17 July 2013

The Flip Side Of Employment Equality

One of the dramatic stories of the last several decades has been the steady growth of female labor force partition from a baby boom low point.  Far less widely discussed has been the plunge in adult male labor force participation, which took a particularly deep plunge from which it has not yet recovered at all during the Great Recession. The article that is the source for the infographic below does an excellent job of documenting the dramatic decline in male labor force participation in a single generation.

But, it is silent on how the men who do not participate in the labor force or do so only marginally manage to survive without working or looking for work.

It has long been obvious that technological change would reduce the number of people per capita needed to produce a constant amount of goods and services.  But, how those members of society whose labor is not needed to meet the demands for production of goods and services spend their time and support themselves has been less well examined.

The relevant forces have differed by occupation and social class.  For the upper middle class, extended higher education for the young and early retirement for the economically successful are largely to blame.  For the working class, resort to disability benefits is a common strategy (and one that was no available when disability payments were less easily obtained) and a shrinking military has forced more men into the civilian labor market.  In some demographics, mass incarceration, both directly and by destroying the human capital value of ex-cons, has been an important factor.  Substitution of "house husbands" for "housewives" has played a relatively minor role, however.

This part of the post added in an update on July 18, 2013.

The reality of an economy with twenty million prime working age men who would have been employed at Eisenhower era employment levels, but are not today, is also highly pertinent to the question of why union power has declined.  It is common for progressives to argue that advances in workers rights from employer provided health insurance and benefits to the weekend and forty hour week were victories secured by unions.

An alternative hypothesis is that unions have declined because the weakening labor market has made them less able to deliver anything beneficial to workers.  There is also a fair reading of the history of unionization in the United States to argue that laws strengthening or reducing union power in the labor market have largely lagged after the economic reality has made this the de facto reality, rather than driving shifts in union power.

In this alternative hypothesis, one argues that unions were powerful only because of an exceptionally tight labor market driven by forces such as:
* export demand due to the destruction of non-U.S. manufacturing capacity in World War II,
* a reduction in the supply of able bodied men in the global economy due to WWII related deaths,
* pent up consumer demand in the wake of Great Depression and WWII austerity at home and abroad, and
* baby boom driven unavailability of women to be in the work force when they have small children.

Also, the economic impact of unions on the operation of the labor markets might mostly come from spreading work out among more people who work fewer hours per week with overtime provisions, as workers in a strong position economically chose leisure over greater financial compensation.  In the absence of these work spreading efforts, some (presumably more desirable or more motivated) employees would have worked more hours, while other people in the labor force wouldn't work at all.

Unions had an incentive to spread out work among more workers because creating more jobs shrinks the ranks of the unemployed and thus reduces the pressure on unions to compete with unemployed "hungry" men who need work.  If there is little slack in the labor market because we are near full employment, even if that full employment is created artificially via work spreading rules, employers will be under economic pressure to reach favorable bargains with their unions whether or not they are unionized, because they can't hire anyone else to do the work.

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