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Michel Euler / AP

For Americans, it seems like a terrific jobs market, with an astonishingly low,4.3% unemployment rate. Yet a closer look reveals a middle class hollowed out by automation, says Larry Summers, the former Treasury Secretary.

"This question of technology leading to a reduction in demand for labor is not some hypothetical prospect ... It's one of the defining trends that has shaped the economy and society for the last 40 years."

In an interview with Axios, Summers points out that 5% of American men aged 25 to 54 were jobless in 1968; today, that number is 15%. In this statistic, the U.S. trails most of Western Europe.

Expand chart
Data: OECD; Chart: Andrew Witherspoon / Axios

Why it matters: If the participation rate for this age group were at its 2001 peak, there would be millions more workers in the economy, making both the country and many families richer.

Summers says a lot of economists advocate "more dynamism and flexibility," but that the U.S. already has a freer market than most other wealthy countries. More flexibility isn't going to make a big dent in this jobs crisis. Meanwhile, "it is a close race between the United States and Italy as to who is going to avoid the cellar of the major industrialized countries" in terms of prime-age male joblessness, he said. And it doesn't seem likely to improve soon. Here is Summers again: "I suspect that if current trends continue, we may have a third of men between the ages of 25 and 54 not working by the end of this half century, because this is a trend that shows no sign of decelerating. And that's before we have ... seen a single driver replaced [by self-driving vehicles] ..., not a trucker, not a taxicab driver, not a delivery person. ... And yet that is surely something that is en route." What it says it about policy: Both Democrats and Republicans believe that able-bodied men and women should work. But there's a growing body of evidence that the conventional U.S. strategy of low taxes, skimpy welfare benefits, and prohibitively expensive higher education won't result in more of them getting jobs.

Mass incarceration could play a role: Former Obama Council of Economic Advisers Chair Jason Furman has presented evidence that the rise in prison populations have something to do with the problem, as employers often shy away from hiring ex-convicts, who are also barred by law from certain jobs.

Go deeper

2 hours ago - Health

Treasury begins dispersing $350 billion in COVID relief funding to states and localities

Treasury Secretary Janet Yellen. Photo: Tasos Katopodis/UPI/Bloomberg via Getty Images

The U.S. Treasury on Monday began giving state and local governments access to $350 billion in emergency funding from the American Rescue Plan, the department announced Monday.

Why it matters: Though the money is aimed at helping state, local, territorial and tribal governments recover from the pandemic's economic fallout, the administration will generally give them wide latitude on how they can use the funds.

Game developers break silence around salaries

Illustration: Annelise Capossela/Axios

Developers are sharing their salaries on Twitter under the hashtag #GameDevPaidMe to encourage pay transparency in their industry.

The big picture: The hashtag started circulating last year, but has returned periodically as developers fight for better working conditions. Salary sharing is a way to equalize the field. By removing the secrecy, as well as the stigma, around discussing pay, workers have more power to advocate for themselves when negotiating salaries and raises.

2 hours ago - World

Jerusalem crisis: Hamas fires rockets, Israel begins military campaign

Palestinian protesters and an Israeli police officer near the Damascus Gate. Photo: Amir Levy/Getty Images

Days of tension in Jerusalem escalated into an exchange of fire on Monday, as Hamas fired dozens of rockets toward Israel and the Israeli military responded with strikes of its own and said it was preparing for a military operation that could last several days.

Why it matters: This is the first time Hamas has fired rockets at Jerusalem since 2014, and it's the most serious escalation between the Israelis and Palestinians in many months. It comes during the most sensitive days on the calendar — the last days of Ramadan and the Jerusalem Day commemoration on Monday — and as political crises roil both the Israeli and Palestinian governments.