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

Repeats Story Initially Transmitted at 15:00 GMT Mar 14/11:00 EST Mar 14
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in 1996 as they have been replaced by computers and machines.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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