For American workers, the summer labor market is being defined by a striking rise in NILFs — people classified as “not in the labor force.”
The NILF population climbed to a record 105.8 million adults in June, the highest level ever recorded, according to data from the Federal Reserve Bank of St. Louis.
That milestone followed a sharp one-month jump, with 832,000 people leaving the labor force in June alone. The total now exceeds the levels seen during both the Great Recession and the peak of the COVID-19 pandemic.
The category is expansive: it includes Americans age 16 and older who are not currently employed or actively counted in the workforce, such as retirees, students and others outside the job market.
But labor economist Nicholas Eberstadt told The Post that a closer look at the numbers points to a troubling trend, especially among men leaving work behind.
“We’ve got a big problem…with the flight from work of prime-age men. And what’s been carrying the overall prime-age labor force participation has been the strong involvement of women, not men,” said Eberstadt, who holds the Henry Wendt Chair in Political Economy at the American Enterprise Institute.
Roughly 5.3 million people — about 5% of those counted as NILF — are out of the labor force because they are discouraged or have stopped looking for a job altogether.
Another major share is tied to health and benefits: as much as 22% of America’s NILF population is receiving long-term illness, disability or similar support, amounting to more than 23.3 million people.
That startling figure is even higher than the percentage of Americans over 16 in full-time education, which is between 16 and 18%, or just over 19 million Americans.
By far the largest segment of the NILF population is retirees, who make up up to 50% of the total Americans not working. That’s not surprising, given the large cohort of Baby Boomers who are in their golden years.
Some 45% of NILFs are retirees who took standard retirement at the age of 65 or later. About 3-5% retired early.
While the absolute number of NILFs is at a record, the portion of Americans in the labor market hit 59% in June. That’s the lowest since September 2021, as the US emerged from the pandemic.
Before that, the portion of Americans in the labor market only dropped so low after the Great Recession.
Turn on, tune in, and drop out
Another factor for Eberstadt is the increasing number of dropouts — otherwise fit and healthy Americans opting not to work or try to work.
“Very roughly speaking, there are about 7 million of these men who are out of the labor force for the 25-to 54-year-olds,” said Eberstadt, whose 2016 book, “Men Without Work,” discussed the phenomenon of American men in their prime leaving the workforce.
However, the issue isn’t limited to men, he argues.
“There are about 3.5 million women who are kind of like the doppelgangers to this,” he said.
“There’s a growing group of dropout women who are neither working nor looking for work, have no children under the same roof with them, and no husband present.”
An American issue
While some of these factors could be put down to a rapidly aging population, Eberstadt pointed out that other societies that are becoming older aren’t seeing the same patterns of dropouts.
“If you look at what’s going on in Europe and Japan, which are both aging, shrinking societies, their workforce participation rates are going up now. So it’s not as if it’s impossible for aging, shrinking societies to mobilize more or involve more in the workforce,” he said.
“These are the healthiest, best educated Americans that have ever lived on the planet,” Eberstadt said.
He puts America’s growing NILF population down to a sprawling, disconnected archipelago of disability programs, which he argues offer many “blind spots” allowing people to fall through the cracks.
“The extent and the sprawl of participation or dependence upon different disability programs is a blind spot,” he said. “There’s no office in Washington, DC, big as it is, that can tell you how many Americans are receiving benefits from which disability programs and how many in collectivity and how many are receiving from multiple disability programs.”
No to UBI
With AI becoming increasingly integrated into “white-collar” industries, raising fears of mass job cuts, there have been calls to bring in a so-called universal basic income, or UBI — which pays people for merely existing.
However, Eberstadt warns that this would only worsen the number of dropouts in American society.
“Disruptive technologies in the past have been really great for people who have had skills,” he said. “Their productivity and incomes have gone up a lot.
“They’ve also displaced a lot of labor for people who don’t have skills. It looks like we’re going to be on that same track with AI, wherever it goes in the next 18 months or 10 years,” Eberstadt said.
“When Henry Ford came down the road, I don’t think that anybody had any idea what a combustion engine was going to do in mass-produced cars,” he said.
“But I would not like to see a guaranteed income, a UBI. Because I look at how men who are neither working nor looking for work say that they are spending their days now. And it is very depressing to see what they say they are doing. And I wouldn’t like us to be buying more of that,” he said.
“They are not engaged in civil society, not helping out around the house, not getting out of the house. Spending 2,000 hours a year in front of a screen. That’s a great warm-up act for becoming a statistic in deaths of despair,” he said.
