Millions Of Working-Age Men Will Never Return To The Labor Market, Fed Says

Given that the trend has only accelerated in recent years, we’ve reported time and time again (and again) on the declining participation rate of healthy, working-aged men (typically defined as those aged 25 to 54).

The labor force participation rate for prime-age men (age 25 to 54) has declined dramatically in the US since the 1960’s. But in recent years, the declines have intensified. In 1996, 4.6 million prime-age men did not participate in the labor force. By 2016, this number had risen to 7.1 million.

As the paper’s author wrote in the excerpt: “Better understanding these men and the personal situations preventing them from working may be crucial in evaluating whether they are likely to return to the labor force.”

And in a perhaps more shocking finding, it’s likely that many of these men will never return to the workforce due to a phenomenon called “job polarization”.

In addition, I argue that “job polarization,” a phenomenon that describes declining demand for middle-skill workers in response to advancements in technology and globalization, has been a key contributor to the increase in nonparticipation among prime-age men. I show that if job polarization had not changed the composition of jobs in the labor market in the past two decades, 1.9 million more men would likely be employed in 2016,representing a 3.6 percent increase in overall employment of prime-age men.However, the effects of job polarization are unlikely to unwind any time soon—survey evidence suggests nonparticipating prime-age men are unlikely to return to the labor force if current conditions hold.

But by taking a closer look at this trend, the researchers at the Kansas City Fed discovered that the numbers more or less line up with a trend that politicians have been lamenting for decades: The hollowing out of the American middle class. Indeed, the study discovered that, over the past two decades, unemployment gains were highest for men in the middle education group – those with a high school degree or some college.