The missing fifth

David Brooks comments on a serious economic problem: the large fraction of American men of prime working age who are not working:

As my colleague David Leonhardt pointed out recently, in 1954, about 96 percent of American men between the ages of 25 and 54 worked. Today that number is around 80 percent. One-fifth of all men in their prime working ages are not getting up and going to work.

According to figures from the Organization for Economic Cooperation and Development, the United States has a smaller share of prime age men in the work force than any other G-7 nation. The number of Americans on the permanent disability rolls, meanwhile, has steadily increased. Ten years ago, 5 million Americans collected a federal disability benefit. Now 8.2 million do. That costs taxpayers $115 billion a year, or about $1,500 per household. Government actuaries predict that the trust fund that pays for these benefits will run out of money within seven years.

Part of the problem has to do with human capital. More American men lack the emotional and professional skills they would need to contribute. According to data from the Bureau of Labor Statistics, 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree.

This is indeed a serious problem. But Brooks goes loopy when he adopts his trademark "a pox on both their houses" approach to competing Democratic and Republican solutions:

This is a big problem. It can’t be addressed through the sort of short-term Keynesian stimulus some on the left are still fantasizing about. It can’t be solved by simply reducing the size of government, as some on the right imagine.

Fantasize? How come Republicans get to imagine while Democrats fantasize? At any rate there's nothing fantasmagoric about the Keynesian stimulus solution. As Andrew Samwick argues, this country has a crumbling infrastructure. Our government can borrow at historically low rates to fund infrastructure investment. And [he does not say] that infrastructure investment can create jobs that will stimulate the economy and employ some of the missing fifth. Suppose we spent $100 billion more on infrastructure every year for the next ten years than we have currently planned. Back of the envelope calculation is that we create a million new jobs every year (at $100,000 per job; that's wages, benefits, supporting equipment). Say half of them go to men of prime working age. That reduces unemployment among that group from 4.5 million to 4 million, bringing the unemployment rate for that group down from 8.2 percent to 7.3 percent. (Data from the BLS employment situation report.) The CBO assumes a multiplier on this kind of spending of as high as 2.5, so as long as the economy is below full employment (which is likely for the next five years or so) the employment effects would be even bigger. We get economic stimulus, jobs and work experience for a big chunk of the missing fifth, and shiny new infrastructure. Why is that a fantasy?