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The unexpected economic consequences of video games

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The June jobs report, released Friday, gave signs that the US economy is doing well: Job growth is increasing, and unemployment levels remain at historic lows. Wages are rising a little bit, though not as much as economists hoped.

In June, the economy added 220,000 new jobs, according to the US Department of Labor. That was more than Wall Street economists had predicted, and is a big improvement from the past three months, when the economy was averaging about 121,000 new jobs. Unemployment is 4.4 percent.

What hasn't seemed to budge, though, is the labor force participation rate for men — the percentage of men in their prime working years who aren't working and aren't looking for work. Ten years ago, 90.7 percent of men in their prime were either employed or looking for work. Now just 88.4 percent are. While it might not seem like a huge difference, it adds up to hundreds of thousands more men who have given up on work.

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Labor economists have been studying this phenomenon for decades, as men without college degrees have been having a harder time finding good jobs. Many economists believe there aren't enough mid-skilled jobs for blue-collar workers out there. Nowadays, even manufacturing jobs require some level of technical training, and unskilled retail jobs pay very low wages.

But the lack of jobs or skills doesn't explain the entire problem. After all, federal job retraining programs have shown limited success in helping displaced workers. New research shows that the lure of computers — and video games in particular — has played a role in keeping young men from working.

"There has been a lot of research on how technology affects labor demand, how robots are displacing workers," said Erik Hurst, an economist from the University of Chicago who was one of the researchers involved in the study, which was published Monday. "But no one had really looked at the effect of technology on someone's willingness to work."

Hours spent gaming are way up

Hurst has done plenty of research on declining job demand for unskilled workers. He and his colleagues have found ample evidence showing high-tech machinery has replaced traditional factory work that once provided a steady paycheck for men who didn't go to college. But that didn't explain why so many men had left the job market altogether, or why they were working fewer hours. What was especially confusing was the fact that men in their 20s were working less than older men.

Young men, between the ages of 21 and 30, worked about 203 fewer hours per year (a 12 percent decline) from 2004 to 2015. Meanwhile, older men between 31 and 55 years old worked 163 fewer hours (an 8 percent decline). That struck Hurst as odd.

"If you lose your manufacturing jobs when you're 45, it's hard to adjust to that shock," said Hurst. "But the decline in work has been much larger for young men. It was a puzzle that the data didn't readily explain."

That made Hurst and his colleagues (economists Mark Aguiar, Kerwin Charles, and Mark Bils) wonder if there was something more, beyond waning job demand, that was keeping young men from work.

Zachary Brame, plays a video game in the basement at his parents' home in Kansas City, Kansas.
Kansas City Star | Getty Images
Zachary Brame, plays a video game in the basement at his parents' home in Kansas City, Kansas.

The payoff of gaming went up too

Hurst and his colleagues began examining census data on how young men were spending their time off work. Most young people — men and women — were clearly spending a lot more time on the computer. Women preferred spending time on social media. The most dramatic shift was the increase in time young men were spending on video games.

As of 2015, men between the ages of 21 and 30 spent about 5.2 hours per week on recreational computer activities, and most of that time (3.4 hours) was spent playing video games. For young men, recreational computer time jumped by 45 percent between 2004 and 2015, even though their total leisure time only increased by 4 percent. That was not the case for young women or older men.

While the shift was striking, it didn't necessarily mean that young men were choosing to play video games instead of working. They could be playing video games instead of going to the movies or doing some other activity. So Hurst and his colleagues came up with a way to calculate the value of their leisure time. It's based on how much more time people spend doing certain activities over others, such as sleeping.

If jobs become more economically valuable by raising wages, people choose to work more. If leisure time for young men was also becoming more valuable, the researchers hypothesized, that might explain why some were choosing to work less.

What the group of researchers discovered was fascinating: The value of young men's leisure time was increasing, and the allure of video games played a small but significant role in why they were working less. They estimated that video games were responsible for about 23 to 46 percent of the decline in work hours for young men during the 2000s.

Hurst suggests high-tech innovation in gaming has a lot to do with the change.

"In 1995, I had 200 cable channels, but I would still be watching TV by myself, and that's an extremely lonely experience," said Hurst, who is an occasional Mario Kart player. "[Video games] now allow us to interact in ways where you can be in your house and still connect with others and play with others. It's very different from other types of leisure."

The policy challenge: make work more appealing

These findings have implications for policymakers who are keeping a close eye on job growth and employment levels. Getting more people to work, and back into the labor force, is a major priority for President Trump and Republicans in Congress. This is a key part of their strategy to grow the economy.

But so far, the main solution Trump has proposed is to spend more money on job training programs. The Obama administration also spent millions of dollars on job training, and that wasn't enough to get a large number of displaced factory workers new jobs that paid just as well. The Trade Adjustment Assistance program is a good example. It's one of the federal government's most robust job training programs, and was meant to help factory workers who lost their jobs through NAFTA learn new skills.

But the program had limited success. An independent analysis by Mathematica Policy Research compared TAA recipients to workers who got traditional unemployment assistance, and this is what they found: After several years, TAA recipients had lower earnings than people who just received regular unemployment assistance. And only 37 percent of those who were trained for specific jobs were actually working in that profession later on.

Hurst's research suggests that jobs need to pay a lot more to make work seem more appealing to young men — which would, in theory, make work seem more worthwhile than playing video games.

But right now, as the jobs report shows, wages have hardly budged. In June, they only rose 4 cents per hour. Wages are only increasing at an annual rate of about 2.5 percent, which is far lower than the pre-recession rate of 4 percent. Businesses usually increase wages when unemployment is low because they need to attract workers in a tight labor market. But they don't seem to be paying enough to get young men who dropped out of the workforce back to work. And there is no amount of job training that can change that.

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This article originally appeared on Vox.