What’s behind Declining Male Labor Force Participation

The recent presidential campaign revived concerns about the state of the American job market. Many observers who are convinced that improving employment indicators mask pervasive hardship cite the increase in the number of prime-age men (those between the ages of 25 and 54) who are neither working nor looking for work; that is, men who are out of the labor force, or inactive. While this upward trend is routinely taken as a sign of the economy’s weakness, other interpretations are possible. This paper attempts to clarify why inactivity in the labor force among prime-age men has grown so steadily for so long. It examines trends in a number of labor market indicators to assess the extent to which rising inactivity rates have reflected a worsening of the job market (lower demand) or reduced job-seeking (lower supply). Finally, it takes a detailed look at four different types of prime-age inactive men—the disabled, the retired, those who want a job, and those who do not. The evidence does not support the view that rising inactivity is the result of a weak labor market. Understanding why prime-age male inactivity has risen requires a focus on disability programs. Public policy should focus on helping the unemployed and inactive men who want jobs—the latter a small share of the inactive—and on reforming disability programs to promote independence. The unemployment rate provides a reliable indicator of changes in the labor market’s strength, even if it understates the level of involuntary joblessness. Policymakers might consider adopting a new “U5b” rate that includes inactive people who want a job with those incorporated in the existing unemployment rate, in order to institutionalize a broader measure of joblessness and increase faith in jobless statistics.