Monday, January 21, 2013

Why Work?

Let me tell you a modern-day parable:

 A political science professor in a state university recently flunked his whole class. The professor announced at the beginning of the school term that there would be three tests, two preliminary tests and one final exam. After the first test, he explained that he was going to average all the test scores and give everyone in the class the average grade on the exam. The average score was a B. When the second test came up, he told the class that the same scoring system would be used. The average score was a D. When the final test came up, he announced that the same scoring and grading system would be used. The average score came out to be an F. The whole class flunked!!

This parable illustrates the fact that people won’t work to do well if the outcome does not benefit them—at least a little. They won’t work for the good of the other guy. Socialist systems illustrated by this parable do not inspire people to work for the good of others.

In the United States, today, we are beginning to see the same kind of force at work in our culture.

Labor force participation has declined since 2000. The recession accounts for some of this decrease in productive working among our people, but not all of it. The other significant reason is soaring government benefits. Many people think that it is not necessary to work when so many economic benefits come to them free from the government.

One disincentive to work is the proliferation of food stamp recipients. There are over 30 million more Americans receiving food stamps today than in 2000. The sharp rise in the number of those receiving food stamps predated the financial crisis of 2008. From 2000 to 2007, the number of beneficiaries rose from 17.1 million to 26.3 million according to the Department of Agriculture. That number has leaped to 47.5 million in October 2012. That increase amounts to 10,000 more beneficiaries per day! The average benefit per person jumped in 2009 from $102 to $125 per month.

The increase in food stamp distribution is not all due to recession-related unemployment. From 2010 to 2012, unemployment decreased from 9.6% to 7.8% and real GDP was rising steadily. Instead of decreasing with the decreasing unemployment rates during that period, food stamp usage continued to rise; and 7,223,000 more people received food stamps.

A second factor in the disappearance of Americans from the work force is the easier availability of Social Security disability payments. The health of Americans and the decreasing physical dangers of the workplace have improved over recent decades. Yet…the number of Social Security disability recipients have increased. Three million Americans received SS disability payments in 1990. Now, the number has risen to 8.6 million.

The SS disability program is soaked in inefficiency and ineffectiveness as reported by David Autor from MIT. Many reported cases of fraud have been revealed.

Extended unemployment benefits are a third source of non-earned income that keeps people out of the work force. The traditional 26 week benefit has been continuously extended over the past four years—many persons out of work a year or more are still receiving benefits.

In conclusion,  If more people have less incentive to stay out of the work force, they might seek jobs and help spur economic growth.

(Much of this blog post was taken from the Wall Street Journal of 1/16/13 page A13.)

No comments:

Post a Comment