The Great Recession and its aftermath produced a sharp decline in employment. Almost eight million more Americans would be working today if the labor force participation rate were unchanged from 2007. Some economists suggest that video games may explain this decline.
Many economists have focused on the work patterns of men in the prime working years of 25 to 54. Workforce participation for this group was 98 percent in 1954, and held steady through the mid-1960s. Today it stands at 88 percent.
Increased college attendance and early retirement should not be affecting work in these years. Men may be working less because they are being Mr. Mom and staying home now that their wives can pursue professional careers. And yet America has not followed Michael Keaton’s example; the percentage of nonemployed men with a working spouse is lower now than in the 1960s.
Less educated men are working relatively less. College graduates, men with some college, and high school grads and drop outs had workforce participation rates in 1964 between 96 and 98 percent. In 2014, 94 percent of college grads were in the workforce, versus 83 percent of high school grads. Each successive age cohort of men is working less as well.
These trends all pre-date the Great Recession, and so may not explain the sharp recent decline. Indeed, they seem like the type of societal changes that drive slow, steady labor force changes. But the participation rates of men without college degrees dropped by four percentage points after the Recession.
Enter the video games argument. University of Chicago economist Erik Hurst and co-authors focus on men ages 21 to 30, whose annual hours worked declined by 12 percent since 2004. Time use surveys show that these young men now spend more hours playing video games. Hurst and his colleagues offer statistical evidence that collaborative online video games (which emerged around 2005) are keeping young men without college degrees out of the workforce.
Aggregate statistics, however, merely sum decisions and do not show us the individuals’ circumstances and life goals. People have a right to live as they choose, and decisions about work are among the most fundamental life choices. The labor force participation rate can fall for perfectly legitimate reasons.
The important question is whether Americans’ free and informed choices are driving the labor force participation decline. Or are government policies encouraging men to leave the workforce? Enrollment in Federal disability, the SSDI program, has indeed increased significantly. The decline in male employment, however, significantly exceeds the increase in SSDI rolls; many nonemployed men are not on disability.
The young men who are not working appear generally to be living off of, or with, their parents and not the government. Hurst and his colleagues report that 67 percent of nonemployed young men lived with a parent in 2015, versus 46 percent in 2000. Despite tales of college graduates living with their parents, statistics show that high school grads do so more frequently.
Is there anything wrong with Junior living with his parents? Not really, if Junior and his parents agree to this, and especially in the short run. Parents’ support of their grown children reflects their prosperity, and perhaps substitutes for not having grandchildren to spoil.
One thing does concern me though. I recently wrote about many Americans’ apparent lack of savings for retirement, one of several instances where people make decisions inconsistent with what they judge to be in their long run interest. Will playing video games still seem like a good idea if Junior never establishes a career and earns much less over his lifetime than his parents? As a libertarian economist I am reluctant to ever criticize peoples’ decisions. But I can offer a thought experiment. Suppose we used Marty McFly’s time machine to check on how Junior is doing in thirty years. With this knowledge, would Junior and his parents decide that he should get out of the basement and start a career?
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.