Friday, July 19, 2013

The Astonishing Collapse of Work In America

The following article is simply depressing:
The Astonishing Collapse of Work In America
Nicholas Eberstadt holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute and is the author of A Nation of Takers: America's Entitlement Epidemic (2012).
Today just under 12 million men and women are officially classified as unemployed, roughly twice as many as in early 2000. But if our national employment ratio today were as high as in early 2000, when this measure reached its zenith, about 15 million more Americans would be working today. And remember: over 10 million of today's men and women with jobs are working fewer hours than they want to-well over twice as many as in early 2000. When we look at the jobs problem this way, we see it is vastly bigger than the official unemployment rate implies.
How bad is "real" unemployment and underemployment? Compare today to the not-so-distant past, when a much higher percentage of adults worked.
By these figures, the male employment ratio reached its peak in the early 1950s-and then commenced an almost relentless descent. Today's level is the lowest thus far-but this decline of work for men has been unfolding for decades, indeed generations. Over the past 60 years, the employment ratio for adult men has plummeted by about 20 percentage points. Which is to say: if America's male employment ratios were back at their Eisenhower-era levels, well over 20 million more men would be at work today. At the moment, roughly 76 million men are counted as working.
What are the causes and what might the solutions be? In the Keynesian universe, the government can create demand, thereby creating jobs. Or, the government can even go so far as create the jobs. There are a great many problems with such simplistic solutions, based on minimalistic mathematical models.
From an economic perspective, it seems safe to say that both demand and supply factors are at play in this disheartening dynamic. On the demand side, it seems fairly clear that our contemporary economy is just not generating jobs and work as robustly as it did in the past---even the relatively recent past. This can be seen as a "structural" problem. Of course, it is the problem that self-described Keynesians always fix upon. It is part of the overall picture-but just part. For on the supply side, it is apparent that there has been a major behavioral change in America, wherein a growing proportion of working-age Americans are checking out of paid labor altogether. Suffice it to say that not working at all is neither unthinkable nor unaffordable these days, even for adults in the prime of life. This too is a problem-a huge problem, one that has been gathering for decades, and one must unlikely to be undone by recourse to standard-issue Keynesian tools.
We have Federal Reserve quantitative easing, which is only helping the investor class and bond issuers, and the QE might be hurting emerging markets. We also have had any number of stimulus programs, with limited results. (And yes, I know Keynesians argue we haven't "invested" enough, but I've addressed that many times in this space.) I'm not going to argue that the "austerity" of sequestration is helping (it wasn't properly, logically focused); it might also be inhibiting employment growth. We're in a messy situation that doesn't work well for Keynesian or Chicago adherents.

The employment situation will improve when private employers hire more people. What seems simple, though, is hard to solve with any government policies. My argument has long been that government getting out of the market as much as possible would be the best solution. Unfortunately, our two major political parties and our dominate economic schools of thought are all about interfering… just in different ways.

No, the 1950s and 60s were not perfect, but we could learn something by studying how laws, regulations, and various tax policies have warped the employment market.
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