Another strong jobs report for November 2019 offers continued good news for the US labor market. Yet, low labor force participation among prime-age people remains a pressing concern, presenting somewhat of a paradox for federal policymakers. Nicholas Eberstadt first alerted us to this looming crisis in his September 2016 book, Men Without Work, and many of the issues he raised remain relevant today. Most experts agree that this trend signals an ominous future for American families, yet changes to federal policy — with a few notable exceptions — have largely been absent.
The Joint Economic Committee (JEC) highlighted this problem in a hearing last month, focusing their attention on ways federal policy can connect more people to work. As a committee comprised of 20 Republican and Democratic legislators from both chambers of congress, the JEC is tasked to “review economic conditions and to recommend improvements in economic policy.” As JEC Chairman Sen. Mike Lee (R-UT) implied in his opening statement, the challenges associated with declining work run much deeper than simply threatening people’s income. He said:
“If we are to expand opportunity by strengthening families, communities, and civil society, we must devote our attention to work — a means of supporting ourselves and our families, a source of meaning and purpose, and a site for affirming and satisfying relationships.”
Witnesses at the JEC hearing highlighted
four driving factors that could provide a useful framework for future policy
efforts: (1) Reforming government
policies that discourage employment,
including government regulations such as land use planning and occupational
licensing, and government programs such as federal disability assistance; (2) Supporting families in their caretaking
responsibilities — which might otherwise impede employment — by ensuring
access to paid time off after childbirth, and affordable childcare and
eldercare; (3) Treating and
accommodating health problems and disabilities that impede employment; and (4)
Removing barriers to employment for
the formerly incarcerated.
Federal policymakers have progressed toward some of these goals. The Trump Administration recently implemented new rules to strengthen work requirements in the Supplemental Nutrition Assistance Program. In 2018, Congress authorized additional childcare funding for low-income families as part of the Child Care Development Block Grant. They also passed the First Step Act last year, advancing criminal justice reforms with an eye towards effective reentry. And several efforts have been introduced by federal lawmakers to ease the caretaking responsibilities of new parents, including a recent bipartisan and bicameral bill, though none have become law.
Although these efforts are steps in the right direction, federal policy efforts have failed to address one of the largest opportunities for reform — federal disability insurance programs. Harvard professor Nicole Maestas summarized the problem with the Social Security Disability Insurance (SSDI) program in a recent article. She cited research showing, “a significant portion of SSDI entrants have substantial work capacity,” that, “they lose further work capacity during the SSDI application process because program rules require them to sit out of the labor market while they wait for a disability determination, a process that takes several years for some,” and, “once people finally enter the SSDI program, they are unlikely to return to work, even when offered work incentives.” She noted the challenge for policymakers by concluding, “the central policy trade-off for the SSDI program is to provide protection against disability-related earnings losses, but in a way that does not induce labor force nonparticipation among people who could otherwise work.”
Maestas recommends a number of reforms to SSDI, such as updating eligibility criteria to measure a person’s work capacity, allowing partial disability benefits, and better engaging employers through return-to-work programs. Problems exist in the Supplemental Security Income (SSI) program too, which is like SSDI, but targets people who never qualified for SSDI. Mary Daly and Mark Duggan made comparable recommendations as Maestas for SSI which in their view currently “provides all-or-nothing benefits that substantially lower a recipient’s incentives to work (or save).”
Reforming the nation’s disability assistance programs in these ways could have enormous implications for the work status of prime-age men in particular, the vast majority of whom identify illness and disability (and not a lack of jobs) as the reason for not working. As the JEC hearing reminds us, even in the midst of a strong economy, labor force nonparticipation threatens our economic and social fabric. Significant structural reforms to SSDI and SSI are essential to reversing that trend.
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