When Not Working Is A Rational Choice
I have a niece, and she shares my last name, and she is young, mid twenties, and has done all the right things: college, on a New Mexico State sponsored Lottery Scholarship, so she doesn’t have a lot of pressing student debt. She concentrated, and has had a series of professional level jobs, mostly in marketing and sales. She has my genes, inherited from farmers, and solid immigrant working stock, and works like a maniac, which serves her well in this economy.
She called me a few weeks ago, wanting to know if I had suggestions about why people were choosing NOT to return to their jobs, but to instead stay on unemployment, with the supplemental $600 provided by the federal government. (Thank you Mrs. Pelosi.) It was a great question, and it made me wonder: Why did people choose NOT to work? All propaganda and political noise aside, Americans are known for their work ethic, and their seemingly endless ability to earn a living, no matter how hard the labor. New immigrants seem to be particularly adept at this — the Chinese laundries in New York were started by immigrants, and I was NOT surprised to see the counters staffed with college students, clearly the sons and daughters of the owners, wearing sweatshirts embroidered with Ivy League college names. Yet, my niece had observed a real thing: Was it rational for people to not work, rather than to work?
The question niggled, and it finally dawned on me that people WERE being rational, for the following reason: If federal minimum wage had kept pace with inflation, if should be hovering around $22 an hour. It is currently $7.85 an hour. The $22 dollar an hour wage would put earnings for a 40 hour work week at about $900, which is close to what people are making for un-employment, with the supplemental. So, people have recognized that it makes more sense to stay home, and collect government largess.
More importantly though, we need to figure out how we got here. Not surprisingly, President Franklin Roosevelt got the first federal minimum wage passed in 1938. Congress has increased it 22 times since then. It was last raised in 2009, 11 years ago. The current wage provides about $232 dollars in take home pay, after taxes, and assuming that people get to work a full 40 hours. This is a dicey assumption, since many large employers monitor very carefully how many hours their employees work, to keep them under the threshold where they would have to offer insurance benefits. The current wage structure results in unfathomable working lives. Many families, those working at low skill jobs, maintain multiple jobs, work 24 hours a day, and just barely keep themselves afloat. PEW Research found that 75% of American Households have only $400 dollars in cash, for an emergency. Payday lenders, title lenders, all sorts of financial institutions have emerged to fill the gap, but at a very steep price. Yet, when you have no cash, and the kids need to eat, you do what you need to do. Many people accept the terms, and figure out later how to pay off the debts, or at least keep the wolves at bay.
How did we get here? How did the richest country in the history of mankind get to a place where so many of their most vulnerable, the young, the old, the newly arrived, the minorities, are so underpaid? It has, as usual, its roots in politics, and the ability of large, monopoly companies to simultaneously keep wages low, and prices for their products and services high. The little guy is trapped, paying high prices for basic services, and not earning enough to keep up.
Much of this started a long time ago. Hedrick Smith, who wrote a few books and is a Pulitzer Prize winner, traces a lot of this to the era of President Jimmy Carter, when corporations, taking advantage of the disarray in politics, in that Post Watergate, Post Vietnam era, and corporations moved in. Many senior managers were heard to say during earnings calls during the 1980’s that dollar for dollar, money invested in lobbying and getting laws that were favorable to them made was a rational investment. Publicly traded companies, their profits swelling for 3 decades, continue to use these profits to buy back stock, thus pushing up the price of shares, benefitting management, and shareholders, but at the expense of workers, and customers, who have to foot the bill by paying more for services. Share buybacks, which were and are legal, were actually NOT used in the decades following the Great Crash of 1929. Many on Wall Street had experienced first hand what the crash and the ensuing Depression did the country, and I would argue also led to the rise of Fascism in Europe. Yet, as the 1980’s dawned, and as it became okay to do hostile takeovers, as investment banking changed from private partnerships to publicly traded behemoths, the culture changed. Michael Douglas, play Gordon Gecco in the movie Wall Street, summed it up; “Greed is good,” he told us.
What can we do? We, as citizens, actually have the power to change all of this. Government, which we control with our vote, can regulate, or at the very least provide a counter measure to out of control corporatism. We, as voters, can decide. We should.
Here are two further articles. This has happened before, as I point out in my piece about the 1920's.
Vote or Die.
