Shteiging Into The Abyss

A Guest Post about Charedim and the Economy

This is a guest post by an old friend of mine, who we’ll call M. M learned for many years in charedi yeshivos in Israel and lives in the charedi community. M also works in the financial sector, and thus he has a full understanding of the issues regarding charedim and the economy.

Perhaps surprisingly, given the intense focus on the deteriorating relationship between Israel's various Jewish sectors of late, recently released Charedi employment numbers are ostensibly encouraging. Data from Israel's Central Bureau of Statistics shows that the proportion of Charedi men in employment rose to a record 55.8% in the first half of 2023, up from 52.0% in 2015. Presumably driven by the surging cost of living, the Charedi male employment trend is at least pointing in the right direction.

Unfortunately, any sense of relief from this increase is premature. As a recent series of articles based on data from Israel's Central Bureau of Statistics in the Calcalist newspaper makes clear, the underlying trend with respect to the Charedi population's impact on Israel's economy is deeply alarming.

Firstly, the 56% of Charedi men who work is still dramatically lower than the 87% of non-Charedi men in employment. Furthermore, the average wage for working Charedi men is only 50% of that of non-Charedi Jewish men. Taken together, this means that Charedi men earn only a third as much from work as non-Charedi men do. While the Charedi female employment rate is closer to that of non-Charedim (78% vs 82%), Charedi women continue to earn only 73% of what their non-Charedi counterparts earn. In comparison to the average non-Charedi household, the average Charedi household pays only 30% as much tax but receives 52% more in welfare payments. The educational disparities are similarly steep: only 4% of Charedi men have a high school qualification, in contrast to 87% of non-Charedi men.

Beyond the problematic status quo, the real issue is that, on the current trajectory, the situation is due to get much, much, worse over time. Studies show that human beings struggle to grasp the concept of exponential growth. And exponential growth is exactly what the Israeli Charedi population has been doing for decades: Israel Democracy Institute numbers, which are essentially identical to the numbers provided by the Machon HaCharedi Le'Mechkarei Mediniyut, show that the Israeli Charedi population increased from 750,000 in 2009 to 1.28 million in 2022, a 4.2% annual growth rate.

Simply holding this growth rate constant for the next few decades results in astronomical numbers: 7.5 million Charedim by 2065. This isn't doom-mongering - it's extrapolation. In fact, in the 14 years since Rabbi Slifkin started his blog, Israel's Charedi population has grown by 530,000 people - a 71% increase!

A common refrain is that people have been warning about this for a long time, and yet Israel's economy remains robust. First of all, it should be noted that the underlying trajectory is broadly in line with what has been warned about. But, more fundamentally, it is understandable that the Charedi population growing from a tiny number to 13% of Israel's total, which is where things stand now, might be manageable. It's what comes next that won't be, without root and branch change.

Israel's Central Bureau of Statistics, assuming a slight decline in the Charedi population growth rate from recent levels, projects that there will be 5.8 million Charedim in 2062 - 38% of Israeli Jews.

Israeli population projections by demographic segment:

How can Israel maintain a first world economy if Charedi men have a third grade secular education and are generally unequipped and not prepared to work in all the various jobs that a knowledge-based first world economy requires? And that's before taking into account the impact on Israel's non-Charedi populace. It stands to reason that many of the most qualified and economically productive citizens will simply leave, rather than pay ever-increasing taxes to fund a wilfully economically unproductive minority. Israel's enemies must be salivating at the prospect of this scenario transpiring, which would make the country's eventual demise that much more likely.

As it stands, there is probably a decade or two left to radically recalibrate the Charedi status quo, but otherwise Israel is heading fast towards the abyss. Incremental changes in Charedi education and employment patterns are simply nowhere near sufficient to alter this trajectory.

Something will have to give, eventually. But, without a revolution in Charedi education and employment, the terrifying alternative is change only occurring when there are tens of millions of Charedim living in ramshackle accommodation with a Somalia-like life expectancy amidst marauding Iran-backed militias, and anyone who is able to has left the country already. Of course, there are half-way houses between a scenario where the necessary changes to preserve Israel's prosperity are enacted in a timely manner and one where an apocalypse materializes, but the current trajectory is much closer to the latter than the former, unfortunately.

This might all come across as melodramatic, but the power of exponential growth is genuinely non-intuitive. That's especially so when the Charedi population explosion that will occur over the coming decades in the absence of radical change is a phenomenon that is in some respects unprecedented, at least in developed countries.

Exponential versus linear and cubic growth:

Prior to the era of modern sanitation and healthcare, the human population grew very slowly, if at all, despite women typically commencing childbearing at a young age and often giving birth to large numbers of children. This was a result of life expectancy being much lower, with infant mortality in particular hugely above current levels. Whether or not Israel avoids a reminiscently horrifying fate in future will depend on decisions made over the next few years. Time is of the essence.