Why Is U.S. Workplace Participation Declining—and Fertility Rates Falling Since 2008 Crash?

Amidst a downhill employment trend for men aged 25-54, employers are reportedly begging for workers. At the same time, the fertility rate is veering well below the replacement level (13 min read.)

Photo by Alex Kotliarskyi on Unsplash

Nicholas Eberstadt is a political economist who has written extensively since the late 1970s on trends tied to demographics. Having completed his Ph.D. at Harvard University in the mid-1990s, Eberstadt has conferred for the U.S. Census Bureau and U.S. State Department.

The 66-year-old holds the Henry Wendt Chair at the think tank American Enterprise Institute, and his recent book includes Men Without Work: Post-Pandemic Edition. Throughout September, Eberstadt’s findings were discussed and challenged across leading publishers, including The Washington Post, National Review and the Wall Street Journal. Eberstadt has also been interviewed on Inside Sources, Free Expression, and at the conservative think tank Hoover Institution.

This article highlights and explores Eberstadt’s research, analysis and judgement.

U.S. population growth

According to the political economist, “Over the past decade and more—since the crash of 2008 and the Great Recession, really—America’s birth trends have taken a fateful turn, veering well below the replacement level.”

The replacement level or “net reproduction” ratio of one means that one female baby is born for every childbearing woman, who will grow up to be of childbearing age.

Eberstadt adds that if this trajectory continues, and without compensating for immigration, America’s population would eventually reach a peak and then indefinitely decline—shrink 20 percent for each succeeding generation.

A point to note is that the COVID lockdown didn’t spark a surge in baby-making; the opposite effect was observed with couples feeling the strain of uncertainty, insecurity and taking extra precautions. Moreover, the vast majority of babies born in 2020 were conceived prior to the reported virus outbreak, more indicative of a continued fertility decline.

Deaths of despair

Even before the surge in health challenges following the COVID lockdown, the direction of life expectancy improvements in the United States had already flatlined over the past decade. Eberstadt uses the phrase “deaths of despair” to describe a persistent health problem, including suicide, drug poisoning and liver cirrhosis.

With the above said, it’s important to emphasize that America is a nation immersed in research, bursting with innovation and technology toward improving health and fitness. However, one striking challenge is the nutrition gap between low-income and high-income households.

Yet, we can avoid becoming alarmist about population decline by (firstly) improving children’s food knowledge and the groceries they will purchase as adults. And modifying—minimizing—the welfare program will mean less of an excuse for a person without a physical disability to stay on the couch.

Immigration trend

According to Eberstadt, “the arithmetic of American population growth has been the arithmetic of our exceptional immigration flows,” which came through multiple waves up to World War I and then resumed in the 1960s.

But here is the more fascinating part. Following the pause on immigration during the COVID lockdown and despite the ongoing flow of illegal migration via the Mexico-U.S. border today, it appears—according to Eberstadt’s analysis—that net immigration has tanked.

The political economist adds that there is a lack of “good immigration statistics” and that “we find out in the rearview mirror by looking at the residual after we look at births, deaths and population change.”

Indeed, Eberstadt argues that to “fix” the immigrant welfare problem, there has to be an incentive to fix the broader welfare state, have the rule of law and control the U.S. borders. Sounds like common sense.

Maintaining prosperity despite population stagnation or depopulation

Eberstadt’s analysis leads to the following reasoning:

For a stationary or shrinking population with high incomes, long lives, and small families, the path to continuing enrichment entails advances in research and knowledge creation, deepening of “human capital,” and an auspicious “business climate,” with incessant innovation in the business sector, labor markets, and the policy realm…Yet dynamism in our economy and society is on the wane in some significant and easily verifiable respects: Simply put, America’s vitalizing “churn” is heading down.

Indeed, between the end of the Civil War and the late 1970s, the U.S. was leading globally in adult educational attainment. This attainment has been rising over the past two decades—but at one-third of that historical rate. Meanwhile, other countries, such as Singapore and Hong Kong, are competing to surpass the United States.

Eberstadt reasons that this slowing pace has been “in our face for almost 40 years.” Although he cannot explain why this trend is happening, he can pinpoint where it is happening:

[T]he epicenters are native-born Americans, native-born American men, native-born American anglo men; there’s a big overlap with the “deaths of despair” problem...its results, its consequences are alarming.

Looking at Statista, around 1 in 5 American men reported symptoms of a depressive disorder between April 2020 and September 2022, such as experiencing persistently low self-esteem and mood swings. On a different note, an analysis by the University of Massachusetts Amherst reports that White men’s “advantaged” access to middle and upper-income roles is most prominent in states with large non-White workforces. Black and Hispanic men are reportedly concentrated in working-class roles, with Hispanics likely to be found in skilled crafts and trades. And in those same states, working-class White men face substantial labor market competition.

Making the most of existing manpower

The U.S. workforce is, still, underpinned by men aged 25 to 54 years. Calculated as the employment to population ratio, the work rate of men in this cohort is 2.5 points below the rate in 1940—when the United States emerged from the Great Depression. Even as the overall unemployment rate fell to 3.5 percent in 2019, the lowest rate since 1969, the work rate for this prime working age cohort narrowly compared to that of 1940.

In such a situation, a policy of immigration is viewed as a means to counteract changes to native-born work participation. However, Eberstadt is very aware that the Biden administration’s “witless posture on immigration—its maddening insouciance about our southern border and stubborn lack of concern about illegal entrants—seems almost designed to provoke anti-immigration outrage.”

Therefore, we have a subset of American men who have checked out of workforce participation. And now immigrants are pouring across the border to fill jobs that this group of native-born men could otherwise occupy.

Interestingly, two previous articles (here and here) have explored the low interest in the construction trades, particularly among American millennials and members of Gen Z. According to the Associated Builders and Contractors, more than 1 in 5 construction workers are older than 55, which is very telling. Moreover, according to the Associated General Contractors of America, “There were 466,000 construction-industry job openings at the end of May, a jump of 130,000 or 39 percent from a year earlier and the largest May total since that series began in 2000.”

According to Eberstadt’s analysis, foreign-born men aged 25 to 54, regardless of ethnicity, are more likely to be in the labor force than native-born counterparts. Americans, regardless of ethnicity, tend to pursue higher education if they have a foreign-born parent.

These differences in workforce participation appear to be associated with three main factors: family structure; attachment to various social welfare programs; and a criminal record.

A natural experiment during the COVID lockdown

The unemployment rate for men aged 25 to 54 lingered at 3 percent in August. However, only 86 percent reported any paid labor, while the remaining 11 percent had checked out, i.e., neither working nor looking for work.

Commonplace knowledge among policymakers is that declining workforce participation is a consequence of falling demand for blue-collar skilled labor and manufacturing; for instance, outsourcing to China after the country joined the World Trade Organization.

Okay. But then, how do we explain the skyrocketing increase in over 5 million unfilled jobs nationwide between April 2020 and August 2022? For August alone, there were reportedly over 10 million unfilled jobs in the U.S. labor market, including positions that do not require high school credentials.

Let’s rewind to that critical date, April 2020—at the start of the COVID lockdown. Migrant flows, be they legal or otherwise, were heavily disrupted in 2020 and 2021. This period offered a “natural experiment” to effectively allow Americans to close the U.S. job openings that foreign-born hires would have otherwise occupied. But this experiment, according to Eberstadt, did not draw “people back off the couch” and “employers are begging for workers.”

In June, the Census Bureau added four questions about “long COVID” to its Household Pulse Survey. Then, in late August, it was reported that as many as 4 million American adults aged 18 to 65 are not in the workforce due to this lingering medical condition. The cost of those lost wages translates to anywhere between $168 billion to $230 billion a year.

Eberstadt, in late September, reported that workforce drop-off number was as high as 7 million. Conversely, the number of respondents who gave “COVID illness” as the reason they were out of work, such as suffering from it or caring for someone else, was around 700,000 U.S. adults.

Improving childbearing patterns for a prosperous economy

When Eberstadt was asked as to why the United States doesn’t “just get the birth rate right back up” to remain a prosperous, vibrant economy, his answer reveals multifold challenges with “baby bonus programs.”

He has argued that Singapore’s efforts to boost birth rates left the country with a 2019 total fertility rate of 1.14 births per woman, roughly 45 percent below the replacement level. Sweden’s effort resulted in a temporary rise in birth rates before declining to the status quo or even below. Such financial incentives could change decisions about birth timing but not necessarily the total number of births.

Interestingly enough, at the end of 2021, the Hungarian Central Statistical Office reported the highest birth rate in 27 years at 1.57 children per woman, a sign of Prime Minister Viktor Orbán’s success with pro-family policies. Nonetheless, this birth rate is still below the 2.1 mark needed for a population to replace itself. 

On the topic of “turning women into baby ranchers,” Eberstadt articulates:

You’d have to do something about the opportunity cost of their time. So maybe you’d want a program that involved, let’s say, 50 percent of the GDP, and I don’t think anybody is going to be proposing that anytime soon.

The father of four says, “what a blessing it is to be a parent,” but acknowledges that the United States and Europe have increasingly moved into a world where “convenience is prized.” Millennials and members of Gen Z, compared to the era of Eberstadt’s youth as a baby boomer, “do not live in Reagan’s America; they live in a place that’s got this new misery shaping it so much.”

So why not just settle into a comfortable decline?

Following an eventual population peak, let us assume that the United States accepts a decline of a 1.5-child America. From Eberstadt’s perspective, how will such a birth regimen reduce—if any at all—the “moral and ideological baggage” of pessimism, hesitance, dependence, self-indulgence, resentment, and division?

Over the past several generations, America and Europe have witnessed a revolution leading to the rise of solipsism and the rejection of the kind of responsibilities necessary to nurture a rising generation. Indeed, America might be able to outsource manufacturing or increase immigration to compensate for a declining birth rate. However, what is presently a challenge and requires a kind of “moral transformation” is to reach a place where Americans are confident enough and brave enough to maintain an organic rate of replacement for society.

Step up to patriotism

“There is no scientific reason that a sub-replacement population shouldn’t be able to step up to patriotism,” Eberstadt says. “Or see the challenges in the world and deal with them.”

I would hope to agree with the political economist. Though, it must be noted that despite population growth over the past several decades, albeit with a declining fertility rate, there has been a worrying drop in the sense of patriotism among every generation of young U.S. adults.

Israel as a case study

Given the above, according to the political economist’s statistical analysis, Israel provides proof that sub-replacement is not inevitable. He writes:

There, an affluent and embattled Western democracy reports fertility levels well above replacement — at latest reading, three births per woman. Moreover, Israel’s birth levels have risen over the past generation, from an already above-replacement 2.9 TFR [total fertility rate] in the 1990s. 

Furthermore, the rise in fertility levels isn’t just among observing Orthodox Jewish couples. Even the birth rate among secular Jews in Israel is well above replacement level—in a nation where women participate in the military and are integrated into the workforce. Indeed, Israel is one of a few countries worldwide with mandatory military service for all citizens once they turn 18, lasting at least two years.

Based on Eberstadt’s interpretation, he is looking at Israel as a “serious country with a serious approach to its demographic future.” But, he continues to add, “This is not the result of government policy. This is not a particular government policy or a particular baby bonus; this is a mentality.”

It may be too easy to suggest that the citizens of Israel believe their country is still a cause: they want their country to have a future and their descendants in upcoming generations to be part of that cause.

So let’s look at the mentality of the United States, particularly the first generation thrust into the Wild West of the uncensored Internet era.

The millennials, and younger

Eberstadt writes not only as a political economist with sound history knowledge but also as a father of millennial children:

People under 40 do not have much memory of the America with a vibrant, private-sector-driven economy. They came of age during a strange historical run of unusually poor political leadership—from Clinton to Biden they have arguably known only substandard presidencies, red and blue alike.

Many millennials were under 18 years of age on September 11, 2001. Parents and educators alike had to grapple with ways to explain what had just transpired, right here on American soil. Likewise, the 2003 invasion of Iraq seeking “weapons of mass destruction” through 2011 was cloaked with ongoing rhetoric about “the war on terror” from media pundits and politicians alike. Indeed, very inspiring language.

Eberstadt continues by adding:

Theirs is an America where public confidence in the nation’s basic institutions has undergone a gruesome and wholesale slide. And that is just the beginning of the litany of differences. Do we wonder that millennials’ expectations and desires about family and children might be diverging from those of their “Morning in America” parents?

Not to forget, many millennials had just finished or were about to complete college and enter the workforce when, lo and behold, they stepped right into the financial crisis of 2008, which worked its way through America on many levels, including housing, unemployment and bankruptcies. For sure, a great start.

But America is a land of hope—those very early settlers left the Old World with hope for a new life, a new future for themselves and their descendants. That hope and optimism, I believe, still underpins the very fabric of the United States, particularly in the creation of small, local businesses and family-run school programs. So I continue to have hope and believe in this great nation.

The future starts here

At one point in an interview, Eberstadt was asked: “Do we possess the resources: political, spiritual human capital? Is this country still capable of another act of national self-renewal?”

“Absolutely, of course, it does,” he says effortlessly. Even if we consider China in specific industry sectors as a competitor, there isn’t a close second yet.

It is Eberstadt’s opinion that the failure to “generate wealth for the bottom half” after the Cold War has been a compounding detriment over the past several decades. However, none of these trends is immutable, and Eberstadt doesn’t think we should “bet against the United States of America.”

The economist continues to add that there are “things which may be going on now that nerds like me won’t be able to recognize for years.” Indeed, government officials aren’t known to predict trends such as great religious awakenings that have revolutionized and transformed societies.

With every expression of hope and optimism for America, the father of four is also objectively aware of a slow, brewing culture of decadence:

[W]e have 40 years of poison distributed through our societies through an increasingly maligned university system, and we have seen a Gramscian march through the institutions of severely problematic points of view…We have that poison to drain from our society before we can, I think, really flourish again but that’s certainly not impossible either.

And the future starts here. Indeed, the future begins at the local, grassroots level. As Eberstadt said, “If you believe that you are in charge of your own destiny, that’s a pretty good starting point.”