President Donald Trump has made it clear that the condition of U.S. workers and the economy is a priority for his administration and he has pledged to increase the number of U.S. jobs and decrease the unemployment rate. Trump’s economic plan aims to create 25 million new jobs over the next decade, a plan the described as “the most pro-growth, pro-jobs, pro-family plan put forth perhaps in the history of our country.”
So who in America isn’t working? And what determines labor force participation and unemployment rates in the U.S.? Research from Brookings highlights who in America is not working and why.
The out-of-work are a diverse group and there is no one-size-fits-all solution
The question of how to help people find work is more usefully conceptualized as “what works best for whom?” To better understand Americans on the sidelines of the labor market, Martha Ross and Natalie Holmes of the Metropolitan Policy Program used cluster analysis to sort out-of-work people at the local level into different groups most likely to benefit from similar types of employment-related assistance, based on their demographic characteristics and work history. Correspondingly, they identified a number of evidence-based employment, education, and training strategies suitable for the different groups, including bridge programs for people with low reading and math skills, two-generation programs for parents of young children, and transitional jobs/social enterprise for people with very limited work experience.
About 24 million “prime-age” Americans are not in the labor force
Of the nearly 38 million men and 56 million women over the age of 16 who are not in the labor force, more than 7 million men and 16 million women are between 25 and 54 years old, according to a Hamilton Project report.
The report also details reasons why these nearly 24 million men and women of prime working age were not in the labor force in 2016. Caregiving is an important part of the story, accounting for about 40 percent of all prime-age nonparticipants, while disability accounts for roughly 30 percent. Hamilton Project director Jay Shambaugh and policy director Ryan Nunn discussed recent analysis on labor force participation:
Prime-age men, in particular, are out of the labor force at much higher rates than women. About 12 percent of all men aged 12 to 54 are not working; they are disproportionately low-income men without higher education, as Senior Fellow David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy, discusses in this video with Jason Furman, then chair of President Obama’s Council of Economic Advisers:
The unemployment rate varies greatly from city to city
In May 2017, the U.S. unemployment rate dipped to 4.3 percent (though in the August report it ticked up a tenth of a percent). The last two times the national unemployment rate was that low were in April 1998 and just before the Great Recession in 2007. Alan Berube explains that while the rate varies considerably from city to city, from a low of 1.7 percent in Ames, Iowa to a high of 19.2 percent in El Centro, California, the unemployment rates across the nation’s 388 metro areas vary less now than they did in 1998 or 2007.
The gap is growing between the skills demanded by today’s employers and those supplied by the labor force
Eleanor Krause and Brookings Senior Fellow Isabel Sawhill explain that the decline of labor force participation for prime-age men and women (ages 25 to 54) is due to both changes in what type of labor is in demand and a decline in the supply of labor. Developments in trade and technology have changed what type of skills employers require. While other sectors are creating jobs (such as high-wage managerial and technical jobs and low-wage service sector jobs), they often require different skills or pay lower wages.
Krause and Sawhill demonstrate increased automation has decreased the demand for low-skilled jobs, especially in the manufacturing industry. Manufacturing only employs two-thirds of the labor force that it did 30 years ago, even though manufacturing’s share of U.S. GDP has remained stable. This trend is especially stark in the auto-manufacturing industry.
At the same time, they highlight alarming trends in the supply side of the labor market, including a dramatic increase in premature mortality and high rates of disability and pain. Increased rates of disability and poor health affect the number of people who are able to work. This trend has the most harrowing effect on Americans aged 25 to 59 who have education levels lower than a four-year college degree. While rates of pain and disability have decreased for all Americans who hold a bachelor’s degree or higher, they have spiked for less educated Americans.
Apprenticeships can help solve America’s workforce issues
Richard Reeves praises President Trump’s recent executive order to expand industry-recognized apprenticeships in the United States. Reeves explains that this order could encourage employers to provide more training in the skills that they require. These apprenticeships could be an alternative for young people who want qualifications without a traditional academic degree. Likewise, Brookings Fellow Elizabeth Mann highlights how partnerships between community colleges and employers can provide high quality education and training to students in the skills that employers are seeking in potential hires.
To learn more, see more Brookings research on Labor Policy and Unemployment.