
Why 3.5M Americans in their prime years aren’t working - watchdogtimer
https://www.marketwatch.com/story/why-35-million-americans-in-their-prime-years-arent-working-and-no-its-not-video-games-2018-02-22?siteid=rss&rss=1
======
ekidd
I'm deeply skeptical of any explanation that claims that we have both a
"shortage of labor" _and_ "downward pressure on wages":

> _If men and women from the ages 25 to 54 took part in the labor market...
> [t]hat would be more fuel for the U.S. economy and a bigger source of
> workers for businesses crying out about a shortage of labor..._

> _Trade with China flooded the U.S. with cheap imports, forced domestic firms
> to shift operations overseas and put downward pressure on wages of less-
> skilled Americans._

There's an obvious capitalistic answer to this problem: If you're "crying out"
for labor, then you may need to offer more money. This will encourage more
people to work, or to acquire the skills you want—look at all those coding
bootcamps, for example.

Claiming that there's a labor shortage _and_ downward pressure on wages is an
extraordinary claim, and it requires a detailed explanation. Otherwise, the
obvious assumption is that somebody wants specialized skills for below-market
prices. If markets are good at one thing, it's adjusting prices to balance
supply and demand.

~~~
kmonsen
We see this all the time in tech, cannot find people is usually cannot find
people with the skills and experience we want for the price we are willing to
pay. This will always be true if you offer less than the current market rate
which startups seems to think they are entitled to.

~~~
psyc
What I've seen in tech is the idea that literally any number of false
negatives is worth avoiding a single bad hire. It's fine to claim that trade-
off is worth it to you, but it's ludicrous to simultaneously claim there's a
shortage of talent. That's just a shortage of risk-free opportunity. Hey, I
suffer from a shortage of risk-free opportunities too.

~~~
throwaway65536
In this age of ghosting people, it seems like everybody is just eyeing
everyone else for a reason to stop talking to them or pull the trigger on the
block button. We used to be socially-integrated enough to put up with people's
foibles and correct them until we are all within a liveable range. Now you
cannot confront or give feedback without it blowing up into hyperbole.

I have been openly asked about my politics at an interview for a Y Combinator
startup (Starsky Robotics). "We need to make sure you are not a horrible
person." One of my references later told me that the co-founder was on the
phone almost 20 minutes asking probing questions about me. No offer, no
feedback. Who stands a chance with that level of scrutiny?

~~~
mcguire
That would be an actionable question, no?

~~~
throwaway65536
I would rather spend time succeeding on my own merits.

------
will_brown
I can squeeze myself into that group due to long extents of unemployment in my
prime years and I:

\- graduated college early

\- graduated law school early

\- was a judicial law school

\- co-developed and sold a patent pending business method for the automated
calculation of fees in statutory litigation

In my specific case, especially in law, one thing holds me back (essentially
placing me on a do not hire blacklist) I have a blemish on my criminal record
for a possession of marijuana charge when I was 21 years old. Law is an old
school industry that doesn’t generally overlook that type of thing, I even had
1 interview end immediately right when that was asked/disclosed during the
interview itself. But even outside of Law I have applied to hundreds of jobs
without ever getting interviews, I have applied to all the tech companies (in
legal positions) without an interview. I have probably even applied to a dozen
or so YC companies and never a single interview, YC even invested in a start
up that is supposed to help people with criminal records get jobs and I
reached out for assistance and was told they couldn’t assist me. This brings
me to my second point, like there are “blacklists” and policies against
candidates with criminal records, there are just plain old blacklists and I
bet most of this 3.5 million are on them.

It’s not just People with criminal records either, people with poor credit are
on blacklists, people with employment gaps are on blacklists. These blacklists
are both internal company policies but also in some cases real shared lists
between recruiters and other lists HR checks. I’ll personally be alright
because I can make money without a _job_ but most can’t and need traditional
emoloyment. And they will never get a job because they are in in this endless
cycle of employment gap and poor finances (bad credit) that can never be
rehabilitated because of mindless policy. This also explains a class of people
ready and willing to be exploited in the gig economy.

~~~
k_sh
It sounds like you're probably located in CA, have you looked into getting
that possession taken off of your record, assuming the charge was in CA? The
statewide legalization effort yielded[0] a provision that allows for review
and possible expungement of marijuana-related charges.

[0]: [https://www.washingtonpost.com/national/convicted-of-a-
marij...](https://www.washingtonpost.com/national/convicted-of-a-marijuana-
crime-in-california-it-might-go-away-thanks-to-legal-
pot/2017/12/17/1e9a2564-d90f-11e7-b859-fb0995360725_story.html?utm_term=.66f3e3d7c9d7)

~~~
will_brown
I am in FL. I can seal/expunge the charge, as weird as this sounds if a
criminal charge is sealed or expunged an applicant to the Florida Bar has to
unseal/unexpunge the charge in order to apply to the Bar.

That’s really the reason I never took that step, though as a current member I
can now take that step.

------
tomohawk
I personally know several people who are no longer competitive in various jobs
due to the massive influx of illegal immigrants. These are tradesmen,
landscapers, and others who used to be able to support their families and live
in the area. Many of them now commute long distances (so they can live in
lower cost areas) for far less pay. Their children are not following them into
these jobs. And its not because they're unwilling to do the work. They're
priced out because their own government is unwilling to protect them from
these predatory practices.

~~~
hycaria
So how do the immigrants manage to go by and live with the same wage?

~~~
tomohawk
They're committing document and identity fraud and dodging taxes. They're
breaking housing laws by living multiple unrelated people (beyond legal
capacity) per dwelling. We just had 9 illegal aliens evicted from a 2BR house
not too far away.

Good for them (probably a step up from 3rd world conditions), but bad if you
want to maintain some quality of life.

~~~
elinmigrante
Your first sentence is a bit of an oxymoron. Allow me to explain.

Without resorting to identity fraud, its nearly impossible for undocumented
immigrants to find work because most employers require a social security
number for payroll purposes. Even though they use a fake identity, they still
get a paycheck, they still pay payroll taxes and pay into Medicare and Social
Security. However, they get none of the benefits. Undocumented immigrants have
no other choice but to commit identity fraud. Unfortunately for them, its a
necessary evil. Their intent is not to dodge taxes.

I'm not saying all undocumented immigrants pay taxes but most are not opposed
to it. A little google search will bring up plenty of research into this
topic.

[http://www.politifact.com/punditfact/statements/2016/oct/02/...](http://www.politifact.com/punditfact/statements/2016/oct/02/maria-
teresa-kumar/how-much-do-undocumented-immigrants-pay-taxes/)

[https://itep.org/wp-
content/uploads/undocumentedtaxes.pdf](https://itep.org/wp-
content/uploads/undocumentedtaxes.pdf)

To your point about them breaking housing laws, all I can say is that its true
but this isn't something that is limited to undocumented immigrants. Just take
a look at the hacker houses in the bay. Maybe what is needed is more
affordable housing.

I see where you're coming from but blaming undocumented immigrants for
lowering the quality of life is a disservice. The US benefits immensely from
undocumented immigrants but its something few want to admit.

~~~
Torwald
Those employers who employ illegals do not require such a SSN. It's the whole
point of employing illegals, to not have the regular overhead.

------
asdffdsa
There has to be a point where mere unemployment isn't stigmitized. Of course,
being lazy, unproductive, and at worst destructive has to be
condemned/disincentivized, but the association of unemployment to unproductive
and from unproductive to some sense of worthlessness/leeching has to be
amended in our society. Whether it's UBI, an increase in non-profits, and/or a
proliferation of diverse and meaningful government funded projects (arts,
public works, infrastructure), there are many ways to put people to meaningful
work and utility besides working for a for-profit corporation. I think
overcoming the stress induced by higher unemployment produced by automation
will be one of the biggest societal challenges America (and beyond) will face
in the coming decades. The outdated, 20th century model of work hard (for a
company) -> be happy/fulfilled/successful will change. Ultimately, I think
automation is for the best: let humans do what they do best (be creative,
think abstractly, form and implement new models of the world/society/some
concept, learn/iterate/improve/adapt) and let machines do what they do best
([generally speaking] automated tasks that require little improvisation or
flexibility).

~~~
CryptoPunk
Living on handouts or at the taxpayer's expense is not dignified or
sustainable, and should be discouraged. A fruitful strategy in my opinion
would be to encourage people to become financially self-reliant from passive
sources of income, to the point of not requiring employment income, by
building up their capital, and looking at the interventions done by the
government that impede capital formation, especially for those starting from
nothing, like:

* licensing restrictions that exclude amateurs and small businesses from participating in various industries (e.g. securities laws that prevent non-public-companies and unaccredited investors from issuing stock to the public and buying stock from non-public companies, respectively)

* occupational licensing

* high tax burdens

* government deficits crowding out lending to the private sector

* zoning restrictions causing housing costs in core economic regions to increase

------
whataretensors
I'm in my prime and relatively competent. The reason I'm broke working on my
own startup and not at a company is because every company or successful
project I've been a part of has not led to my success as an individual.

FTE at a startup is high risk low reward. You might think with funding a
startup is not high risk. It is. You are giving up the huge salary you'd get a
a megacorp. And don't even get me started on the common stock issue.

FTE at a megacorp is medium risk medium reward. Not high enough reward until
you get to the higher levels - difficult to do.

And also the dull monotone reward signal of direct deposit every two weeks is
so incredibly boring.

So now I'm left bootstrapping. The only thing left with high reward. It's
hard. My insurance sucks. Trying to work with other companies is obnoxious.
Every app store takes 30% and thinks they have employees without the
paperwork. One app store I built something for requested(demanded) never
ending meaningless changes then released a copy of my idea without telling me.
It wasn't even that good of an idea in retrospect.

The game is rigged and not optional. People everywhere hate rigged games.

------
purplezooey
_3.5 million Americans could either be at work today or looking for jobs. That
would be more fuel for the U.S. economy and a bigger source of workers for
businesses crying out about a shortage of labor._

Yeah right. It's my experience that companies do not care about picking up
anyone who is not already perfectly tailored for the role needed. If that
person hasn't been found, the req just sits there. Sometimes for a year or
more. That there is some "unfilled gap" of jobs is a fallacy.

------
mythrwy
There's a lot of challenges, automation, globalization, immigration, poor
schooling, poor family life, discrimination, clueless human resource
departments, unjust stigma from encounters with criminal justice system.

All these things are issues, part of the reason many people can't work.

With all that in mind, some (largish?) percentage of people not working are
simply unemployable. As in, they won't be able to do a job. Or they will make
more trouble than they will put out so are net negative to have employed and
thus don't stay employed. I don't know what can be done about this, probably
feed them and call it good. Not sure everyone is owed a job, at least the way
the system is set up now.

------
scilro
_> Higher minimum wages are probably another cause._

 _> After declining in inflation-adjusted terms from 1998 to 2007, minimum
wages rose almost 11% in real terms between 2007 and 2016, Abraham and Kearney
estimated. Firms may have outsourced jobs or spent more on automation to
offset the higher costs of low-skilled labor._

Is it just me, or is this a shockingly misleading paragraph? That minimum
wages rose in real terms tells us nothing. They may have kept in place with
inflation, or they may have even continued to fall in inflation-adjusted
terms. This is not an apples-to-apples comparison at all.

~~~
refurb
Real terms means inflation adjusted. Nominal means just the rate ignoring
inflation.

~~~
scilro
Thanks, all. I thought that "real" was the same thing as nominal.

------
galieos_ghost
Not sure why people are shocked by this, it's just the basic principle of
diffusion.

As long as america continue to allow free trade our wealth and jobs will flow
out of the country as countries seek cheaper labor and sell it right back to
America with no restrictions. The standard of living is raising in other
countries while lowering in the US. Labor is already getting too expensive in
China for cheap goods so companies are beginning to look at other countries
for cheap labor, or bring manufacturing back to the US and us automation to
make up the difference.

The US really has no incentive to allow this to happen. We have the largest
market in the world and could very easily do what China does if other
countries want access to it. The US allows anybody into our markets while
China bends them over the bargaining table requiring them to give up IP and
form joint ventures with Chinese companies. What incentive does the US have to
do "fair" trade? We have all the leverage in any negotiation but for years
haven't used that leverage. At some point we're going to have to or the
citizens are going to either rebel or accept lower standard of living, lower
income, and lower life expectancy.

I'm starting to believe that the reason Washington DC does nothing about the
opioid crisis is because it benefits them. If thousands of unemployed, heavily
armed rust belt men were not strung out and dying from addiction they probably
would have organized and marched on DC a long time ago and got payback on the
politicians who have sold them out for personal gain.

~~~
endorphone
Comments such as yours -- parroting Donald Trump like talking points -- are
remarkable when you consider that the US has the second highest purchase power
_in the world_.

 _The US really has no incentive to allow this to happen_

Except that it has opened trade for US companies, and the reported numbers are
often laughably misleading. Apple, for instance, nets almost all of the
profits from an iPhone, yet in the trade balance an iPhone magically counts as
a $1000 deficit with China. Further, it yields cheaper goods for Americans,
and more efficiency.

The US was literally _built_ on free trade, and sits right near the top
because of it, so to read these nonsensical "but what if" arguments borders on
parody. It is just a profound ignorance of history and even the most
rudimentary of economics. It is one of those amazing things where people
really, really don't understand what they have until they lose it.

~~~
badpun
> Apple, for instance, nets almost all of the profits from an iPhone, yet in
> the trade balance an iPhone magically counts as a $1000 deficit with China.

What good does Apple's record profits do for the US? Apple is owned by
shareholders across the world, and Americans benefit only insofar as they
actually own Apple stock.

~~~
oblio
Normally those profits would be taxed in the US...

~~~
PunchTornado
The profits made by Apple Germany are taxed in Germany. Profits made by Apple
US are taxed in the US. In theory... In practice very little of what they make
is taxed.

------
mcguire
_Next on tonight 's news: disability cheats, the millions of Americans who
could work, but don't._

Yep, I'm a cynic.

Then, there's this:

" _After declining in inflation-adjusted terms from 1998 to 2007, minimum
wages rose almost 11% in real terms between 2007 and 2016, Abraham and Kearney
estimated. Firms may have outsourced jobs or spent more on automation to
offset the higher costs of low-skilled labor._ "

I was unaware there were many minimum wage jobs that could be outsourced or
replaced. Most are in the service industries, right?

------
zaroth
I didn’t read the study, but an even bigger factor than SSDI is Medicaid
expansion. Free insurance with no co-pays and deductibles is worth a lot of
money if you consume any healthcare services, and you can only get it if you
_don’t_ earn more than 140% FPL.

~~~
dragonwriter
> Free insurance with no co-pays and deductibles is worth a lot of money if
> you consume any healthcare services, and you can only get it if you don’t
> work.

The Medicaid expansion population is up to 138% of Federal Poverty Level, so
it's not “available only if you don't work”, and the vast majority of states
participating in the expansion impose cost sharing requirements (which work
like deductibles, though at least the ones I know well are monthly rather than
annual), so it's mostly not “with no copay or deductible”.

~~~
DrScump
The Medicaid population excludes those who pay any portion of subsidized ACA
policies, even when the subsidy is 95+% (e.g. paying $10/month for a Bronze
policy with the taxpayers paying the other $500+).

~~~
dragonwriter
> The Medicaid population excludes those who pay any portion of subsidized ACA
> policies

The ACA subsidy minimum income in Medicaid expansion states is the exact
minimum amount that fails to qualify for Medicaid expansion in the first
place, so such an exclusion is irrelevant to the expansion population (the ACA
minimum is lower—100% of FPL—in states that don't expand Medicaid, but that's
obviously immaterial to the effect of Medicaid expansion.)

Medicaid cost sharing is, in case you are unclear, also a completely different
thing than the recipient paying a subsidized ACA premium, it's being on
Medicaid and paying the first $ _N_ /month for Medicaid services, where _N_ is
income dependent, out of pocket.

------
hisforehead
I'm one of these, it sucks. Several career starts failed, having to rebuild
again.

------
yusuke10
On the one hand, US is doing great. US grew 3% annualized last year, on a base
of 19T, the most in the world. That's very impressive considering how big the
base is to even have such a big percentage. You can compare that to China,
where they had to keep reporting a fake 7% growth despite their provinces
confessing to a 20-30% fake revenue. In the last 40 years, America's middle
class shrank 7%. However, the lower middle class shrank 7% as well, and the
upper middle class grew 16%.
([http://money.cnn.com/2016/06/21/news/economy/upper-middle-
cl...](http://money.cnn.com/2016/06/21/news/economy/upper-middle-
class/index.html)) . Implying that alot of the lower middle and middle had
moved up. Especially in certain cities like San Francisco or Santa Clara,
where there is just an abundance of $130k+/year jobs (and contrary to popular
belief, one can easily save $50-60k/year by renting a room in a house at
$1000/month).

On the other hand, it seems like the lower class has barely budged, and has
remained in place and their quality of life has suffered. They have been
losing manufacturing jobs to China and other countries (20M at the height in
1970, 12M currently [http://money.cnn.com/2017/04/07/news/economy/us-
manufacturin...](http://money.cnn.com/2017/04/07/news/economy/us-
manufacturing-jobs/index.html)). However, now with an administration dedicated
to bringing jobs back from overseas (with focus on manufacturing), and
enacting tariffs on countries that competes by flooding the market and
destroying local competition, the jobs for lower class should be growing
starting this year. The current solar/washing machine tariff, and upcoming
steel and aluminum tariffs against China should help.

~~~
humanrebar
> and contrary to popular belief, one can easily save $50-60k/year by renting
> a room in a house at $1000/month

What if you have a family?

------
curuinor
Causal statements. No experiment means you shouldn't make causal statements.

You can have natural experiments, but I don't see any. Did they try kidnapping
Congress and forcing them to do a total embargo on China? Seems a no.

~~~
NumberSix
Asteroid is discovered in deep space heading for Earth. Astronomers watch the
asteroid approach Earth. Asteroid hits New York City. Millions die.
Astronomers and media report:

"Asteroid from deep space kills millions. Asteroid causes death of millions."

No experiment is possible. Causation is clear.

~~~
curuinor
I'm sorry to be seeming to make a straw man, but do you actually in sober
thought think that economics is as well-understood as physics?

~~~
craftyguy
Did you just post a rebutal to your original comment calling for
'experiments'? If economics is as mysterious as you say, how can you design
experiments that produce verifiable and reproducible results?

~~~
curuinor
Physics has had a lot of predictive power: economics hasn't. "Asteroids are
incredibly powerful" is a physical statement, and a physical statement of
causation that you can only make because physics is better-understood.

With exceptions, physical statements have predictive power. With exceptions,
economic statements don't. So that's why I say that causality in economics is
not generally understood.

