exit of large numbers of men from the workforce, Medicaid has inadvertently facilitated an Opioid Epidemic in our country, especially among the unemployed and underemployed.
Statistic show that:
* A startlingly high number … some say 50% … of men-without-work take prescription pain medicines; others use alcohol or other drugs
* In a 2015 report by the Drug Enforcement Administration, more Americans died from drug overdoses than from either traffic fatalities or guns
* A study from the Ohio Department of Health stated that “… fully 11 percent of Ohioans were prescribed opiates…” over the period of the study
* In a study of mortality, death rates rose sharply for those with high school diplomas or less … most of the rise in death rates was due to suicides, chronic liver cirrhosis, and poisonings (including drug overdoses)
This sound more like Russia … we have been reading for years about the devastating effects of vodka-and-drug-binging among Russians. But, no … This Is America.
How is Medicaid implicated in the Opioid Epidemic? More than 1-in-5 of all civilian men between the ages of 25-55 are Medicaid beneficiaries. More than half of prime-age people who are not in the labor force receive Medicaid.
Any Medicaid recipient who can get a doctor to write a prescription for painkillers (evidently, not a particularly difficult thing to do) can get the most expensive street drugs, such as OxyContin, for just a $3 co-pay. Pharmaceutical companies are more than willing to supply vast amounts of addictive drugs to American consumers, especially with the government paying most of the bill.
Coupling this insanely easy and legal method of acquiring Opioids with a flood of dangerous drugs on the streets from illegal cartels, there is no wonder that we have an unprecedented epidemic in our country.
Criminal Records
Many of the unemployed and underemployed run into difficulties like those we have discussed, and end up with a drug offense or felony on their record. How will this affect their job prospects in the future?
It is much easier today for prospective employers (or landlords) to access databases and do background checks. Many jobs are simply off-limits to people with a felony or drug offense … even finding an apartment to rent becomes virtually impossible.
Thinking About Solutions
We will conclude this series next week, and hope to shed some light on a very difficult subject. We will look at the thinking of Congress and the Administration on the prospects for putting people to work. Hopefully, these would involve something more tangible than promising expansion of jobs in declining industries, as the President trumpeted on the campaign trail.
We will finish with a discussion of the Future of Work, automation and artificial intelligence in the American Economy, and analyze growth prospects for our economy and our labor force.