Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
As mentioned in a previous post, WSJ reporter Josh Zumbrun looked yesterday at why a stronger job market isn’t “luring back many of the millions who dropped out of the labor market during the down times. … Over the past three months, an average of 6.8% of those outside the labor force either found a job or began looking for one. That means people are entering the labor force at the lowest pace in records kept since 1990, down from more than 8% in 2010.” And the labor force participation rate in November was exactly where it was at the end of 2013.
While there is a demographic piece to the story — all those baby boomers retiring — that is not the whole story. Zumbrun:
Another big explanation could be that people who drop out amid a bad economy can’t easily be enticed back. Economists call this labor-market scarring. People find other ways to get through life, even precariously, by relying on friends and family, going on disability or retiring early. “You can leave for economic reasons, but it doesn’t mean you’re going to come back for economic reasons,” Mr. Feroli said.
And a bit more on long-term joblessness and “labor-market scarring” from a 2012 WSJ piece:
Workers who lose their jobs because of cyclical factors—a factory that lays off workers, a restaurant that closes, an office that decides to go without a front-desk receptionist—might stay out of work so long that they become effectively unemployable. Their skills erode, they fall behind on the latest technologies and industry trends, or they become stigmatized by employers who assume there must be something wrong with anyone who’s been unemployed so long.
And I wonder if job polarization — job growth at the skill and wage extreme, but not in the middle — is also not playing a role. This from a recent New York Times piece on nonemployment:
Many men, in particular, have decided that low-wage work will not improve their lives, in part because deep changes in American society have made it easier for them to live without working. These changes include the availability of federal disability benefits; the decline of marriage, which means fewer men provide for children; and the rise of the Internet, which has reduced the isolation of unemployment. At the same time, it has become harder for men to find higher-paying jobs. Foreign competition and technological advances have eliminated many of the jobs in which high school graduates … could earn $40 an hour, or more.
To illustrate the trend, reporter Binyamin Appelbaum tells the story of Frank Walsh, a union electrician out of work for four years, who is married with two kids. The family lives on his wife’s part-time income and an almost-evaporated inheritance from Walsh’s mother. He’s not quite ready to work fast food or retail:
Sitting in the food court at a mall near his Maryland home, he sees that some of the restaurants are hiring. He says he can’t wait much longer to find a job. But he’s not ready yet. “I’d work for them, but they’re only willing to pay $10 an hour,” he said, pointing at a Chick-fil-A that probably pays most of its workers less than that. “I’m 49 with two kids — $10 just isn’t going to cut it.”
And here are few policy ideas on dealing with nonemployment. Also, check out this piece from The Economist on the less-than-satisfying nature of clerical, sales, and other service work (particularly at low wages):
The issue is not that jobs used to have meaning and now they don’t; most jobs in most periods have undoubtedly been staffed by people who would prefer to be doing something else. The issue is that too little of the recent gains from technological advance and economic growth have gone toward giving people the time and resources to enjoy their lives outside work. Early in the industrial era real wages soared and hours worked declined. In the past generation, by contrast, real wages have grown slowly and workweeks haven’t grown shorter.