This summer, a group of Americans has grown to numbers larger than those reported during the COVID-19 pandemic or the Great Recession: the “not in the labor force” or NILF cohort.
This week, the New York Post declared that it’s a hot NILF summer out there. It cited data from the Federal Reserve Bank of St. Louis that shows a record NILF high of 105.8 million people over age 16 who aren’t currently working.
Now, since that definition is broad, we should address some of the obvious reasons why this all-time high is upon us. One is retirees, with 20% of the U.S. population belonging to the baby boomer generation. This year, the oldest baby boomers are turning 80 and the youngest are turning 62, which means they’ll all be able to collect Social Security benefits if they’re eligible.
According to the Post, retirees make up 50% of the total NILF population in the U.S. It also said that 45% of those NILF retirees took standard retirement at the age of 65 or later, while 3 to 5% retired early.
As the data suggests, retirees are only half of the story. Another factor is what labor economist Nicholas Eberstadt of the American Enterprise Institute called the “flight from work of prime-age men,” per the Post.
He said there are about 7 million of these men aged 25 to 54 in the U.S. Comparatively, there are only around 3.5 million women Eberstadt labelled as similar and “who are neither working nor looking for work, have no children under the same roof with them, and no husband present.”
Previously, Audacy has reported on the NEET phenomenon among Generation Z (born from 1997 through 2012) – that is the “not in employment, education, or training” crowd. We noted that younger Americans are finding it harder to get a job, get promoted and reach milestones like buying a house even if they put in an effort.
Those have all become an even greater concern with the growth of artificial intelligence. Already, companies have cited the technology as a reason for laying off human employees, and tech giant Meta was recently sued for allegedly using AI for conducting layoffs themselves.
“Disruptive technologies in the past have been really great for people who have had skills,” Eberstadt said. “Their productivity and incomes have gone up a lot.”
At the same time, he noted that these technologies can displace people who don’t have the right skills to work with them.
In an op-ed published this week in The Hill, John Mac Ghlionn noted that the percentage of men over the age of 20 working decreased from 86.4% in 1950 to under 70% today. He said possible reasons for this that have been floated include declines in construction and manufacturing jobs, automation impacting other blue-collar work, men staying in school longer and men becoming caretakers.
“Generation after generation, millions of men have exited the labor force. Some are disabled and some retired early, but a growing number have simply removed themselves from the economic ecosystem altogether, trading the daily grind for the blissful nirvana of doing absolutely nothing,” Mac Ghlionn said.
Around 22% of the NILF population are on long-term illness, disability, or other forms of benefits. That’s equal to more than 23.3 million Americans, more than the estimated 19% NILFs in full-time education. Around 5% of NILFS (equal to 5.3 million workers) have dropped out “because they are discouraged or they’re not even bothering to look for work,” said the Post.
The outlet noted that a “massive surge of 832,000 workers dropped out of the labor force in June alone,” and that the portion of Americans in the labor market is the lowest it’s been since the pandemic. Still, a news release issued this week from the Department of Labor showed that the insured unemployment rate was holding steady at 1.2%.
Eberstadt also “pointed out that other societies that are becoming older aren’t seeing the same patterns of dropouts,” according to the Post. Europe and Japan, for example, don’t seem to have the dropout issue.
“It’s not as if it’s impossible for aging, shrinking societies to mobilize more or involve more in the workforce,” Eberstadt said. He said that the sprawling nature of U.S. disability programs makes it hard to get complete numbers in that area, creating bling spots as to what exactly is going on.
