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EXCLUSIVE: Government programs and policies are exacerbating a decades-long labor exodus as Americans increasingly disconnected from the labor market, according to a new analysis released Wednesday by the Joint Economic Committee Republicans.
The study, shared exclusively with FOX Business, found that the United States is experiencing an unprecedented increase in the number of prime-age workers voluntarily leaving the workforce. For men, the trend goes back 50 years, with the activity rate for men rising from over 97% in 1955 to 89% before the COVID-19 pandemic; for women, the decline in labor market participation has started over the past two decades.
“As the number of Americans receiving government assistance has grown, more Americans have voluntarily quit their jobs,” Sen. Mike Lee, senior Republican member of the JEC, said in a statement. “Congress’ plan to spend an additional $ 3.5 trillion to provide households with new subsidies and fewer incentives to work would only make matters worse.”
The decline in labor force participation in the prime of life has been mostly voluntary: only 12% of unemployed men who are in their prime and able-bodied said they wanted a job or were ready. to work. At the same time, among men who do not work for reasons other than disability, retirement, school or household chores, 41% have personally received government assistance.
“Government policies can tip the balance of work,” according to the analysis. “A growing number of Americans are receiving government assistance, which has been shown to reduce employment.”
What’s more, a growing number of Americans in general are receiving government assistance, even as economic conditions improved before the pandemic, the study shows. For example, the share of working-age Americans living in households between the 20th and 50th percentiles of income who benefit from government programs increased from 20% to about 30% between 1998 and 2014.
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“This growth in the benefits of the safety net probably makes non-employment more attractive and has contributed to the decline in labor force participation,” the report said.
Empirical evidence suggests that government money, especially those that don’t require work, tends to reduce employment. Labor force participation and earnings decline after individuals receive housing assistance, while loss of Medicaid coverage increases employment – but obtaining coverage may reduce it. The introduction of food stamp programs in the 1960s and 1970s also significantly reduced employment.
JEC Republicans have suggested that policymakers could help reconnect Americans to work by removing financial disincentives and removing barriers through professional licensing reform, better-targeted non-compete agreements, and reinstatement of workers. previously incarcerated people, among other stages.
The analysis also proposes that Congress examine “work disincentives” in welfare programs like Medicaid, Social Security Disability Insurance, Supplementary Security Income, Unemployment Benefits, and Food Stamps (known under the name of Supplementary Nutritional Assistance Program or SNAP).
While the study focuses on the run-up to the pandemic and before Congress passed three massive stimulus packages, it highlights an ongoing and worsening labor shortage. Recent Labor Department data released in October revealed that there were about 10.4 million jobs open at the end of August. Although this is a slight decrease from the record number of openings in July, it is still an incredibly high number; There are about 2.7 million more jobs open than Americans looking for work, or about 1.35 jobs per unemployed person.
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The number was exacerbated by the record 4.3 million people who left their jobs in August, representing about 2.9% of the country’s workforce, according to the job openings survey. employment and workforce rotation (JOLTS). report. The data was released just days after the government’s September jobs report, which found non-farm payrolls only increased by 194,000 last month, well below the 500,000 expected by economists. by Refinitiv.
There are still around 5 million fewer jobs than in February 2020, before the virus shut down large swathes of the national economy.
The study comes as Democrats in Congress push forward another economic spending bill that could inject as much as $ 1.9 trillion into the nation’s economy over the next decade. Although the details of the measure are still being clarified, there are plans to expand the child tax credit, guarantee preschool for all three and four year olds, provide additional funding to strengthen the Affordable Care Act and build more affordable housing.
Beyond the broader economic impact, the inertia of the job search plays an essential role in personal well-being; employment is an important source of social capital that provides tangible and intangible benefits for individuals and their communities. Middle-aged men who are not in the workforce tend to be more socially isolated and less happy than working men, the analysis found, citing a previous JEC report from 2018 (titled ” Inactive, Disconnected and Sick: A Portrait of the Early Age of Inactive Men “).
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“Work is more than a source of income; it is fundamental to our ability to contribute and prosper, ”said Lee. “Congress must stop making political decisions that discourage return to work – we need workers’ contributions more than ever. “