"Critics argue that giving amnesty to 12 to 30 million illegal aliens in the U.S. would have an immediate negative impact on America’s working and middle class — specifically black Americans and the white working class — who would be in direct competition for blue-collar jobs with the largely low-skilled illegal alien population." JOHN BINDER
Sunday, July 2, 2017
CITY JOURNAL - EDWARD L. GLAESER - THE JOB CRISIS IN AMERICA'S OPEN BORDERS
DURING OBAMA'S EIGHT YEARS 75% OF ALL JOBS WENT TO FOREIGN BORN, BOTH LEGAL AND ILLEGAL. OBAMA, ERIC HOLDER AND THE DEMOCRAT PARTY SABOTAGED HOMEELAND SECURITY, E-VERIFY AND THE AMERICAN WORKER TO KEEP WAGES DEPRESSED FROM ENDLESS HORDES OF ILLEGALS JUMPING OUR BORDERS, JOBS AND VOTING BOOTHS!
om the magazine
The War on Work—and How to End It
An agenda to address
joblessness, the great American domestic crisis of the twenty-first century
In 1967, 95
percent of “prime-age” men between the ages of 25 and 54 worked. During the
Great Recession, though, the share of jobless prime-age males rose above 20
percent. Even today, long after the recession officially ended, more than 15
percent of such men aren’t working. And in some locations, like Kentucky, the
numbers are even higher: fewer than 70 percent of men lacking any college
education go to work every day in that state.
The rise of
joblessness—especially among men—is the great American domestic crisis of the
twenty-first century. It is a crisis of spirit more than of resources. The
jobless are far more prone to self-destructive behavior than are the working
poor. Proposed solutions that focus solely on providing material benefits are a
false path. Well-meaning social policies—from longer unemployment insurance to
more generous disability diagnoses to higher minimum wages—have only worsened
the problem; the futility of joblessness won’t be solved with a welfare check.
The loss of work for so many also reflects the emergence of a modern labor
market with little interest in less skilled job seekers. American wages were
high in the 1960s and 1970s because of steady demand for unionized labor in
Detroit and Allentown. Automation and globalization have destroyed many of
those jobs, and the process is likely to continue. Technology gurus like Elon
Musk believe that future innovations will make the human contribution to other
economic sectors, including services, increasingly obsolete as well.
underemployed American represents a failure of entrepreneurial imagination. We
can do better. Our educational system must improve the way it provides skills
that bring higher earnings, and we need to experiment with new forms of
vocational training. We should encourage entrepreneurial energies, including by
making it easier for small businesses to get up and running in low-income
areas. And social programs that deter employment should be reformed—and ideally
replaced by a simple pro-work subsidy. It’s time to end the war on work.
Illustrations by The Heads of State
as an oasis of plenty in a world of poverty. Farms from New Hampshire to
Georgia offered any free man crossing the Atlantic the chance to exchange hard
work for a full belly. In 1820, 78 percent of the American labor force farmed.
While droughts and pestilence often threatened disaster, joblessness was no
part of then-rural America. If you didn’t work, you starved, and there was
always another patch of land to hoe and seed.
arrived only when workers moved to cities. A vital strength of urban life is
that it can connect people who want to work with people who have capital and
ideas. But sometimes, those matches aren’t available. Almost half of America’s
workers had left their farms by 1870, setting the stage for the recessions of
the 1870s and 1890s. University of Florida economist J. R. Vernon estimates
that the unemployment rate hit 8 percent in 1878 and may have exceeded 15
percent in the 1890s. In both downturns, financial crises had led to bank
failures and massive firm bankruptcies. In 1894, the Pullman Strike disrupted
the nation’s transportation network.
Yet as soon
as the banking system recovered, American entrepreneurs resumed hiring cheap,
usually unskilled, labor. Nominal wages actually fell over both the 1870s and
the 1890s because workers had to accept low pay. With no government safety net,
long-term unemployment meant deprivation—or even death.
By 1920, the
U.S. had become a majority-urban nation. As urban industry replaced
agriculture, the country got wealthier but also more vulnerable to economic
dislocation. The Great Depression brought it with terrible force: the
unemployment rate exceeded 15 percent in 1931, peaked at 24.9 percent in 1933,
and remained above 14 percent as late as 1940. (These figures count those
working on federal relief programs as unemployed; exclude these individuals,
and the unemployment rate was down to 9.5 percent by the end of the decade.)
Depression-era Americans endured long-term joblessness, then, but it was
fundamentally different from the kind that afflicts us today. The U.S. economy
was in disastrous shape throughout the 1930s, with real GDP and industrial
output staying below 1929 levels for most of the decade. Whatever the
reason—and debates remain lively—American industry recovered from the
Depression with painful lethargy. Persistent unemployment mirrored an enduring
The New Deal
saw the rise of public programs that worked against employment. Wage controls
under the National Recovery Act made it difficult for wages to fall enough to
equilibrate the labor market. The Wagner Act strengthened the hand of unions,
which kept pay up and employment down. Relief efforts for the unemployed,
including federal make-work jobs, eased the pressure on the jobless to find
of World War II ended both the Nazi regime and the American Depression. The
peace augured in 30 years of remarkable growth and prosperity. America enjoyed technological
preeminence and an enormous growth in human capital, thanks to policies like
the GI Bill. Women surged into the labor force by the millions, yet demand for
male work stayed robust. The empowered postwar unions shifted industrial
employment to right-to-work states, as the classic work of Thomas Holmes
illustrates, but they didn’t compromise the labor market as a whole.
From 1945 to
1968, only 5 percent of men between the ages of 25 and 54—prime-age males—were
out of work. But during the 1970s, something changed. The mild recession of
1969–70 produced a drop in the employment rate of this group, from 95 percent
to 92.5 percent, and there was no rebound. The 1973–74 downturn dragged the
employment rate below 90 percent, and after the 1979–82 slump, it would stay
there throughout most of the 1980s. The recessions at the beginning and end of
the 1990s caused further deterioration in the rate. Economic recovery failed to
restore the earlier employment ratio in both instances.
fall, though, occurred in the Great Recession. In 2011, more than one in five
prime-age men were out of work, a figure comparable with the Great Depression.
But while employment came back after the Depression, it hasn’t today. The
unemployment rate may be low, but many people have quit the labor force
entirely and don’t show up in that number. As of December 2016, 15.2 percent of
prime-age men were jobless—a figure worse than at any point between World War
II and the Great Recession, except during the depths of the early 1980s
The trend in
the female employment ratio is more complicated because of the postwar rise in
the number of women in the formal labor market. In 1955, 37 percent of
prime-age women worked. By 2000, that number had increased to 75 percent—a
historical high. Since then, the number has come down: it stood at 71.7 percent
at the end of 2016. Interpreting these figures is tricky, since more women than
men voluntarily leave the labor force, often finding meaningful work in the
home. The American Time Survey found that nonemployed women spend more than six
hours a day doing housework and caring for others. Nonemployed men spend less
than three hours doing such tasks.
is disproportionately a condition of the poorly educated. While 72 percent of
college graduates over age 25 have jobs, only 41 percent of high school
dropouts are working. The employment-rate gap between the most and least
educated groups has widened from about 6 percent in 1977 to almost 15 percent
today. The regional variation is also enormous. Kentucky’s 23 percent male
jobless rate leads the nation; in Iowa, the rate is under 10 percent.
Graphs by Alberto Mena
1970, has each new downturn added to the ranks of the permanently unemployed?
Social science has not fully answered this question, but the best guess
involves a combination of a generous social safety net, deindustrialization,
and social change.
Roosevelt and Lyndon Johnson aggressively advanced a stronger safety net for
American workers, and other administrations largely supported these efforts.
The New Deal gave us Social Security and unemployment insurance, which were
expanded in the 1950s. National disability insurance debuted in 1956 and was
made far more accessible to people with hard-to-diagnose conditions, like back
pain, in 1984. The War on Poverty delivered Medicaid and food stamps. Richard
Nixon gave us housing vouchers. During the Great Recession, the federal
government temporarily doubled the maximum eligibility time for receiving
programs make joblessness more bearable, at least materially; they also reduce
the incentives to find work. Consider disability insurance. Industrial work is
hard, and plenty of workers experience back pain. Before 1984, however, that
pain didn’t mean a disability check for American workers. After 1984, though,
millions went on the disability rolls. And since disability payments vanish if
the disabled person starts earning more than $1,170 per month, the disabled
tend to stay disabled. The economists David Autor and Mark Duggan found
that the share of adults aged 25–64 receiving disability insurance increased
from 2.2 percent in 1985 to 4.1 percent 20 years later. Disability insurance
alone doesn’t entirely explain the rise of long-term joblessness—only one-third
or so of jobless males get such benefits. But it has surely played a role.
social-welfare programs operate in a similar way. Unemployment insurance stops
completely when someone gets a job, which may explain why economist Bruce Meyer
found that the unemployed tend to find jobs just as their insurance payments
run out. Food-stamp and housing-voucher payments drop 30 percent when a
recipient’s income rises past a set threshold by just $1. Elementary economics
tells us that paying people to be or stay jobless will increase joblessness.
Olivier Blanchard and Justin Wolfers have explained Europe’s persistent
unemployment, which they called “hysteresis,” by the interaction of adverse
economic shocks and extremely generous welfare states. Twenty years ago, the
more economically successful European nations, such as Sweden, Germany, and the
Netherlands, reorganized their welfare states to emphasize work and witnessed
positive results. Others, including France, Italy, and Spain, did not, and they
have struggled. In a sense, the eurozone financial crisis of the past
half-decade is the legacy of southern European countries that wouldn’t fix
their failing welfare systems. The U.S. needs to decide if it wants to follow
the path of Germany or of Spain.
programs didn’t immediately generate a crisis of joblessness in America.
Manufacturing workers weren’t going to leave their well-paying union jobs in 1967
because of the existence of food stamps. But over the next half-century, things
changed dramatically. As hundreds of studies have documented, wages for the
best-educated and most-successful Americans have risen, while those for the
least-educated and least-successful Americans have stagnated.
developments result from tectonic movements in the economy. Globalization and
technological change have steadily eroded—and continue to erode—the demand for
American brawn. In 1966, American factories employed millions of industrial
workers, making products that were shipped to far poorer places. As technology
spread, the world’s lower-wage countries started manufacturing. Asia’s economic
tigers initially thrived because of low labor costs, but these increasingly
educated countries eventually achieved technological parity with—and sometimes
became superior to—many American industries.
share of total American output has fallen from 25 percent in 1968 to 12 percent
today. The number of manufacturing workers has shrunk from 19.5 million in 1979
to 12.2 million, which represents 8.8 percent of nonfarm employment. The fact
that manufacturing today is a larger share of GDP than of employment
underscores a shift toward technology-intensive production—another response to
high U.S. labor costs. For millennia, men were valued for their muscles. Human
strength was crucial to feudal farming and to Henry Ford’s assembly line. We
still have some jobs that depend on strong backs, as in the building trades. But
they are getting rarer because machines can do the work for us.
moving toward an entirely mechanized economy. Between 1980 and 2000, U.S.
service-sector employment rose by 73 percent—a whopping 37 million new jobs.
There remains commercial value in a friendly face and the charm of human
interaction. But for millions of men, working in the service sector wasn’t a
joblessness reflects the social unraveling that Charles Murray describes in Coming
Apart. A significant portion of the American heartland has moved from a
norm of stable marriage and traditional religion to single-parent families and
social dysfunction. A study by Raj Chetty and Nathan Hendren calculated
mobility across America using income-tax records. Their data show that the
share of single-parent families in an area is a particularly strong predictor
of low upward mobility. Any parent knows that raising children is tough, even
with two adults involved. When only one parent is around, that task gets even
harder. Unsurprisingly, many kids from broken families lack the skills needed
to get ahead in today’s competitive economy.
War II, the army taught millions of Americans how to behave effectively in a
tough organization. Such skills may have helped returning veterans thrive in
the industrial America of the 1950s. Yet that very success may also have
enabled younger Americans to tolerate joblessness, as they wind up relying for
extended periods on their parents’ (or grandparents’) help. Thirty percent of
prime-age jobless men currently live with their parents.
The rise of
joblessness among the young has been a particularly pernicious effect of the
Great Recession. Job loss was extensive among 25–34-year-old men and
35–44-year-old men between 2007 and 2009. The 25–34-year-olds have
substantially gone back to work, but the number of employed 35–44-year-olds,
which dropped by 2 million at the start of the Great Recession, hasn’t
recovered. The dislocated workers in this group seem to have left the labor
policymakers seem intent on making the joblessness crisis worse. The past decade
or so has seen a resurgent progressive focus on inequality—and little concern
among progressives about the downsides of discouraging work. Advocates of a $15
minimum hourly wage, for example, don’t seem to mind, or believe, that such
policies deter firms from hiring less skilled workers. The University of
California–San Diego’s Jeffrey Clemens examined states where higher federal
minimum wages raised the effective state-level minimum wage during the last
decade. He found that the higher minimum “reduced employment among individuals
ages 16 to 30 with less than a high school education by 5.6 percentage points,”
which accounted for “43 percent of the sustained, 13 percentage point decline
in this skill group’s employment rate.”
to prioritize equality over employment is particularly puzzling, given that
social scientists have repeatedly found that unemployment is the greater evil.
Economists Andrew Clark and Andrew Oswald have documented the huge drop in
happiness associated with unemployment—about ten times larger than that
associated with a reduction in earnings from the $50,000–$75,000 range to the
$35,000–$50,000 bracket. One recent study estimated that unemployment leads to
45,000 suicides worldwide annually. Jobless husbands have a 50 percent higher
divorce rate than employed husbands. The impact of lower income on suicide and
divorce is much smaller. The negative effects of unemployment are magnified
because it so often becomes a semipermanent state.
studies help us understand why the unemployed are so miserable. Jobless men
don’t do a lot more socializing; they don’t spend much more time with their
kids. They do spend an extra 100 minutes daily watching television, and
they sleep more. The jobless also are more likely to use illegal drugs. While
fewer than 10 percent of full-time workers have used an illegal substance in
any given week, 18 percent of the unemployed have done drugs in the last seven
days, according to a 2013 study by Alejandro Badel and Brian Greaney.
disability are also particularly associated with America’s deadly opioid
epidemic. David Cutler and I examined the rise in opioid deaths between 1992
and 2012. The strongest correlate of those deaths is the share of the
population on disability. That connection suggests a combination of the direct
influence of being disabled, which generates a demand for painkillers; the
availability of the drugs through the health-care system; and the psychological
misery of having no economic future.
the benefits received by nonemployed persons may make their lives easier in a
material sense but won’t help reattach them to the labor force. It won’t give
them the sense of pride that comes from economic independence. It won’t give
them the reassuring social interactions that come from workplace relationships.
When societies sacrifice employment for a notion of income equality, they make
the wrong choice.
when they do focus on long-term unemployment, too often advance poorly targeted
solutions, such as faster growth, more infrastructure investment, and less
trade. More robust GDP growth is always a worthy aim, but it seems unlikely to
get the chronically jobless back to work. The booms of the 1990s and early
2000s never came close to restoring the high employment rates last seen in the
1970s. Between 1976 and 2015, Nevada’s GDP grew the most and Michigan’s GDP
grew the least among American states. Yet the two states had almost identical
rises in the share of jobless prime-age men.
spending similarly seems poorly targeted to ease the problem. Contemporary
infrastructure projects rely on skilled workers, typically with wages exceeding
$25 per hour; most of today’s jobless lack such skills. Further, the current
employment in highway, street, and bridge construction in the U.S. is only
316,000. Even if this number rose by 50 percent, it would still mean only a
small reduction in the millions of jobless Americans. And the nation needs
infrastructure most in areas with the highest population density; joblessness
is most common outside metropolitan America. (See “If You Build It . . .,”
while it’s possible that the rise of American joblessness would have been
slower if the U.S. had weaker trade ties to lower-wage countries like Mexico
and China, American manufacturers have already adapted to a globalized world by
mechanizing and outsourcing. We have little reason to be confident that
restrictions on trade would bring the old jobs back. Trade wars would have an
economic price, too. American exporters would cut back hiring. The cost of
imported manufactured goods would rise, and U.S. consumers would pay more, in
exchange for—at best—uncertain employment gains.
techno-futurist narrative holds that machines will displace most workers,
eventually. Social peace will be maintained only if the armies of the jobless
are kept quiet with generous universal-income payments. This vision recalls
John Maynard Keynes’s 1930 essay “Economic Possibilities for Our
Grandchildren,” which predicts a future world of leisure, in which his
grandchildren would be able to satisfy their basic needs with a few hours of
labor and then spend the rest of their waking hours edifying themselves with
culture and fun.
But for many
of us, technological progress has led to longer work hours, not playtime.
Entrepreneurs conjured more products that generated more earnings. Almost no
Americans today would be happy with the lifestyle of their ancestors in 1930.
For many, work also became not only more remunerative but more interesting. No
Pennsylvania miner was likely to show up for extra hours (without extra pay)
voluntarily. Google employees do it all the time.
is not foreordained, because entrepreneurs can always dream up new ways of
making labor productive. Ten years ago, millions of Americans wanted
inexpensive car service. Uber showed how underemployed workers could earn
something providing that service. Prosperous, time-short Americans are
desperate for a host of other services—they want not only drivers but also
cooks for their dinners and nurses for their elderly parents and much more.
There is no shortage of demand for the right kinds of labor, and
entrepreneurial insight could multiply the number of new tasks that could be
performed by the currently out-of-work. Yet over the last 30 years,
entrepreneurial talent has focused far more on delivering new tools for the
skilled than on employment for the unlucky. Whereas Henry Ford employed
hundreds of thousands of Americans without college degrees, Mark Zuckerberg
primarily hires highly educated programmers.
change this dynamic? The first step is to improve Americans’ skills. The
jobless rate is about 8 percent for prime-age men with a college degree or more
but more than 22 percent for men with only a high school diploma or less. We
have levers that can improve educational outcomes, like the very best early-childhood
programs and charter schools. Such innovations should be expanded and made
better through competition and evaluation.
also improve the way that we do vocational education. (See “Vocational Ed,
Reborn,” page 36.) Many vocational schools, like Boston’s Madison Park High
School, have long been troubled. The most ambitious students avoid getting
tracked onto a vocational path, and they—and their parents—want schools that
focus on college readiness. Consequently, less fortunate or struggling students
often get segregated into these vocational centers. The conventional teachers
in many vocational programs often lack the know-how for teaching either
high-paying blue-collar trades, like plumbing, or cutting-edge fields, like
effective approach might be to keep students in college-readiness-oriented
schools and experiment with out-of-school vocational training. Kids could be
taught after school, on weekends, and during the summer by programs
specializing in particular occupations. These initiatives can be evaluated
swiftly—you can readily determine if a program has produced, say, good
carpenters. The superior training programs can then be scaled up and bad ones
shut down. Adopting this structure would mean that anyone could potentially
compete to run the programs—trade unions, private providers,
nonprofits—increasing the chances that some programs will excel. We should also
be open to initiatives like Cambridge, Massachusetts’s “The Possible Project,”
which has been training youths, many from poorer backgrounds, to launch
themselves in the start-up economy. (I am currently working on a randomized
control trial for the project.)
present the toughest training problem. The extensive literature on retraining
adults for new jobs has few success stories. We must keep trying; here, too,
the more experimentation, the better.
up-skilling workers, we should lower the regulatory barriers to
entrepreneurship. It’s a sad fact that America tends to regulate the entrepreneurship
of the poor much more stringently than it does that of the rich. You can begin
an Internet company in Silicon Valley with little regulatory oversight; you
need more than ten permits to open a grocery store in the Bronx.
permitting would be a good step, especially in poorer areas. If new businesses
had only a single regulatory office to satisfy, the obstacles to
entrepreneurship would be less daunting. One-stop permitting would also make it
easier to evaluate the regulator on its speed and the number of permits issued.
Permitting shops could specialize in the languages and businesses most common
in their areas.
licensing is another area crying out for reform. The University of Minnesota’s
Morris Kleiner has found that the share of American workers who need an
occupational license has increased from 5 percent in the 1950s to 29 percent in
2008. States now credential interior designers, tree trimmers, and even
florists. In many cases, these requirements are merely means for protecting
incumbents from competition. When we license basic service jobs, we make it
tougher for the jobless to find something new to do.
entrepreneurs can solve our joblessness crisis only if the U.S. stops
incentivizing joblessness. Consolidating social policies would be a crucial
step. Struggling families now receive food stamps, housing vouchers, Temporary
Aid to Needy Families, and other assistance—all of which punish work. If the
various programs were combined into a single cash benefit, that benefit could
be designed so that the tax on earnings never went above 30 percent. We could
follow the lead of Norway on unemployment and disability insurance, allowing
the disabled to keep, say, 50 percent of their benefit above the $1,170
threshold, while tightening the requirements for being designated as disabled.
Unemployment insurance could be structured so that payments were no longer contingent
upon staying completely out of work.
Earned Income Tax Credit (EITC) offers a design model, by providing funds that
initially scale up with earnings, especially for lower-income families with
children. Economists Nada Eissa and Jeffrey Liebman found that the credit’s
introduction in 1986 increased labor-force participation significantly. The
EITC was instituted during one of those rare moments in modern U.S. history
when policymakers wanted to avoid rewarding joblessness.
We also need
to make hiring workers less costly for employers. Temporarily cutting the
payroll tax was one of the most constructive policies adopted during the Great
Recession. We could enact a permanent payroll-tax reduction. The tax could be
gradually phased in for workers once their hourly earnings went beyond a
certain threshold. The payroll tax could be eliminated for workers who had been
unemployed, at least for an initial period. The costs of reducing the payroll
tax could be offset by raising the minimum retirement age for employees who
hadn’t paid these taxes for enough years. Reducing mandated benefits, like
health care, that employers must provide lower-income earners would help
encourage work, too. Ideally, the reform of our health-care system will ensure
that workers have health-care options that don’t unduly burden employers.
pay needs one final, major policy initiative: wage support, which would replace
the EITC. The EITC had the right overall idea, but it is cumbersome and
indirect. Instead, the federal government could simply provide pay to increase
the earnings of minimum-wage workers by a fixed amount—say, $3 per hour.
Consequently, a worker paid $7.25 would take home $10.25 hourly, with the
difference paid for by taxpayers. The subsidy could fall gradually as wages
rise, and it could be targeted for specific groups—larger for returning
veterans or the long-run jobless—and rise or fall with the level of aggregate
unemployment. The phaseout might slightly slow private-sector wage growth, but
the cost would be more than offset by the benefits of such a visible push
toward employment. Such a program would be expensive, so it should be matched
with spending reductions for other social services.
The rise in
joblessness is not inexorable. But to solve this crisis, we must educate,
reform social services, empower entrepreneurs, and even subsidize employment.
That is an ambitious—but necessary—agenda for ending the war on work before it
consumes another generation of Americans.
The new reports show that in addition to
“traditional” coping strategies of skipping meals and eating cheap food, these
teens and pre-teens are increasingly forced into shoplifting, stealing, selling
drugs, joining a gang, or selling their bodies for money in a struggle to eat
AMERICA STUDENTS STARVE:
Report on the impact of
"Possibly most affected by this shift in the economy is the
Millennial generation, those aged 18-30. The report notes that more
than half of those under age 25 participate in independent work, not
just in the United States but throughout the European Union
AMERICA’S BLUDGEONED YOUTH: Homeless, Hopeless and Addicted…. Will they
start the revolution?