The decline in social status relative to higher-paid peers It’s one of the main reasons so many American men have dropped out of the workforce, according to a study examining a conundrum that has baffled economists for decades.
(Read: Minimum wage: position of each of the parties in the negotiation).
According to research by Pinghui Wu, an economist at the Federal Reserve Bank of Boston, men’s perception of their status in the labor market it largely depends on what they earn compared to their peers of a similar age.
And as their salaries have fallen behind those of their more educated peers, men without a college degree have been more likely to drop out of the workforceWu wrote.
Younger white men, in particular, are more likely to drop out of the job market when their salary expectations fall in relative terms, he added. The results add to the extensive body of research that attempts to explain why one in nine men in the so-called age of maximum labor activity (ages 25-54) are out of the job market today, up from one in 50 in the mid-1950s.
Wu’s study attributes this in part to rising income inequality in the US in recent decades. “If the widening wage gap between the highest and lowest earners directly or indirectly affects the aggregate labor supply of men, wage inequality could have had broader repercussions on the economy than previously thought.Wu wrote.
(Also: How happy are Colombians in their work?).
Other researchers have cited possible causes, such as the decline in manufacturing jobs traditionally held by menthe increase in family income as more women enter the labor market, the increase in public aid and drug addiction.
Now there are also a record number of young adults who continue to live with their parents longer than in the past. Wu focused on men’s loss of status and incentives to work, who saw their social standing and purchasing power erode over time.
The average weekly income, adjusted for inflation, of men working-age people without college education in the United States fell 17% in the last 40 yearswhile their college-educated peers saw a 20% increase, Wu wrote.
The Women far outnumbered their male counterparts during that period, regardless of their educational level, with an increase of 32%. But they were starting from a much lower base. And Wu found that men’s status and participation in the labor market are primarily correlated with the earnings of other men, not women.
(Keep reading: Government, behind the formalization of almost 1 million contractors).
Last month, the proportion of men over the age of 20 who were working or looking for work fell to 70.2%, the lowest level in three months and a rate well below pre-COVID levels.
Bloomberg
