Prime-age men may never return to U.S. workforce, Fed report says

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SHELLY HAGAN, BLOOMBERG

Men in their prime working years have left the labor force at an astonishing rate and they may never return if the state of the U.S. job market holds, according to a new report from the Federal Reserve Bank of Kansas City.

A decline in demand for middle-skilled work — a phenomenon dubbed “job polarization,” because more positions are concentrated at the higher and lower ends — has played a role in keeping prime-age men out of the job market, Didem Tuzemen, an economist at the Kansas City Fed, wrote in the paper released this week. Without job polarization, Tuzemen estimated that 1.9 million more prime-age men would have been employed in 2016.

Middle-skilled jobs are those that often involve routine tasks and are procedural or rule-based, making them easier to automate. On the other hand, low-skilled jobs are mostly service-oriented, and high-skilled jobs involve analytical or managerial skills — both of which involve responsibilities that are more difficult to replace with a machine or computer, Tuzemen said.

The participation rate of prime-age men — those 25 to 54 years old — has steadily decreased in the last half-century. As of January, 89 percent of prime-age men were in the labor force, down from around 97 percent following World War II, according to the Bureau of Labor Statistics. That includes people who are working, unemployed and actively looking for a job.

International trade and weaker unions have also contributed to the departure of men from the labor force, particularly as manufacturing jobs have moved to countries with lower wages. The men who have left the workforce are unlikely to return if labor conditions remain the same, possibly due to a lack of available jobs suitable for their skill set, according to the paper.