If one economic fact could explain Donald Trump’s success it would be America’s declining male labour force participation rate. More than one in six US men without a college degree do not have jobs or are looking for work — a picture far worse than in France and other supposedly sclerotic labour markets. Even including those with college degrees is unflattering. Almost one in eight American men have dropped out of the workforce altogether. Nor is the picture much rosier for women. Among the rich club of OECD countries, only Italy and Israel have a lower female workforce ratio. Had the labour force stayed at the same level it was before the 2008 recession, the US jobless rate would now be almost double today’s rate of 4.7 per cent.
Here is the most vexing thing: almost all the trends still point in the wrong direction. Unless there is a drastic shift in US policy, the participation rate will keep falling. Each year a higher share of baby boomers is set to retire. Prospects for boosting the intake of immigrants to America look highly unrealistic — just ask Mr Trump. Budgets for retraining deskilled US workers are stuck at nugatory levels — just a sixth of the OECD average as a share of national income. And the chances of an overhaul to the US penal system, which shuts out millions of ex-felons who would otherwise be capable of working, look modest. Since the recession ended in 2009, the US labour force participation rate has fallen from 65.7 per cent to 62.4 per cent. If the economy had been functioning as it should, that number ought to have gone in the other direction, as it has in Britain. Instead, it looks set to head further south in the coming years.
What, then, is to be done? In his diagnosis of the problem, Jason Furman, head of President Barack Obama’s Council of Economic Advisors, sets out a cocktail of prescriptions. None in themselves would be enough to fix America’s labour market crisis. But taken together they could make a large dent. Top of the list is a dramatically better system of worker retraining and job market assistance. America’s community colleges should be much more effective at giving workers relevant skills. At the moment, they suffer from horrific dropout rates. Nearly half of all enrolled students fail to complete their two-year degrees.
Likewise, the US is now a generation behind most rich countries in terms of family and childcare benefits. With just 12 weeks of unpaid leave, maternal (and paternal) rights are little better than nothing. In almost half of US states, the monthly cost of full-time childcare exceeds average housing rental costs. It is little wonder so many pregnant women drop out of work. The same applies to sick leave. The US could also boost its minimum wage, allow non-violent ex-felons to expunge their criminal records, and adopt a wage insurance system to tide employees through hard times.
Many of the solutions are self-explanatory. Yet there is a gargantuan flaw. As with much else in Washington, the more obvious the remedy, the less willing the political system is to adopt it. Mr Trump’s economic plan is skewed to almost every group other than his core supporters. The more you earn, the bigger the tax windfall under Mr Trump. Hillary Clinton, by contrast, has adopted many of the items on Mr Furman’s list. But there is little in her campaign to inspire confidence she will have better luck than Mr Obama at persuading Congress to enact them. The US seems to be stuck in a bad feedback loop. The worse the middle class feel, the more embittered politics becomes — and the less likely it will deliver the obvious fixes. Whomever is able to sever this Gordian knot will be the genius of their age.
This article has been amended to correct the number of men without a job or looking for work
Copyright The Financial Times Limited . All rights reserved. Please don't copy articles from FT.com and redistribute by email or post to the web.