Men Locked Out After Lock-Up

(Originally published here.)

The share of men in their prime who are part of the workforce has been falling for years and nobody really knows why.

If the participation rate had held steady at about 94 percent, there would be more than 3 million additional men aged 25-54 either employed or looking for work.

One possible explanation, recently offered by Robin Harding at the Financial Times, is that the crime wave of the 1970s and 1980s, combined with tougher policing and sentencing rules, has stigmatized more and more men with criminal records who served time in prison. These men have a harder time getting a job once they are released and may choose to drop out of the labor force — even though people with criminal backgrounds tend to be better employees in certain industries.

No one should minimize how hard it is for people who have been in prison to reintegrate into the workforce (this is a good survey of the evidence), but there is reason to think that changes in the economy offer a better explanation for the decline in male labor-force participation.

One way to see this is to count the number of men released from prison each year relative to the number of men aged 25-54 who aren’t in prison. If the stigma of prison were having a big effect on whether men are looking for jobs, you would expect an increase in the release rate to lead to a decrease in the participation rate without much of a lag. Yet while the release rate has increased a lot since the early 1980s, most of that increase occurred in years when the participation rate was holding steady. By contrast, the release rate was unchanged or falling in the early 1990s, early 2000s and the past few years.

Economists at the Center for Economic and Policy Researchconcluded that “ex-offenders lowered overall male employment between 0.7 and 1.7 percentage points” in 2008. That’s a significant public-policy problem but it only explains about one quarter of the total decline in prime-age male employment rates from 1978 through 2008. Since 2008, of course, the share of men in their prime with a job fell much more and is now about 8 percentage points lower than it was in 1978.

Here’s a simpler idea: Many men dropped out of the labor force during recessions that ravaged male-dominated industries and the jobs never returned. Of the 5.6 percentage point decline in the prime-age male participation rate since 1978, 4.9 percentage points occurred when the economy was shedding manufacturing and construction jobs. After long stretches in which they couldn’t find work, some of those unemployed men probably decided to give up looking for work.

The rising number of prime-age men who are either unable or unwilling to work is a social problem, and improving the criminal justice system is doubtlessly a worthy goal, but it isn’t obvious that the two issues are connected.

To contact the writer of this article: Matthew C. Klein at mklein62@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.

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About Matthew C. Klein

I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist on a fellowship provided by the Marjorie Deane Financial Journalism Foundation. I have worked at the world's largest hedge fund and read every FOMC transcript since May, 1987.
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