Drugs and Dropouts

Why are so many men not working?

Photo: Arielle Jay. Source: Morguefile

Over the past 40 years the rate at which prime-aged men participate in the labor force has fallen from 94% to 88%. That may not seem like a lot, but it’s over 7 million men who could be working, but aren’t. They’re not retired – it takes a lot of money to pay for retirement that early. Some of them are in school, but not enough to explain why the US has fewer men working than any other country, except Italy.

It could be because wages are so low and disability payments are so high. That means there’s less incentive to work. It could be that a lot of these labor force dropouts have criminal records. There are over 20 million current and former felons among the population. It’s a lot harder for convicts to find a job, so they get discouraged and drop out. But drug abuse is a major issue. Nearly half of all non-working prime-aged men take opioids daily, either because they’re sick or because they’re addicted. A recent study in Ohio found that over 10% of the population had been prescribed pain-killers over a three-month period.

Labor Force Participation Rate for Men Aged 24-54. Source: Bureau of Labor Statistics

This is a vicious cycle. There are millions of open positions that companies want to fill. Many of these jobs come with training, good wages, and health insurance. But firms need sober workers – monitoring precision machinery or interacting with customers. You can’t do that very well when you’re high, and firms have zero-tolerance drug policies, for good reason.

Yellow line is job openings. Source: Calculated Risk, BLS

The latest employment report shows our economy continues to create jobs faster than people are entering the labor force. Unemployment is going down and wages are going up. The Fed is gradually raising interest rates. Companies are expanding, but job openings are going unfilled. The workers needed to fill them are staying home, stoned, watching TV.

Douglas R. Tengdin, CFA

By | 2017-07-17T12:21:19+00:00 May 8th, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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