The Myth of the Lazy Poor

The Trump administration has recently suggested that recipients of Medicaid – health insurance for the poor – be forced to have a job or go to school if they want to retain their health insurance, however limited. This revives a theme which has been current in American mythology for a long time. The story is that the poor are to be blamed for their own poverty. They are poor because they refuse to work. Poverty is not anyone's fault except for the poor and their laziness.

People actually believe this, however incredible that may seem. But look at the plain facts: Beginning January 1, 2018 workers on federal contracts must be paid at least $10.35 an hour. If someone works a 40 hour week that amounts to $414. On an annual basis this would amount to $20,700.00. Federal guidelines defined a family of three persons as poor if they are earned $20,780 or less. If two parents have one child and one partner works 40 hours a week all year they are still poor. If two parents both go to work who will take care of their child and how much will that cost them? But what if they want two children?

Disneyland in Anaheim, CA employs more than 30,000 workers. Half of them earn $15.00 an hour or less. In Anaheim, in Orange County, the cost of living is exceptionally high. It takes $33,000.00 for a single person to live, to pay rent, buy food, insurance and maintain a car. If you earn $ 15.00 an hour your annual income is $ 30,000.00. Many Disneyland employees live in their cars or trucks.

People are not poor because they are too lazy to work. They are poor because their earnings are very low. This story about the poor who only have themselves to blame is a myth propagated by employers who pay minimum wage. "It's not our fault" they say, "it's the fault of the poor people themselves." But as we can see there is no truth to this.

Some time ago, I published a blog that dealt with an aspect of these questions. I pointed out that making poor people work for public housing, or Medicare, or food stamps or what have you is often defended on the grounds that everyone ought to work. Against that I argued that it matters a lot what sort of work people are made to do. There is work that is mind numbing and destroys the soul. No one should be forced to do that sort of work. In fact no one should have to do that sort of work. If people were offered work that is interesting, that makes one happy, few would have to be forced to do that.

But now an article in the Journal of the American Medical Association (Aaron E. Carroll, MD "The Problem with Work Requirements for Medicaid" February 20, 2018, page 646) examines the facts bearing on this project.

According to the Kaiser Family Foundation, 80% of Medicaid recipients "are from working families." This breaks down as follows: 42% work full time, 18% work part-time, 14% do not work at all because they are disabled or ill, 6% attend school. That leaves 19% of Medicaid recipients who do not work at all. Of those 12% are caregivers for ill or disabled family members. Of all Medicaid recipients 7% are not working at all. Among those remaining 7%, some are looking for work and can't find any, and others are retired and or elderly. There remain about 3% of Medicaid recipients who could be described as "able-bodied adults" who choose not to work. This is a very different picture from the "lazy poor" narrative promoted by employers and their advocates among politicians.

Dr. Carroll's article quotes two other studies which find a higher numbers of able-bodied non-working Medicare recipients but those usually include older Americans or Americans who are in some way disabled. There is no evidence that there are a large numbers of poor people who refuse to work. In fact, there are probably more rich people who inherited large fortunes from their parents and grandparents, who are not working than people who live at the edge of poverty. Why allow the rich to be idle and keep bearing down on the hard working people who get paid so poorly that they remain in poverty?

The wealthy who can leave large fortunes to their children and grandchildren often acquire those fortunes by paying poverty wages to their workers. That is a pretty shameful way of making money. Instead of recognizing the immorality of that and paying workers a living wage, many employers use some of the money made by paying too little to live on to get politicians to repeat the myth of the lazy poor.

Do not be taken in by their lies!

Guaranteed Basic Income

With more attention being paid to poverty, the suggestion that everyone should be entitled to a guaranteed basic income, has come to the fore again. Advocates imagine that this support for people with little or no income will be distributed in the form of a tax rebate. No grand new bureaucracy would have to be established.

There are actually two projects. One will make sure that every family has enough money for food, decent housing, education, and health care, for transportation and a reasonably agreeable life. The second one is focused on children. There are a large number of children in the United States living in severe poverty. 17% of our children live in poverty; 5% live in deep poverty--their families income is half of the poverty line, less than $10,000 a year. This project would give every family $2500 a year per child. That amount would lift these children out of poverty.

Both of these projects obviously run into the feeling of many people that since they had to work for their money, it would be grossly unfair for other people to receive a reasonable income without working. I will come back to that feeling below. For the moment we need to think about the fact that there are actually not enough jobs for everybody in the country. All politicians keep talking about creating jobs but have  no concrete proposals.

There are some obvious ways of creating jobs. If we reduce the normal work week from 40 hours to 35 hours a week, and employers will have to pay over time after a person has worked 35 hours, rather than paying more, employers would hire more persons and thus create new jobs.

If we decided to hand out money to people with children, according to current estimates, we would infuse 2 1/2 billion dollars into the economy. Families receiving that assistance, being poor, will spend that money and thus create jobs. An infusion of 2 1/2 billion dollars would make a significant difference to the economy.

While these are interesting considerations they will not persuade any opponent because what worries them is the unfairness of the whole thing. Why should I have to work and you have the whole day off and still have a decent income? What is more, why should I pay part of my hard-earned money in taxes to allow you to live comfortably without working? That seems grossly unfair.

If you replied that it seems grossly unfair that some people are superrich and some people live in abject poverty in this, the richest country in the world, opponents of guaranteed basic income would not be moved: “Let them get a job,” they would say or “Let them go to school and get job training.”

In order to get a sense of the underlying issue, let's make a thought experiment. Suppose everybody had a job they truly loved. There are very few days when they wish they could stay home. They think about their job at night before going to sleep because the job is full of challenges, it gives them a feeling of confidence, of competence. It somehow makes their life worth living. How much they earn in is not as important as growing as a person and as a person with special skills. For many people who have jobs that support them but barely and jobs that don't give them impressive social status, nevertheless work is fulfilling and the source of happiness. They are content.

Think about that world for a minute and then suppose that in this country there are not enough of these wonderful jobs and the population decided a long time ago that no one should have a job they hated because it was repetitive, because even stupid people find it boring and people of ordinary intelligence suffered doing it, day in, day out. So in this country there are people who have no work and they are supported by the public by receiving guaranteed basic income payments.

Now comes the big question: do you think that in that country where work is a source of happiness and fulfillment people will resent the unemployed who live off government payments? Would you not rather think that the people who had work they liked would feel sorry for the people who just had money and no work that made their life feel worth living?

Work today, for most people, is trying. They have done it for a while. There is nothing interesting about it. They are oppressed by authoritarian management. They have no say over what they do, or what they produce. They are treated as if they were mentally defective. They frankly hate their job. In that situation it makes perfect sense to not want others to get money without going through the same suffering. The opposition to guaranteed basic income tells us something deep about Work in America. It tells us that for many Americans work makes life miserable.

That is not something that political candidates are talking about, that the majority of Americans enjoy only their leisure time because the eight or more hours a day they are at work are indifferent at best, and most likely positively unpleasant.

The misery of going to work does not tell us that employers are sadists, but it does tell us something about the economic calculations which govern how one runs a business. The employer's obligation is to keep costs low and thus have as many as possible unskilled workers, people who can be trained in an hour or two to do their job. For the skilled jobs it is cheaper to buy a robot or to outsource the work to low wage countries.

The quality of work-life, the extent to which workers enjoy working, does not figure in the employer's calculations. The most serious consideration is that unskilled work is cheaper to buy in the labor market and therefore preferable.

It is the economic system, that is not interested in the worker's life and fulfillment but only in keeping the wage bill small, that is really inhumane and needs to be changed. As long as people work under that system, they will oppose guaranteed basic income projects.