Executive Summary
For more than sixty years, the share of American men between the ages of 25 and 54, or prime-age men, in the labor force has been declining. This fall in the prime-age male labor force participation rate, from a peak of 98 percent in 1954 to 88 percent today, is particularly troubling since workers at this age are at their most productive; because of this, the long-run decline has outsized implications for individual well-being as well as for broader economic growth. A large body of evidence has linked joblessness to worse economic prospects in the future, lower overall well -being and happiness, and higher mortality, as well as negative consequences for families and communities.
This report documents the trend of declining prime-age male labor force participation over the last half century in both a historical and international context, examines a number of potential explanations, and discusses the policies President Obama has proposed to address it.
Labor force participation among prime-age men peaked in 1954 and has fallen steadily since the mid-1960s, a trend that has been sharper in the United States than in other advanced economies.
Participation among prime-age men peaked in 1954, declined only slightly until the mid-1960s, and then began to decline in earnest in the decade between 1965 and 1975. Since then, participation has fallen persistently, with sharper declines in recessionary periods that were not fully reversed in the subsequent expansions.
Since 1965, the prime-age male labor force participation rate has fallen by an average of 0.16 percentage point each year, totaling an 8.3 percentage-point decline as of May 2016.
The United States has had the second largest decrease in prime-age male participation among members of the Organisation for Economic Co-operation and Development (OECD) since 1990; today, the United States has the third lowest labor force participation rate in this group.
The fall in participation for prime-age men has largely been concentrated among those with a high school degree or less, and participation rates have declined more steeply for black men.
Participation rates by educational attainment, previously quite similar, have diverged since the 1960s. In 1964, 98 percent of prime-age men with a college degree or more participated in the workforce, compared to 97 percent of men with a high school degree or less. In 2015, the rate for college-educated men had fallen slightly to 94 percent while the rate for men with a high school degree or less had plummeted to 83 percent.
Lower rates of labor force participation have affected all races and ethnicities, although participation has declined most steeply and remains lowest for prime-age black men.
Participation at nearly every age has fallen for nearly every consecutive cohort of men, meaning that falling participation among prime-age men is largely a function of lower participation at all ages rather than shocks at a particular age or for a particular birth cohort.
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Reductions in labor supplyin other words, prime-age men choosing not to work for a given set of labor market conditionsexplain relatively little of the long-run trend.
Less than a quarter of prime-age men who are not in the workforce have a working spouse, and that figure has actually decreased during the last 50 years.
The data suggest that public assistance can explain very little of the decline in labor force participation rates for prime-age men:
o Social Security Disability Insurance (SSDI) receipt has increased by 2 percentage points since 1967 compared to a 7.5 percentage-point decline in prime-age male labor force participation rates over that period. Moreover, not all of this increase in SSDI causally lowers participation. CEA analysis finds that increasing SSDI receipt can explain at most 0.5 percentage point of the decline over this period, under a counterfactual scenario that likely provides an upper-bound estimate.
o Other government programs, such as Temporary Assistance for Needy Families (TANF) and the Supplemental Nutrition Assistance Program (SNAP) have become increasingly hard to access for those out of work and especially those without children.
Nearly 36 percent of prime-age men not in the labor force lived in poverty in 2014casting doubt on the hypothesis that nonparticipation represents a choice enabled by other personal means or income sources.
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