Like a lot of economists writing on political issues, American Enterprise Institute scholar Nicholas Eberstadt focuses attention in his new book, Men Without Work, on what he believes is an extremely serious but “largely invisible crisis,” and makes a case for government action to confront the problem. Unlike most such calls, however, instead of wanting government to do more, Eberstadt gently suggests that it do less. But his gentle suggestions are not gentle enough for two economists/​policy analysts who respond to the arguments in the last part of his book.

The crisis that concerns Eberstadt is the relentless downward spiral of the labor force participation rate (LFPR) of prime-age American males between 1965 and 2015. He begins Chapter 1 by pointing out that so far in the 21st century we have seen three fundamental indicators of economic health that typically move together—wealth, output, and employment—lose their alignment. The growth in wealth as measured by net worth of U.S. households and nonprofit institutions has surged, almost doubling between early 2001 and late 2015. Yet, real per-capita output was barely 3% higher in the first quarter of 2016 than it was eight years earlier.

There are different explanations for this collapse in economic growth. A compelling (though partial) explanation is found in the labor market despite a steady stream of cheerful reports of a decreasing unemployment rate. Eberstadt points out, “If our nation’s work rate today were back to its start-of-the-century highs, approximately 10 million more Americans would currently have paying jobs.” The LFPR for prime-age males declined from 94.1% in 1948 to 84.1% in 2015, and almost all of that decline has taken place since 1965. The decline occurred as the LFPR for prime-age females more than doubled between 1948 and 2015.

Interesting details / In his first three chapters, Eberstadt expands on numerous details concerning the real and troubling flight from work by U.S. men. Chapter 4 begins with the observation that as countries become wealthier, their citizens generally consume some of their additional wealth in leisure. The U.S. experience, however, differs from that in other modern Western economies in “peculiar, if not anomalous” ways. Working Americans “spend markedly longer hours on the job than their counterparts in affluent European countries and Japan.” Yet, in 2014 the United States ranked 22nd out of 23 countries in prime-age male LFPR, coming in ahead of only Italy.

Chapter 5 contrasts men who are, and who are not, participating in the labor force. Prime-age men who are not in the labor force are apparently paying little attention to information provided by labor markets on job opportunities, since “fully two-thirds of [them] who were not in the labor force (NILF) for any part of 2014 were out of it for the entire year.” In terms of race,

By 1965, both prime-age work rates and LFPR were already substantially lower for black males than whites. They also dropped far more steeply for blacks than whites over the next 50 years. It is worth noting, however, that those rates were higher for black men in 1965 than they are for white men today.

The data Eberstadt uses are for non-institutionalized populations. The more education a man has, the more likely he is to be working. Also, being married or having been married increases the chances that a man will have a job or be actively looking for one. Finally, regardless of ethnicity, foreign-born men of prime-employment age are more likely to be employed or looking for a job than their ethnic counterparts born in America. In addition, immigrants have higher LFPR than native-born Americans over all educational levels except for college graduates.

In Chapter 6, after making the traditional distinction between leisure (which refines and elevates) and idleness (which corrupts), Eberstadt considers how prime-age NILF men use their time. According to the Census Bureau’s Annual Social and Economic Survey, when prime-age men who did not have a paying job at all in 1994 and 2014 were asked why they didn’t work, only 16% and 15%, respectively, answered, “The inability to find work.” Even at the bottom of the Great Recession in 2009, only 28% provided that answer.

So how are NILF men spending their day compared to employed men? Making use of the U.S. Department of Labor’s “American Time Use Survey,” Eberstadt finds that NILF men spend 1 hour and 16 minutes more than the latter on daily personal care, including sleeping; 31 minutes more on household care; the same amount of time on caring for household members; 5 hours and 54 minutes less on work—which means they worked just 7 minutes a day; 2 minutes less on eating and drinking; and 4 hours and 11 minutes more on socializing, relaxing, and leisure—which surely involved drinking not included in the “eating and drinking category. Regarding the leisure-based activities of prime-age NILF men, Eberstadt tells us that in 2014 they spent more time than working men and women or unemployed men listening to radio, watching television, using tobacco and drugs, gambling, and (perhaps incongruously, according to Eberstadt) engaging in hobbies involving arts and crafts. This chapter clearly leaves the impression that NILF men are not, as a group, very productive.

Demand-side or supply-side? / Chapter 7 considers two types of explanations for the men without work problem: demand-side and supply-side. Eberstadt clearly recognizes the importance of both, but doubts that demand-side factors, such as international trade, technological and financial innovations, and outsourcing and temporary work dominate supply-side factors.

He cites from the 2016 Report of the President’s Council of Economic Advisers:

A number of studies have identified declining labor market opportunities for low-skilled workers as the most likely explanation for the decline for prime-age male labor force participation, at least for the period in the mid-to-late 1970s and 1980s.

He then discusses five qualifications suggesting demand-side explanations are less compelling than commonly believed. First, there has been a steady decline in LFPR males since 1965. Second, work rates for women have been less affected by recessions than have the rates for men. Third, work rates are not typically reduced much by slow growth in affluent modern economies. Fourth, the LFPR for some less-educated prime-age American males (in particular, foreign-born and lower-skilled males) have increased since 1994. And fifth, if demand-side influences were the primary reasons for low male LFPR, one would not expect the large regional differences in those rates to be more persistent than they would be with normal labor mobility. Long-term and large differences in male LFPR, even in adjacent states, indicate that workers are not moving in response to labor market opportunities. These qualifications suggest that it is supply-side influences that are reducing the LFPR of lower-skilled males, with dependence on government transfers an important influence by reducing the males’ labor mobility.

Welfare and the underground economy / How dependent are prime-age NILF men on government transfers, and what are their living standards? The data Eberstadt cites and discusses in Chapter 8 seem to support the view that these men have become increasingly dependent on government transfers and they live in low-income households, which strengthens the supply-side explanation for the declining LFPR for men. There is no doubt that he is correct that it has become easier for men to qualify for disability payments, with Social Security Disability Insurance being the main source of these payments. The number of men taking advantage of these payments has significantly increased over the last 50 years.

Without going into the details of the data, let me consider an omission in his discussion that could have important implications for the seriousness of the problem he is considering. He fails to consider an important source of income available to prime-age NILF men that could be reducing the social costs of men dropping out of the labor force.

Recall from my discussion of Chapter 6 that Eberstadt cites data showing NILF men work only 7 minutes a day on average. This estimate seems to ignore the possibility that many men recorded as NILF are actually working clandestinely in the underground economy (a possibility about which there is—understandably—little solid evidence), which is estimated to be contributing $2 trillion, or a little over 12%, to U.S. GDP. Most of that contribution is believed to come from the poorest households, which according to Chapter 8 are the households containing most of the NILF men. This suggests that the average productivity of NILF men—though not as high as it could be if they were formally employed—is not as small as Eberstadt indicates. This could mean that the problem of men without work is not as serious as he would have us believe, at least in terms of lost productivity. To the extent this is true, however, it strengthens his view that government support payments motivate lower-skilled men to leave formal employment. The income lost by doing so can be more than made up by earnings from less-productive employment in the underground economy.

Furthermore, ignoring the productivity that men classified as being “without work” may be contributing in the underground economy does not necessarily mean that Eberstadt has overstated the social loss from the decreased LFPR of prime-age men. Consider that in Chapter 9 on crime and the decline in work, he wants “to understand the impact of [the upsurge in arrests, felony convictions, and incarcerations] on male work patterns in modern America.” And he presents strong evidence that criminal activity and incarceration correlate with men becoming less employable, though he is careful not to make causal claims.

A plausible case can be made that welfare payments increase felony convictions and incarceration and therefore cause reductions in LFPR of prime-age males. That case goes as follows: As previously argued, the possibility of engaging in the underground economy adds to the incentive created by public assistance for less-educated men to drop out of the formal labor market. This likely increases the number of men who get involved in criminal behavior and end up doing time in prison, thus becoming a greater cost on society and less attractive as an employee. Even if not a major factor in employment trends, this could still explain how welfare assistance causes a long-term decline in LFPR for men by interacting with crime to generate that decline.

Some solutions / In his closing chapter, Eberstradt offers some brief policy recommendations. While acknowledging that addressing the men without work problem requires action on many different fronts—and certainly not just government action—he suggests devoting closer attention to three broad objectives:

  • Revitalize American business and its job-generating capacities.
  • Reduce the immense and perverse disincentives against male work embedded in our social welfare programs.
  • Come to terms with the enormous challenge of bringing convicts and felons back into our economy and society.

Taking appropriate government action on these issues would require undoing much that government currently does. For example, eliminating a lot of government regulations and scaling back the government wars on poverty and drugs would go a long way toward accomplishing each of the three objectives (respectively). Given the prevalence of poor education among NILF men, it is surprising that Eberstadt doesn’t mention the importance of undoing the barriers that currently protect public K–12 schools against competition.

Addressing critics / Men Without Work ends with two dissenting points of view, followed by a response from Eberstadt. The first dissenter is Henry Olsen, a senior fellow at the Ethics & Public Policy Center. Olsen recognizes the negative consequences of men dropping out of the labor force, but believes Eberstadt “overestimates the causal effect of government safety net programs … and underestimates the causal effect [of] a changing labor market.” Disappointingly, Olsen says nothing about the government policies that restrict the ability of men to prepare themselves educationally for productive employment or about the barriers that prevent them from getting entry-level jobs in which they could develop employment skills. He does recognize the disincentives of entitlements, but adds that “once men feel they cannot reenter the workforce, they need something to live on.”

The second dissenter is Jared Bernstein, formerly chief economist and adviser to Vice President Joe Biden and now with the Center on Budget and Policy Priorities. He agrees that men without work is a serious problem, but disagrees with Eberstadt that it is underappreciated. Bernstein mentions concerns about automation, immigration, and globalization—all demand-side influences on the declining percentage of prime-age men in the labor force.

His more important disagreement with Eberstadt concerns the latter’s belief that the downward trend in men’s LFPR is largely a supply-side problem, which Bernstein considers a serious misdiagnosis. Not surprisingly, his suggested solutions are limited to policies he must believe will increase the demand for workers otherwise likely to leave the workforce. I admit to being mildly surprised when he listed—no doubt with plenty of demand-side enthusiasm—raising minimum wages. Obviously, raising the wage floor is a tough way to address weak labor demand. I am reminded of a man who responds to his boat taking on water by drilling a hole in the boat’s bottom to let the water run out.

Ebersadt responds politely to these critics, pointing out that, except for a few labor economists at think tanks and universities, “men without work” remains largely ignored by almost everyone else in the country, including most policymakers in Washington. He also points out that he doesn’t claim welfare and disability programs “caused the male flight from work, but rather financed it” (emphasis in original). As indicated earlier, I think Eberstadt is a little too reticent to assign causation, but his dissenters don’t think he is reticent enough.

I strongly recommend Men Without Work. It is a well written and informative book on an important issue. I also recommend a previous book of Eberstadt’s, A Nation of Takers (Templeton Press, 2012). That book considers the broad economic and social effects of public assistance programs. It exhibits less caution about causation, as indicated by its subtitle, America’s Entitlement Epidemic.