The Justice Department is weighing a potential breakup of Google, among other options, Bloomberg News reported on Tuesday, after a federal judge this month ruled that the company's practices related to search and some ads ran afoul of anti-monopoly laws and suppressed competition.
Google declined to comment. The Justice Department, when reached, said no decisions had been made on a course of action.
"The Justice Department is evaluating the court's decision and will assess the appropriate next steps consistent with the court's direction and the applicable legal framework for antitrust remedies," a representative for the agency said over email.
Shares of Alphabet Inc. (GOOGL) (GOOG), Google's parent company, dipped about 1% after hours on Tuesday.
Bloomberg, citing people familiar with the matter, said that if the agency tried to split up the company, the search giant's Android operating system and Chrome browser would be the likeliest segments to be separated. The DOJ is also considering ordering a sell-off of AdWords, Google's ad-sales platform, Bloomberg said.
The news outlet also said that the Justice Department would likely try to prohibit the exclusionary contracts Google that spent billions of dollars on to become the default search engine for many mobile users.
Bloomberg reported other options included "forcing Google to share more data with competitors and measures to prevent it from gaining an unfair advantage in AI products."
Google has said it plans to appeal the court's ruling.
In January, Axios reported a developing trend in corporate America: corporations across the United States were backing away from DEI, which had become a “minefield” for companies.
Following a multi-year boom in the Diversity, Equity, and Inclusion space following the 2020 death of George Floyd, corporations were pulling back on DEI initiatives.
The risks were too great — especially in what was expected to be a politically charged election season amid growing attacks from conservatives targeting “woke” corporations.
“It’s hard to imagine with the amped up rhetoric of an election year that people really want to stick out their neck more,” Kevin Delaney, co-founder of media and insights company Charter, told markets correspondent Emily Peck.
Axios wasn’t wrong about the trend, which has only picked up steam this summer.
In July, John Deere announced that it was stepping away from DEI efforts and would cease sponsoring “social or cultural awareness” events. The announcement came a week after Business Insiderreported that Microsoft had laid off its entire DEI team. Microsoft’s action, in turn, had come just weeks after Tractor Supply, a Brentwood, Tennessee-based company, decided to pull the plug on its social activism efforts in the face of a social media campaign targeting the company.
The backlash against DEI has been so intense that the term itself appears to be going the way of the dodo. The Society for Human Resource Management recently announced it was ditching the word equity from its acronym.
Preaching to Consumers
DEI is just one form of corporate social activism, which comes in various forms and includes its cousin Environmental, Social, and Governance (ESG). Both ideas fall under, to some degree, Corporate Social Responsibility (CSR), the idea that corporations have a duty to take social and environmental actions into consideration in their business models.
If you’re wondering why Burger King has commercials on climate change and cow farts, and why Bud Light’s commercials went from featuring Rodney Dangerfield and Bob Uecker to trans activist Dylan Mulvaney, it’s because of CSR.
The idea that corporations should fight for social causes has skyrocketed in recent years to such an extent that activism is inhibiting companies in their primary mission: generating profits by serving customers.
“Firms leveraging situations and social issues is not new, but showcasing their moral authority despite a disinterested consumer base is,” Kimberlee Josephson, an Associate Professor of Business at Lebanon Valley College in Annville, Pennsylvania, has observed.
Bud Light’s decision to feature Mulvaney cost them an estimated $1.4 billion in sales, and it revealed the danger of corporations leaning into social activism, particularly campaigns and policies that alienate their own consumer bases.
Not very long ago, companies like Chick-fil-A faced backlash from progressive activists for supporting traditional marriage. Culture war advocates on the right have responded in similar fashion.
Conservative influencers have made a point of raising awareness around “woke” corporate initiatives — white privilege campaigns, climate change goals, LGBTQ events, etc. The most successful ones, such as Robby Starbuck who pioneered the campaign against Tractor Supply and John Deere, made a point of targeting corporations with conservative consumer bases.
“If I started a boycott against Starbucks right now, I know that it wouldn’t get anywhere near the same result,” Starbuck recently told the Wall Street Journal.
One can support Robby Starbuck’s tactics or oppose them. What’s clear is that corporations increasingly face risks for participating in social activism campaigns, and the threats now come from both sides of the political aisle.
Social Responsibility and ‘Social Justice’
The idea that businesses have responsibilities that go beyond their shareholders, workers, and consumers stretches back at least to Howard Bowen’s 1953 book Social Responsibilities of the Businessman. Bowen, an economist who served as president of Grinnell College and the University of Iowa, is widely considered to be the godfather of corporate social responsibility.
“CSR can help business reach the goals of social justice and economic prosperity by creating welfare for a broad range of social groups, beyond the corporations and their shareholders,” he wrote.
This is a version of “stakeholder capitalism,” an idea that says corporations must look beyond serving customers to generate profits for shareholders. Various other “stakeholders” must be considered.
Over time, other incantations of stakeholder capitalism emerged, including ESG, which stemmed directly from a 2004 report — “Who Cares Wins” — spearheaded by the United Nations, asset management groups, and banks. Its purpose was “to develop guidelines and recommendations on how to better integrate environmental, social and corporate governance issues in asset management, securities brokerage services and associated research functions.”
These “guidelines and recommendations” eventually morphed into a global ESG framework which graded publicly traded companies on “social responsibility.” Though ESG scoring is notoriously opaque, what’s clear is that a small number of rating firms were allowed to determine what values corporations should have, and penalized them if they deviated. A bad score could see a company cut from a trillion-dollar index fund.
This no doubt explains why companies like Tractor Supply, known for selling farming equipment and animal feed to farmers, had carved out ambitious plans to cut emissions by 50 percent by 2030 and achieve a “net zero” carbon footprint by 2040 (in addition to various other social objectives).
Those plans are now scrapped, and media outlets are aghast, pointing out that not very long ago Tractor Supply argued that these initiatives made “great business sense for Tractor Supply.”
But this analysis misses the reality that social activism now carries greater potential risks and rewards, particularly in light of the collapse of the ESG movement, which earlier this year saw an exodus of $14 trillion, as asset managers like BlackRock and Goldman Sachs fled for cover.
The Problem with Taking Sides
Many Americans likely feel that corporations should have social responsibilities. They just tend to have different views on what those values should be.
I was in church recently, and a pastor spoke of an entrepreneurial friend who was excited to realize how he could use profits from his business to spread the gospel. I suspect that many people who support CSR would be appalled at corporations using their business to spread religion, just like many religious Americans are appalled at corporations embracing what they see as “woke” agendas.
While corporations are free to inject values into the workplace and support social and religious programs, they have no societal responsibility to do so. In fact, there are compelling reasons they should not be doing so.
The Nobel Prize-winning economist Milton Friedman wrote what is perhaps the most famous rebuttal to CSR. In a 1970 New York Times article titled “A Friedman Doctrine — The Social Responsibility of Business Is to Increase Its Profits,” Friedman accused champions of CSR of “preaching pure and unadulterated socialism” and being “puppets of the intellectual forces that have been undermining the basis of a free society.”
Friedman understood that corporations don’t have a social responsibility (or a religious one) beyond serving their consumers and generating profits. This is their raison d’être, and how they best serve society. They don’t have a responsibility to spread religion or to champion diversity or to stop climate change or to promote equity. These values might be good, but it’s not the responsibility of corporations to promote them.
“[T]here is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits,” Friedman wrote, “so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
This is the most famous element of the Friedman Doctrine, but I don’t think it’s the most important one. The most important line is Friedman’s warning on the dangers of straying from this model, which he makes at the beginning of the same paragraph:
[T]he doctrine of ‘social responsibility’ taken seriously would extend the scope of the political mechanism to every human activity. It does not differ in philosophy from the most explicitly collectivist doctrine. It differs only by professing to believe that collectivist ends can be attained without collectivist means.
This is the true danger of CSR, stakeholder capitalism, or any of the alphabet soup acronyms that seek to replace capitalism with collectivist systems that seek to undermine the rights of property owners: it risks extending politics into our private lives beyond its proper scope.
One of the hallmarks of a totalitarian society is that public and private levers of power are utilized to enforce adherence to state dogmas, and Friedman wasn’t the first to recognize the potential dangers of corporate social activism.
Writing in Harvard Business Review in 1958, the German-born American economist Theodore Levitt warned of replacing the profit motive with corporate do-goodism in an article titled “The Dangers of Social Responsibility”:
The trouble with our society today is not that government is becoming a player rather than an umpire, or that it is a huge welfare colossus dipping into every nook and cranny of our lives. The trouble is, all major functional groups — business, labor, agriculture, and government — are each trying so piously to outdo the other in intruding themselves into what should be our private lives. Each is seeking to extend its own narrow tyranny over the widest possible range of our institutions, people, ideas, values, and beliefs, and all for the purest motive — to do what it honestly believes is best for society.
This is precisely what stakeholder capitalism has done, and it’s a primary reason why culture today is saturated with politics and political messaging. Corporations, by embracing Bowen’s idea that corporations have a duty to pursue “social justice,” have helped blur the line between private and public life.
Though many Americans are alarmed by corporate America’s retreat from social activism, it’s actually a sign that nature is healing.
The move likely will not only help the bottom lines of companies like John Deere and Tractor Supply, but it will allow them to serve their customers more effectively. Keeping politics and “social responsibilities” out of corporate boardrooms, charters, and messaging is likely to result in a more harmonious society.
On paper, Zulfat Suara and Steve Happ don’t have much in common.
One, a Muslim woman, immigrated to the U.S. from Nigeria in the 1990s and now serves on the Nashville City Council. The other, a Christian man, is a Memphis native with a background in software who began a ministry partnering with Ugandan non-profit charities that care for orphaned and at-risk children in 2015.
But they do have at least one thing in common: Both were canceled by large national banks with little warning and virtually no explanation.
Suara, who like Happ, is also involved in non-profit work, received a vaguely worded notice of cancelation from Regions Bank earlier this year, giving her 30 days to find a new bank. Happ’s cancelation by Bank of America came in 2023 shortly before he made a trip overseas—forcing him to scramble for solutions and delay hard-earned paychecks to Ugandans.
Happ’s notice said he was operating in the wrong “business type.” As we reported in this year’s report for our Viewpoint Diversity Score Business Index, which measures corporate respect for free speech and religious liberty, these problematic policies are present in at least 69% of the country’s largest financial institutions.
Incidents like these are a small sample of a larger trend of viewpoint-based discrimination in financial services—known as “de-banking”— which has also affected firearms and fossil fuels because of radical net zero emissions commitments and government initiatives like Operation Choke Point. It has also garnered the attention of both sides of the political aisle.
These incidents propelled Tennessee lawmakers to adopt a landmark legislative solution aimed at curbing this dangerous weaponization of the financial system. Like a similar law that recently went into effect in Florida, the legislation is a first-of-its-kind consumer protection bill that prohibits big banks from canceling customer accounts based on their constitutionally protected speech and religious exercise.
The Tennessee law applies to banks with at least $100 billion in assets—which includes both Regions and Bank of America—the latter of which has also been exposed by U.S. House oversight as working hand-in-hand with the U.S. Department of Treasury to profile as domestic terrorist threats my organization, Alliance Defending Freedom, and everyday Americans who committed the sin of shopping at Bass Pro Shops or buying “religious texts.” It should come as no surprise that this same government entity has now spoken out in opposition to these state-level attempts to protect the God-given freedoms guaranteed by the First Amendment.
In a recent letter lauded in these pages by Hispanic Leadership Fund president Mario H. Lopez, the Treasury makes a series of false assertions about Tennessee and Florida’s laws. Chief among these specious claims is that the laws prevent Treasury’s Financial Crimes Enforcement Network (FinCEN) from dealing with money launderers and terrorist threats.
There’s no need to provide a nuanced answer to this accusation. It’s simply untrue. Twenty state attorneys general recently responded to this letter and rightly observed that the standards the Treasury is attacking in the state laws are the exact same standards the Office of the Comptroller of the Currency proposed—and the Treasury did not object to—only a few years ago.
Likewise, Lopez’s reactionary appeal to free market principles fails. Banks don’t operate in a free market. ESG is avowedly anti-free market. And the market is not free if access depends on your political and religious views.
First, banks are highly regulated. But in exchange for those regulations, they benefit from a wide spectrum of government subsidies. Those include bailouts, tax credits, property tax abatements, and grants at the state and federal levels. Since 1998, for example, JPMorgan Chase has received over $1.7 trillion from American taxpayers in the form of subsidies.
Second, ESG activists, and even government regulators, are introducing non-financial and subjective factors into decision-making by classifying groups like mine as domestic terrorist threats and denying service to ministries that support orphans and widows for being the wrong “business type.” Someone should explain how these groups, or those of Christian broadcaster Lance Wallnau or U.S. Ambassador Sam Brownback, present national security threats. Of course, one of the features of the state laws is that customers like Wallnau and Ambassador Brownback can demand a written explanation from the banks.
Third, the market is not free if it does not support a free society. There are numerous antidiscrimination laws that apply specifically to financial services, from the Equal Credit Opportunity Act to state fair lending laws—because every American deserves equal access to financial services. If we allow financial services to become politicized, we undermine the democratic process and deny businesses the ability to focus on what they do best, create excellent goods and services for their customers.
The Treasury cannot profile half of America as domestic terrorists, institute Orwellian financial surveillance, and then hide behind the fig leaf of national security when the states push back.
Banks, insurance providers, and others in the financial sector need to make tangible changes to their policies to protect their customers from discrimination. States like Tennessee and Florida have a critical role to play—not only in adopting laws to ensure their citizens’ freedoms are protected but also in enforcing these laws so that no one else has to fear financial discrimination because of their religious or political beliefs.
General Motors has been cutting staff in China and eventually will meet with its local partner SAIC to explore a "larger structural overhaul" of the business oversees.
The shift indicates that GM likely won't eclipse its peak sales in the country it set in 2017, according to Bloomberg.
GM is reducing staff in its China-focused departments, including research and development. In coming weeks, GM and its partner SAIC will discuss potential capacity cuts as part of a strategic shift for American brands in China.
Bloomberg writes that this marks a significant change for GM, which once made billions in the Chinese market. The automaker is scaling back as foreign brands struggle with intense competition and overcapacity in the world's largest car market.
GM is shifting its focus to producing electric vehicles, particularly upscale models, and importing premium vehicles. The company is considering reducing factory capacity and further job cuts, though these plans haven't been publicly disclosed yet.
Despite these changes, GM will still produce affordable vehicles and EVs locally in partnership with SAIC Motor and Wuling Motors, with some of these models being exported from China, according to the report.
GM's 30-year contract with state-owned SAIC expires in 2027, and the company aims to restore profitability before then. The goal is to strengthen the SAIC-GM partnership, which produces Buick, Cadillac, and Chevrolet vehicles, so it can self-fund operations and development.
A second partnership, SAIC-GM-Wuling, which makes small, affordable vehicles, has fared better, particularly with the Hongguang Mini EV. However, GM lost $104 million in its Chinese operations in the most recent quarter, contributing to a $210 million loss for the first half of the year.
In the latest quarter, GM's China sales dropped 29% to 373,000 vehicles, with steep declines across its U.S. brands like Buick, Cadillac, and Chevrolet. In contrast, sales from the SAIC-GM-Wuling partnership fell only 12%, as it produces compact EVs that remain in high demand in China, which GM views as a stronger growth opportunity.
Chief Financial Officer Paul Jacobson commented earlier this month: “We’ve got to remain competitive and that means that we’ve got to take a look at the business with our partner to ensure that we can restore it to profitability and that we can restore it to self-sustaining cash flow going forward. China can be a good asset for us and remains a good asset for us.”
Regardless of political affiliation, recent American presidents commonly say that the nation needs to win back manufacturing jobs lost to overseas relocation. “Where is it inscribed that America cannot reclaim its position as the world’s manufacturing hub?” queried President Biden recently. He has pushed for policies that penalize corporations for moving jobs abroad and that incentivize job repatriation. Biden’s predecessor Donald Trump pursued a similar objective with different means, modifying the tax code to encourage companies to bring back profits earned internationally and imposing tariffs to protect domestically produced goods. Despite their ideological differences, both presidents share a similar view on infrastructure and its capacity to create jobs in construction and related sectors. Trump proposed a $1 trillion infrastructure initiative to get Americans back to work as the Covid pandemic waned; Biden enacted a program allocating approximately $550 billion toward local infrastructure projects.
Yet an unexpected hurdle has impeded these ambitions: finding enough workers. When Biden’s infrastructure law passed, the construction industry was already grappling with some 500,000 vacant positions. The money pouring into government plans then triggered a competition for workers between privately funded and government-backed ventures, driving up wages and thus reducing how much work the infrastructure bill subsidizes. “We’re in this situation where we’ve already got this skilled labor shortage, and now we’ve got all this money that’s coming in,” remarked an official with the trade group Associated Builders and Contractors last year. Since then, the shortage of construction workers has swelled by another 150,000 positions. And while America has about 1.4 million fewer industrial jobs than it did 20 years ago, the U.S. Department of Labor estimates that manufacturers have roughly 750,000 unfilled positions. That number, one industry group calculated, could surpass 2 million by the end of the decade.
Behind these shortages is a steady increase in the number of adult Americans not working. Rising for years, the number exploded during the Covid lockdowns. The proportion of working-age men out of the workforce—unemployed and not actively seeking employment—has reached unprecedented levels. Though the rates lessened somewhat as Covid abated, they still linger distressingly above historical norms. A contributing factor is the expansion of generous government welfare programs that discourage recipients from seeking work, such as Social Security Disability Insurance payments—now collected by 3.7 percent of all working-age adults, a significant increase from 1.1 percent in 1970. Further, multiple rounds of Covid relief from the Trump and Biden administrations appear to have led many adults to quit the labor market outright, even as the economy reopened.
But the workforce woes run deeper. Ever more adults are unemployable because of worsening social dysfunction, changing youth attitudes toward work, and university and public school failures to prepare students for labor-market realities. Drug legalization has made it harder to find laborers who can pass drug tests—essential to work in industries like construction and transport—leading to worker shortages for key jobs, including truck drivers. A crime spike, meantime, will likely create a new generation of convicts, among the toughest people to employ when they reenter society. Soaring mental-health problems add to the ranks of the unemployable. And many firms hesitate to hire new college grads because they often lack basic skills, starting with knowing how to communicate and function within a group, and often have unrealistic expectations about pay and benefits.
Demographically, the surge in unemployable Americans arrives at a particularly inopportune moment. The retirement of the baby-boomer generation, the largest in the country’s history, has brought an unprecedented demand for labor. Even in optimal circumstances, subsequent generations would struggle to bridge this gap. While American firms may try to adapt through innovation, the burgeoning population of the unemployable presents not only an economic conundrum but also an impending social catastrophe. Among men, those who are either disengaged from the workforce or have never been part of it are less inclined to marry and establish families. Individuals entirely detached from employment exhibit elevated rates of depression and often fall prey to self-destructive habits. Their overall involvement in community activities shrivels.
Addressing a multifaceted problem of this magnitude poses formidable challenges for the American future.
Marijuana legalization has made it harder to find workers who can pass drug tests. (Deb Cohn-Orbach/UCG/Universal Images Group/Getty Images)
The crisis has been building for decades. Following a peak of 67.3 percent in 2000, the labor-force participation rate started a somewhat erratic descent, plummeting to a low of 62.4 percent of adults in 2015 and falling further to just 60.8 percent during the pandemic. Even now, the rate remains lower than it has been, excluding the lockdown period, since the economic downturn of the mid-1970s. And these dismal figures obscure a longer-running decline in men’s labor-force participation. After World War II, their participation rate hovered near 90 percent, with nearly 95 percent of adult males aged 25 to 54 employed. Around 60 years ago, though, male employment rates began steadily to drop, largely independent of economic cycles.
For decades, the impact on employers was cushioned by a steady rise in women joining the workforce, climbing from around 40 percent in the mid-1960s to a peak of 60 percent in the late 1990s. This rate remained stable for over a decade, partly due to the welfare reforms of the 1990s propelling more women into employment. Yet, since 2010, women’s labor participation rate has faltered, too.
Expanding government benefits correspond with the declines. Two programs in particular, Social Security Disability Insurance (for workers with a long-term disability) and Supplemental Security Income (for nonworking adults without income), support more and more Americans. The disability rolls have shot from 1.5 million in 1970 to 7.6 million today, and would be even higher except the federal government stopped processing disability applications during Covid, creating a temporary drop in numbers and a massive backlog of applicants (see chart). The supplemental income program, introduced in 1974 for adult nonworkers—many with zero work history—has grown by several million recipients. The expansion partly stems from a relaxation of medical criteria, enabling more workers to qualify for disability, including for mental-health and addiction issues. Federal drives to combat fraud, or to transition recipients back into the workforce as medical advances improve health outcomes, have led to prolonged legal disputes. Courts have ruled against periodic reviews of recipients’ statuses, deeming them unlawful.
Direct disability benefits are only part of the support that the nonworking receive. Most are also eligible for food stamps, government health insurance, and housing subsidies. Many nonworkers live in households where someone else also gets government aid. The Census Bureau’s Survey of Income and Program Participation found that about 63 percent of working-age men outside the labor force lived in households getting government benefits. “How do prime-age [non-working] men support themselves?” social thinker Nicholas Eberstadt asked in his 2016 book Men Without Work. “The short answer is, apparently, they don’t. Relatives and friends and the U.S. government” do.
Extended government jobless benefits during Covid maximized the disincentives. Starting with the CARES Act in March 2020, the federal government provided an extra $600 a week for the unemployed and direct one-time household payments that started at $1,200 per adult and $500 per child. In early January 2021, before leaving office, President Trump extended Covid relief payments of an added $300 per week until March of that year; President Biden extended them again until September, even as the economy recovered. Unfortunately, the longer individuals are jobless, the more likely they will stay that way. In a mid-2022 survey by the U.S. Chamber of Commerce, nearly a quarter of unemployed respondents said that government aid had led them not to look for work. Even though most pandemic restrictions were disappearing by mid-2022, two-thirds of those who had lost their jobs during Covid said that they were only somewhat active or not very active in seeking new work. Nearly 10 percent of the unemployed decided to retire—many earlier than originally intended—aggravating labor shortages. Helping make this possible was the astonishing $2.6 trillion surge in the country’s household savings rate, in part funded by Covid aid. More than 100 million adults are neither working nor looking for work, up from about 95 million pre-pandemic.
Covid lockdowns intensified social troubles that further detach people from work. Drug use went up during the lockdowns. The percentage of workers testing positive for drugs hit a ten-year high in 2021, according to Quest Diagnostics. Since 2017 alone, Quest found, workers and job applicants screened for pot whose results were positive rose 50 percent. Today, 24 states and the District of Columbia have legalized recreational marijuana use, up from just eight in 2017, which doubtless reinforces the trend.
Though several states have banned employers from testing for pot or acting against an employee solely for testing positive, marijuana remains a federal government Schedule I controlled substance—the most restrictive of classifications—though the Biden administration has proposed changing it to a Schedule III drug, with fewer restrictions. Companies that work as federal contractors thus still test for drug use, and employers in various labor-intensive industries still see cannabis as a potential workplace hazard and continue to screen for it. A National Institute on Drug Abuse report found that employees testing positive for marijuana were involved in 55 percent more industrial accidents, suffered 85 percent more injuries, and had 75 percent higher absenteeism than workers who didn’t test positive.
Workers regularly using cannabis, even the legal kind, aren’t just potentially hazardous to others. They are likely also short-circuiting their own careers. A 2017 National Academy of Medicine survey detailed various problems with regular marijuana consumption, including diminished school performance and reduced earning potential. Businesses in states that have legalized pot report growing frustration with hiring workers. After Colorado legalized recreational pot, one of the state’s biggest construction firms got so desperate to find workers able to pass a drug test that it started recruiting out of state. The owner of an Arizona-based microchip company told a local newspaper that absenteeism was such a chronic concern at the firm’s Colorado facility that he had stopped expanding operations there.
Employers are right to worry. In trucking, with a quarter of a million unfilled positions, nearly 41,000 drivers tested positive in 2022 for THC, the active ingredient in pot—a 32 percent climb in one year. Since 2020, more than 175,000 truckers have failed a banned-substances test, drawing suspensions. And 120,000 or so of these truckers have yet to finish—or, in some cases, even enroll in—a return-to-work initiative that lets them regain driving privileges. Many seem to be dropping out.
Marijuana advocates argue that suspending such workers is too harsh, but the National Transportation Safety Board has recommended that legal pot come with warnings about driving impairment after a study confirmed the dangers. “We’ve long known about the devastating impact of alcohol-impaired driving, but [the NTSB study] shows that impairment from other drugs, especially cannabis, is a growing concern that needs to be addressed,” an NTSB board member told the press. The Insurance Institute for Highway Safety found that road crashes rose by more than 5 percent in states that had legalized pot compared with neighboring states that didn’t.
Skyrocketing addiction rates for deadlier drugs like opioids are behind yet more workers leaving the job market. A 2022 National Bureau of Economic Research working paper estimated that the number of people with opioid and methamphetamine addictions expanded 17 percent faster during the pandemic than addiction growth previously, adding nearly 2.8 million to the rolls of those with severe substance-abuse issues. The NBER paper suggested that between 9 percent and 26 percent of the surge in individuals exiting the workforce during Covid could be attributed to substance abuse of some kind.
Chart by Alberto Mena
Pandemic America also witnessed a sharp elevation in crime rates, especially after the riots that erupted following George Floyd’s May 2020 death in Minneapolis and the subsequent nationwide movement to defund the police. Though millions remained at home during the lockdowns, reducing residential burglaries, America’s homicide rate rose 34 percent from 2019 through 2022, motor thefts went up 22 percent, and burglaries at commercial establishments increased 11 percent. Shoplifting rocketed upward in America’s biggest cities—up 64 percent in New York and 61 percent in Los Angeles from mid-2019 to mid-2023.
As social disorder intensifies, more marginalized individuals, particularly male adolescents and young adults, get drawn into illegal activities, eventually entangling themselves in the criminal-justice system when society inevitably reacts against disorder. This backlash has already commenced in numerous American locales, leading to a resurgence in local jail populations after an initial decline during the pandemic.
For the job market, the implications are clear. Ex-felons are hard to employ. A recent Rand study estimated that half of all unemployed men in their thirties have past criminal arrests, and by 35, some 46 percent have been convicted of a crime. Data from the Bureau of Justice Statistics suggest that only about one-third of federal convicts find employment within four years after release. Even among those finding work, earnings are well below median income levels. Ex-offenders also tend to switch jobs frequently, struggling to stay employed. Progressives often blame this on businesses’ reluctance to hire former criminals. Many states and cities have subsequently banned companies from asking job seekers whether they’ve ever been convicted. But that strategy has backfired, research shows. In areas where businesses can’t inquire about criminal records, they’ve become broadly reluctant to hire young minority applicants lacking college degrees; the firms fear the unknown.
The real obstacle to hiring ex-offenders is not business bias but the job candidates themselves. Between 40 percent and 70 percent of male prisoners suffer from antisocial personality disorder, defined in a Nature article as “a life-long condition involving habitual irresponsible and delinquent behavior.” Among the chief characteristics: “failure to conform to law, failure to sustain consistent employment, manipulation of others for personal gain, deception of others, and failure to develop stable interpersonal relationships.” Further, a Bureau of Justice Statistics report found that nearly six in ten state and local prisoners had been diagnosed as drug abusers or drug “dependent.”
These personality deficits help explain the poor track record of ex-offender employment initiatives. In March 2018, President Trump launched the Reentry Council, a joint effort of several federal agencies to help ex-offenders get hired. Speaking about the challenges that the group faced, its director, David Muhlhausen, said that the entire field of prisoner reentry, as it often is called, suffered from a lack of quality research on what worked and what didn’t. Noting one study that found that 83 percent of state prisoners were rearrested at least once within nine years of leaving prison, he said: “In a nutshell, there are very few employment programs that show promise for reducing recidivism.”
The few programs that do boast above-average results require vast resources and intensive counseling, as well as cooperation among local groups that supervise and train ex-cons and the businesses that might hire them. While they often succeed working with the most employable former prisoners, these efforts are hard to replicate nationally and don’t offer the deeper counseling that many onetime criminals need in order to work again.
Severe personality disorders and widespread mental-health challenges are also shrinking the larger pool of employable individuals, a phenomenon particularly conspicuous among younger adults. In 2020, mental-health issues rendered 29 percent of federal disability beneficiaries—about 2.4 million people—incapable of employment. Among them, 1.4 million struggled with depression or psychotic disorders. Most of those recipients had been enrolled in disability programs before the pandemic. One notable trait among SSDI recipients with mental-health-related disabilities is their relatively younger age, compared with other disabled beneficiaries. They tend to remain on the benefit rolls for long periods, contributing to their growing representation among disabled workers.
Mental-health problems worsened during the Covid lockdowns and have remained elevated since. An early 2023 poll found that a third of American adults still were experiencing pandemic-related anxiety and depression. A McKinsey American Opportunity Survey taken in May 2022 found that 17 percent of those unemployed and not looking for work blamed their situation on their mental state. Young adults again appear particularly distressed—nearly twice as likely to report issues as those aged 50 and up. In a survey last fall, nearly half of young professionals said that they struggled with anxiety and depression and that work had taken a negative toll on them. More than four in ten said that they planned to quit their current jobs. Gallup pollsters describe these millennials’ attitudes toward work as “more lost” than previous generations. A November 2022 Gallup poll found that nearly 70 percent of Generation Z and millennial respondents claimed to be stressed at work, and 34 percent said that they were burned out, compared with only 40 percent of baby boomers who reported being stressed at work.
Many young Americans have simply checked out. One study estimated that about 14 percent of 25-year-olds aren’t working or even looking for a job—a rate about double that of baby boomers at a comparable age. While some of this variance can be attributed to prolonged educational pursuits, young workers also cite “self-reported disability or illness,” which includes issues like drug addiction, more frequently as reasons for their lack of interest in seeking employment, compared with previous generations at the same life stage.
A rise in workplace anxiety among young Americans corresponds with employer complaints about them. In roundtable discussions organized by the Federal Reserve Bank of St. Louis in mid-2023, many business executives “identified a lack of soft skills among younger workers” as a reason for the workers’ employment woes. In a recent survey of American hiring executives, many said that young applicants often struggled to make eye contact, showed up for interviews dressed inappropriately, had weak communications skills, and responded poorly to feedback. About 20 percent reported that they’d had a recent college graduate show up for an interview with a parent.
How did millennials develop such shortcomings and gloomy views of work? One explanation: young adults don’t assess risk well. Though we live in one of the safest times in history, Generation Z believes that “risk is everywhere they turn,” writes political scientist Gabriel Rubin about an ongoing study assessing the origins of young people’s mental-health crises.
In their bestseller The Coddling of the American Mind, Greg Lukianoff and Jonathan Haidt argue that society has “unwittingly taught a generation of students the mental habits of anxious, depressed, polarized people.” Parents bear some blame, but schools at all levels are at fault, too, Lukianoff and Haidt maintain. Gen Z has grown up learning to “catastrophize.” Old wisdom—like the notion that what doesn’t kill you can make you stronger—gets turned on its head, so that any stress or conflict is seen as potentially devastating. Hence the demand for safe spaces and the agitated reactions to mundane workplace scenarios. Young workers wind up ill-suited to embracing economic opportunities because they can’t see work as fulfilling or even fun. “Yes, fun at work. Imagine that. Gen Z can’t,” business school professor Suzy Welch recently observed of her students. For them, she added, “Work is what you do when you can’t be doing what you want.”
American schools’ response to Covid made all this worse. Long lockdowns and periods of remote learning instilled fear and dread in teens—among the least vulnerable demographics to the virus—while also stunting their academic growth. U.S. schools stayed closed far longer than did their counterparts in other industrialized countries, averaging approximately 71 weeks of remote learning, compared, for example, with just 15 weeks in Spain and 38 in Germany. By fall 2022, perhaps unsurprisingly, polls showed more than half of American high school kids battling depression and a third reporting that home distractions disrupted learning. Math and reading scores have plunged, with the equivalent of about four months of schooling essentially missing, on average, for most students. For poorer kids, learning losses represent nearly an entire school year.
Alarmingly, many school districts have responded by lowering standards, which can mislead parents into thinking that their children haven’t fallen behind. One recent study documented a wide gap between what test scores show about falling performance and what parents think. That may be one reason that some school districts report widespread problems in getting parents to take advantage of federally funded tutoring catch-up programs for their kids. Only about 20 percent of the $190 billion in Biden’s Covid recovery program for schools has gone to helping students close the learning shortfall. Schools appear to have spent as much on upgrading facilities as they did on tutoring.
All this has potentially seismic economic effects. Harvard’s Center for Education Policy Research estimates that the aggregate learning loss of K–12 students during Covid will total about $900 billion in forgone earnings over students’ subsequent work lifetimes. To what extent the combination of learning deficits and rising mental problems tips marginal students into the category of nonworkers is hard to estimate, but the trends are distressing.
Sobriety is particularly vital for many jobs in industries like construction, manufacturing, and transportation. (Charlie Riedel/AP Photo)
What can be done about the workforce quandary? Reforms should start with ending government disincentives to work. The welfare-to-work movement of the 1990s showed that smart policies could reengage people, even after long periods of government dependency. Some states and cities, including New York, have lately gone in the opposite direction, so that welfare rolls are growing again. Efforts to require able-bodied adults to work for other government benefits such as food stamps have never gained traction, but such reforms are ever more pressing.
Similarly, an increasingly dysfunctional Social Security disability system needs reform as its trust fund runs out of money. Among the options are so-called early-intervention initiatives. These help the temporarily disabled get back to work before they become permanently unemployed—aiding workers unable to perform physically demanding jobs, say, to transition to less arduous careers instead of remaining on disability. We also need to halt efforts to expand nonwork support, including so-called universal basic income (UBI) programs that pay people regardless of work status and that have gained currency on the political left and even on the right. Some advocates counterintuitively claim that these plans, which have been piloted in several locations, will help get nonworking people working again, but the effects have been otherwise: UBI programs reduce work and worsen dependency.
America’s schools once effectively readied the country’s young people for adult life, including work. Generations found their way into trade and technical careers through high schools, but the college-for-all movement undermined those projects. Schools that have restarted them, sometimes in tandem with local businesses, are producing highly trained, well-paid young workers. But compared with similar training programs in other industrialized countries like Germany, America still has too few.
The drive to integrate ex-convicts and individuals grappling with severe mental-health conditions into the workforce presents considerable obstacles. Optimal reforms should aim at preempting these challenges. The relaxation of criminal penalties and enforcement has unleashed a surge in social disorder, ensnaring more vulnerable young individuals in criminal actions and intensifying mental-health crises. The escalating use of marijuana has correlated with a marked rise in debilitating psychosis. Decriminalizing harder drugs has wrought widespread havoc in Oregon. Like the Hippocratic principle in medicine, the foremost tenet of governance should be to avoid causing harm. Beyond that, it is imperative to concentrate efforts on assisting those capable of rejoining the workforce. A notable minority of ex-offenders possess immediate employability after release. We need to devise strategies to encourage businesses to give them a chance. One policy worth exploring is “crime and safety insurance” for businesses, mitigating potential losses incurred from hiring ex-cons.
Beneath the current disengagement from work lies a misguided belief that technological advances and greater business productivity afford individuals the luxury to stop working and simply “enjoy” life. But research consistently demonstrates that those engaged in work lead markedly happier lives than the nonworking. An early study even revealed that lottery winners who maintained fulfilling jobs wanted to keep working, despite their windfall. The rationale is straightforward: work is deeply ingrained in human history, with each of us being beneficiaries of generations who toiled and left enduring legacies through their labor. America retreats from work at great peril.
Steven Malanga is a senior fellow at the Manhattan Institute and City Journal’s senior editor.
