In 2014, there were 38 million men in the United States between the ages of 18 and 34; about 5 million of those young men were jobless, and 1 million were incarcerated. Those numbers and some related longer-term trends have significant economic and budgetary implications. Young men who are jobless or incarcerated can be expected to have lower lifetime earnings and less stable family lives, on average, than their counterparts who are employed or in school. In the short term, their lower earnings will reduce tax revenues and increase spending on income support programs, and the incarceration of those in federal prison imposes costs on the federal government. Farther in the future, they will probably earn less than they would have if they had gained more work experience or education when young, resulting in a smaller economy and lower tax revenues.
The share of young men who are jobless or incarcerated has been rising. In 1980, 11 percent of young men were jobless or incarcerated; in 2014, 16 percent were (see figure below). Specifically, 10 percent of young men were jobless in 1980, and 1 percent were incarcerated; those shares rose to 13 percent and 3 percent in 2014.
Trends in Joblessness and Incarceration
Rates of joblessness and incarceration differ among young men with different levels of education. In every year between 1980 and 2014, young men with less education were likelier than those with more to be jobless or incarcerated. For example, in 2014, about 1 in 5 young men with only a high school education was jobless or incarcerated; among young men with a bachelor’s degree or more, the share was 1 in 13. That difference was larger in 2014 than in 1980 because the rate of joblessness and incarceration for young men with only a high school education rose considerably over that period, growing much closer to the rate for those without a high school education. (The incarceration rate grew more slowly for young men with a high school education than for young men without one, but the rate of joblessness grew much more quickly for the first group than for the second.)
Rates of joblessness and incarceration also differ among racial and ethnic groups. Throughout the period from 1980 to 2014, young black men were more likely than other young men to be jobless or incarcerated. In 2014, they were roughly twice as likely to be jobless or incarcerated as young Hispanic men or young white men were. The differences in incarceration were particularly stark: Roughly 8 percent of young black men were incarcerated in 2014, whereas about 1 percent of young white men and 3 percent of young Hispanic men were. The racial and ethnic differences in rates of joblessness and incarceration grew over the period—primarily because of a large increase in the incarceration of young black men, though reduced rates of military employment among black men also played a role.
And throughout the period, among young men lacking a high school education, those who were black were particularly likely to be without a job or incarcerated. More than half of young black men without a high school education were either jobless or incarcerated in almost every year between 1993 and 2014. By contrast, among young white men without a high school education, the share who were jobless or incarcerated peaked in 2009, after the recent recession, at about one-third, and fell slightly after that. The share of young Hispanic men without a high school education who were jobless or incarcerated also peaked in 2009, at about one-quarter, though it was still close to that level in 2014. The differences were largely because of differences in incarceration: In 2014, for example, young black men without a high school education were four times as likely to be incarcerated as their white or Hispanic counterparts.
Why Joblessness and Incarceration Increased Among Young Men
Changes of at least three kinds contributed to the increase in joblessness and incarceration among young men between 1980 and 2014: economic changes, including the recent recession and slow recovery; policy changes at the federal, state, and local levels; and changes in the skills of young men with less education.
Several economic factors contributed to the increase in the share of young men who are jobless. Among them were longer-run trends in the economy, such as increases in the employment of women and the movement of some jobs to other countries. The especially large increase in joblessness among less educated young men may be partly attributable to changes in technology that have reduced demand for the labor of those young men. Some research suggests that a subset of that group—less educated young men who are native born—may have seen increased joblessness because of an influx of young immigrant men with little education and high rates of employment, but the evidence is mixed.
In addition to those long-run factors, the recent recession and slow recovery have also increased joblessness (though not incarceration) among young men. The unemployment rate of young men increased from 3.1 percent in 2006 to 7.9 percent in 2009, and the rate rose still more for young men without a high school education.
Changes in federal policy have contributed to the increased joblessness among some young men since 1980. First, employment in the military, which had long been an important source of work for less skilled young men, fell significantly during the 1990s; also, the military now employs more young women than it did in the 1980s, and it has stopped accepting people who have not graduated from high school. Second, the federal government has increased its efforts to elicit child support payments from noncustodial fathers (who now account for a larger fraction of young men than they did in 1980), and that increased enforcement has probably made employment less attractive to some young fathers, because they can now keep less of their earnings. Third, federal spending on means-tested benefits—that is, cash payments or other benefits for people with relatively low income or few assets—increased substantially between 1980 and 2014, possibly reducing young men’s incentives to work.
Higher minimum wages may also have increased joblessness among young men. The federal minimum wage, adjusted for inflation, has not consistently risen since 1980, but there has been an increase in the number of state and local minimum-wage laws in recent years.
As for the increase in incarceration among young men, most of it is not due to an increase in crime, which has declined since the early 1990s. Rather, it is largely due to the same policy changes, such as changes in sentencing rules, that have made nationwide incarceration rates about four times as high as they were in 1980. Because roughly 90 percent of all inmates are held in state prisons or local jails, most of the policy changes that have led to increased incarceration have been at the state and local levels. Though incarceration rates have increased for young men in all of the racial, ethnic, and educational groups examined in this report, the effect has been strongest for those who are less educated and those who are black, who already had higher rates of incarceration at the beginning of the period.
The increased incarceration of young men is itself another factor in the increased joblessness of young men. People who are incarcerated are less likely than others to be employed in the future, both because they have a more tenuous connection to employment and because they have a criminal record, which employers generally avoid. That avoidance may have increased of late, as searchable databases have improved employers’ ability to identify people who have been incarcerated.
Changes in the Skills of Less Educated Young Men
Also possibly contributing to the increase in joblessness is that more young men may have been entering adulthood without the cognitive and noncognitive skills that employers want. Cognitive skills are generally equivalent to academic skills, whereas noncognitive skills include such “soft skills” as diligence, punctuality, and teamwork. If mismatches between young men and employers have indeed been growing more common, it could be either because the young men have fewer of the skills that employers have traditionally sought or because the employers are seeking different skills.
Among young men with less education, another reason that joblessness and incarceration have become more common is that those men have, on average, lower skills, in relation to all young men, than their counterparts in 1980 had—and those with lower skills are more likely to be jobless or incarcerated. Also, young men who are categorized as high school graduates are increasingly likely to have passed the General Educational Development (GED) test in lieu of having completed high school—and such people’s employment status resembles that of people who did not complete high school more closely than that of people who have completed high school.
The Implications of Joblessness and Incarceration
The increase in the joblessness and incarceration of young men between 1980 and 2014 has immediate implications for the federal budget. Jobless young men have no earnings on which to pay taxes, for one thing. Also, they and their families receive more federal benefits—such as benefits from Medicaid, unemployment insurance, and the Supplemental Nutrition Assistance Program—than employed young men and their families do, on average. And increased incarceration in federal prisons directly imposes significant costs on the federal government.
There are also future implications for the federal budget. Young men who are neither employed nor in school today are less likely to work when they are older. Among those who work in the future, estimates suggest, a lost year of schooling will lower annual earnings by roughly 10 percent, on average, and a lost year of work experience will lower earnings by roughly 3 percent. Those lower future earnings will yield a smaller economy and lower tax revenues than would have existed otherwise.
By adversely affecting future rates of marriage and family formation, joblessness and incarceration may have budgetary implications still farther in the future. Young men who are jobless or incarcerated today are less likely to marry, less likely to stay married, and less likely to have children who live in two-parent households than their counterparts who are employed or in school. Because the earnings of the next generation are likely to be affected by the families in which they grow up, adverse consequences for today’s families can have long-run economic impacts.
The Scope of This Analysis
CBO analyzed trends for young men because those trends are considerably less favorable than the corresponding trends for young women. The share of young men who were jobless or incarcerated increased from 11 percent to 16 percent between 1980 and 2014, whereas the corresponding share of young women declined from 31 percent to 22 percent (see Exhibit A-4 in Appendix A). That decline was partly attributable to an increase in school attendance; since 1988, the share of young women who are in school has exceeded the corresponding share of young men. Furthermore, the large increase in incarceration since 1980 had a far smaller impact on women than on men. (It is true that the share of young women who are jobless or incarcerated remains higher than the corresponding share of young men—but that is largely because many more young women than young men are spending their time caring for other people, particularly children, which drives up their rate of joblessness.)
This analysis focuses on young men instead of older ones because the consequences of joblessness and incarceration can be much greater for young men. A young man has, on average, many more years of prospective work ahead of him than an older man does.
Sources of Data
For this analysis, CBO used data from the Current Population Survey, which is sponsored jointly by the Census Bureau and the Bureau of Labor Statistics; data on the incarcerated population from the Bureau of Justice Statistics; and data on the military population from the Department of Defense. Immigrants, documented and undocumented alike, are included in the analysis. For more information about data and methods, see Appendix B.