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Sometimes the media gets it right– why changing government incentives are contributing to lower employment.

13 Dec 2014

I don’t know how this slipped past the editors of the NYT.  We have at least a recognition that changing incentives are contributing to more people staying out of the workforce.  Of course, excellent economists such as U of Chicago’s Casey Mulligan have done outstanding empirical analysis to show that changing government policies are making it far more costly (in terms of potential loss of government benefits) to go back to work.  But you’d never expect to hear this from the flagship of establishment media, the New York Times.  Several quotes from the linked article will help illustrate.  The first is from an out of work union member, who explains why he will not accept available wages:

“I’d work for them, but they’re only willing to pay $10 an hour,” he said, pointing at a Chick-fil-A that probably pays most of its workers less than that. “I’m 49 with two kids — $10 just isn’t going to cut it.”

Why is he unwilling to take lower paying jobs?  The NYT posits this:

Many men, in particular, have decided that low-wage work will not improve their lives, in part because deep changes in American society have made it easier for them to live without working. These changes include the availability of federal disability benefits; the decline of marriage, which means fewer men provide for children; and the rise of the Internet, which has reduced the isolation of unemployment.

“They’re not working, because it’s not paying them enough to work,” said Alan B. Krueger, a leading labor economist and a professor at Princeton. “And that means the economy is going to be smaller than it otherwise would be.”

Alan Krueger has served in both the Clinton and Obama administrations; he is not a conservative economist.  Make no mistake, the article is still implicitly condemning the US economy for not generating the high wage jobs that low-education workers can do, but at least it acknowledges to some degree the role of changing incentives.  It doesn’t highlight the changing availability of food stamps, extended unemployment insurance, potential medicaid availability, etc., but it recognizes that it is easier to get by without working.

I also applaud the reporting on the human costs of lack of work; workers who lose their inherent dignity by not working:

“I lost my sense of worth, you know what I mean?” Mr. Walsh said. “Somebody asks you ‘What do you do?’ and I would say, ‘I’m an electrician.’”  “But now I say nothing. I’m not an electrician anymore.”

As we’ve argued in this blog before, fundamental government policy ought to be to remove barriers to work–work is an integral part of who and what we are.  We dignify people by demanding that they work if they are able bodied, and we denigrate them if we say that if their skills and productive output are low, they should not even work at all.  No, we don’t say it like that, but that is often the effect of our policies.