MNI INTERVIEW:Some Prime-Age Men Unlikely to Get Jobs-Fed Econ

By Jean Yung

     WASHINGTON (MNI) - Survey evidence suggests prime working age men who have

left the labor force are unlikely to return if automation continues to hollow

out middle-skilled jobs, according to Federal Reserve Bank of Kansas City

economist Didem Tuzemen.

     Over the past two decades, 2.5 million men age 25 to 54 have ceased

searching for work during their most productive years as automation have

rendered many of their jobs obsolete. Tuzemen says the effects of job

polarization are unlikely to unwind any time soon.

     In an interview last week, she explained that middle skill jobs, which are

largely routine-based, as a share of all jobs had fallen to 43% in 2016 from 54%

in 1996 as they have been replaced by computers and machines. By contrast, low

and high skill jobs have increased. 

     "When I look at prime age men, a lot of them have middle skill education

and are in production, installation or maintenance. These middle skill jobs are

repetitive and rule-based and easier to automate," Tuzemen said. "High skill

jobs have higher educational requirements, and low skill jobs are more

physically demanding -- typically service occupations. These are harder to

automate." 

--SKILLS MISMATCH

     The lagging labor force participation rate to some Fed officials stands as

a signal of remaining slack in the U.S. labor market despite the jobless rate's

hovering at a 17-year low. The participation rate for prime age men and women,

at 82.2% in February, remains about a percentage point below that of pre-crisis

levels.

     To ascertain how much of an increase in nonparticipation among prime age

men job polarization could explain, Tuzemen considered a situation where

polarization has not affected the composition of jobs in the labor market over

the past two decades. 

     "If we had the same share of those men who were in middle skill jobs, how

many more of them can be employed?" she said. "I found that 2 million more can

actually be working, so job polarization plays some role." 

--VICIOUS CYCLE

     What are these men who have left the labor force doing with their time? Are

they training up for high skills jobs or acquiring skills for a different

occupation? 

     In 1996, 56.0% of nonparticipating prime-age men reported they were

disabled or ill. By 2016, that share had declined to 48.3% while those citing

retirement, being in school, and taking care of family increased slightly. 

     But schooling does not appear to be the main driver of nonparticipation,

Tuzemen said. Based on the self-reported survey responses, only a third of the

increase in the number of nonparticipating younger prime-age men was related to

being in school, she found.

     "These people when they come back are still coming back to middle skill

occupations," Tuzemen said. "They don't have a chance to go back to school. When

they lose their jobs and they cannot find jobs, they drop out of the labor

force." 

     Long periods of unemployment are associated with illnesses and depression,

Tuzemen said, referring to Princeton economist Alan Krueger's finding that

nearly half of prime age men outside of the labor force use painkillers on a

daily basis.  

     Health problems in turn may become further barriers to their finding

employment, leading to a "vicious cycle," she said. 

--FUTURE CHALLENGES

     Data on flows between employment, unemployment, and nonparticipation do not

suggest nonparticipating prime-age men are likely to return to the labor force,

Tuzemen said. 

     The share of nonparticipants remaining out of the labor force from one

month to the next declined rapidly from 2008 to 2009 as the economy climbed out

of the trough of the recession. However, that figure started rising again in

mid-2010 and reached an average of 83.8%, higher than its pre-recession rate, in

2016.

     Tuzemen said she has not considered whether job mobility or if a rise in

wages could draw more workers back into the market. 

     Rather, she prescribes better skills training by employers, private

organizations and the government as a possible way to help this group. 

     "We need to have training programs to make sure that these people are

equipped with the skills demanded by employers," Tuzemen said.  

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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