Are the Poor Working Poor Working, or Working Poorly?

Great Debates
21

You sound like that old geezer from Heinlen’s “The Moon is a Harsh Mistress.” :slight_smile:

Sometimes I think I’m an anarchist. I’m certainly very seldom happy with any system in it’s entirety.
Gaderene

Man, you know, ever since that Pit thread where you became my personal sock puppet, I have had this affinity for you. Man, I must really be off the deep end if this is what the other half of my subconcious is thinking:)

Couple of problems:

The government has no money. It is just a mechanism to take money from a large group of people and focus the money to achieve something we all need but would (theoretically) be unable to get without cooperating.

So, for the gov’t to support people, that means it is taking that money (stealing IMHO) from certain people, and giving it to others.

I’m no economist, but it seems to me that if you dolled out handouts to everyone so that everyone had a certain amount of money (say $20,000/year/person) Then inflation would take over. All of a sudden goods would cost more. Then you would have to raise that to $25,000 and so on and so on. Are you for gov’t setting the prices on all goods as well?
I also think that whenever you subsidize something, you make it more common. So if you started subsidizing bad ideas/decisions today, it would cost more next year because more people would be making them.
An idea that I have is as follows…

(I’m just full of gov’t reform ideas lately:))

If you take in more from the gov’t than you pay out in taxes, then you do not get to vote.
This solves the problem of having the majority vote themselves all the money from the minority.
Take it to one extreme…

No one gets any handouts (assistance if it makes you feel better) whatsoever. Everyone gets to vote and the people who want gov’t handouts to exist can vote for them.

Boom.

The next year there are crushing taxes on people who work and huge gov’t handouts. But the taxes are just unbearable. So they vote again. The pendelum swings back in the other direction.

And so forth and so on until a nice medium that everyone can live with is reached.

22

Suppose Joe gets a job as a clerk in a hardware store earning $18,000 per year. Sure, he doesn’t make much, but he could rent a room in a boarding house, using public transportation or get an ecno-used car, and buy sensible groceries; he may not own a fancy stereo or have the latest and greatest home computer, but he could get by on limited means. Now suppose Joe meets Jane, a part-time clerk, they romance, Jane gets pregnant, they decide to marry and raise a family. Unfortunately, Joe and Jane can’t afford daycare so Jane must quit and Joe doesn’t make enough to support them both. Here, according to Gadarene the Government should step in and provide the necessary relief. But this benefits certain lifestyle choices: Joe and Jane choose to romance, choose not to use birth control, or choose not to have an abortion. I don’t see how the Government should provide financial compensation for personal choices. They should have known that their limited income precludes certain things like sports cars, three week vacations in Barbados, a five bedroom mansion, or (in their case) the ability to raise a family. If Joe and Jane really wanted a family, then they would have to work hard, save, and climb the company salary ladder until it was an affordable choice. If they want to choose they family option early, they can do so, but that choice also entails living in poverty.

23

You would be right about “inflation taking over” if the group was very big. The “working poor” are a popular political tool, but they are a very very small group. You have to keep that in mind. Remember, none of us considers that 16 year old working fast food as a “member of the working poor.” You have to be careful how you consider these propositions. The lefies may not be as far off on this as some think. However, you have to be careful, because this a dynamic world. Members of one group can easily become members of another if incentives change.

24

Freedom2,

Wow I didn’t catch that bit at the end the first time through:confused:. You do realize that the poor, even if we gave them “working wages” would not be nearly the drain on society that old people are. Yeah, thats right grandma and gandpa are bleeding the system dry. I suppose we should off all the old people huh;). The poor are not the drain on the system people believe them to be. On the contrary, elderly retired people get the majority of government assistance. But you know its easier to blame the poor for their state than it is to blame grandma and grandpa, so we bitch about the poor. Look at the numbers, then consider the size of the group we are talking about and tell me that you still feel the same way.

Let me clarify one thing though, I didn’t say I’m for this working wage, I still need to know exactly what you all think it is (I don’t want a Ralph Nader vote for me definition, I want something concrete). However, I will probably still be against it, oddly enough, with a few tweaks we have some good programs already that will do the job far more effectively, namely EITC.

25

Very good point, RD, and what I was trying to get at by saying stimulating that group won’t provide the growth we would hope for. You got a way with econ talk though :wink:

Stella, NOW we’re talking :wink: Indeed when I was in the military the off-base per diem pay was adjusted to reflect the local economy. Not that I ever lived off base, but I knew chaps who did. Any living-wage program would also need to take this route and I don’t like that at all…I feel that it subsidized the problem we want to eliminate. That is, we hate high rent but like a good economy. We lower rent prices and property value goes down. Uh-oh! Ok, instead we provide an area-compensated living wage and prices are now locked in where before they were merely a function of supply and demand. Uh-oh (imo)! I’m with you…there’s no simple solution. Well, there is (my salary cap which would just about destroy the economy) but you can bet I won’t go for it. I also forgot to mention another “option” I have for lower rent: move to a high crime area where what valuables I do have are in jeapordy if not my health itself. I’ll take my relative poverty, thanks :slight_smile:

Pyrrhonist, exactly. the other POV on it is that it is to your disadvantage to stay single. I wish I wasn’t single (economically speaking) but that’s my choice and I deal with it.

26

Well, if they become unemployed, they can’t consume what they used to. Thus, there is less demand for production, causing more lay offs.

Non-value added employees are not necessarily poor, trust me. But, they are, ideally, the first laid-off in a slowdown.

I am not talking about what stimulates “growth” – I am talking about preventing a depression. If we got to a point where people only bought food and clothing, what do you think our unemployment rates would be? I’d be out of a job almost guaranteed.

An incentive to do what exactly? We could have 100% employment and just throw all the excess production away but you’d have to enforce that somehow as well (paying farmers not to grow corn, etc.).

27

That just seems like a fallacy. What do they need beyond food, clothing, and shelter? These are all freely available if you know the right people.

28

A couple of economics questions…ARL, is it really to one’s financial disadvantage to be single? It’s my understanding that married people have a bigger chunk o’ change taken by the Feds. But perhaps you meant single in the sense of “only one person” as opposed to “the opposite of married”. I guess we can figure out why cohabitation is on the rise…

& RD, I think you have to have kids to get the EITC, which means that it doesn’t benefit those who are responsible enough to know when they can’t afford a family.

29

aynrandlover,

Its not your salary cap that worries me, its Naders;). His plan would have placed a 100% marginal tax at around 100K which I’m sure is exactly what you were refering to. He (Nader) just didn’t call it a salary cap, the tricky bastard.

One thing you guys also might wanna keep in mind, a point that nobody brought up, but was implicit in aynrandlover salary cap example, is that the rich generally do work more. A friend of mine just started out in Ibanking with a top firm, and guess how many hours he’s gonna be working? Any guesses? Well his average work week is about 90 hours a week, but it gets worse when things get busy. So you see, it is not only the poor that are worked like slaves. yeah, he may get a 6-figure salary, but when can he enjoy it? Money isn’t everything, we all make our choices in life, and we all must live with them. Thus, one must take the hardly working hypothesis into consideration as well. We all have choices, we can take an easy low paying job and consume a lot of leisure, or we can take a job like my friend and trade leisiure for prestigue and a nice salary. In addition, pay varies with the desireablity of the work and the risk of injury as well. Do you think a garbage man deserves 40K or more a year? What about those tree trimers from the phone company, they can make 60k or more, do they deserve it? There are many factors that we are overlooking when we say “living wage” regardless of how you define it.

30

looking at economics without taking social-psychology into account is nonsense. a book that looked at this over 20 years ago is: THE POWER ELITE. why do lower classes buy lottery tickets, what is the EMOTIONAL REASON for that. why do some big winners blow the money. RICH DAD, POOR DAD by Robert Kiyosaki is the most recent book that looks at the social-psychology of economics that i know about.

poverty creates emotional problems in the children that get acted out when they become adults often leading to more poverty. George Bernard Shaw knew about this in writing his play Pygmalion, which became MY FAIR LADY. the powers that be don’t want to solve the problems, it would mean changing the class structure of society.

Dal Timgar

31

Stella*Fantasia,

I’m not sure on that part about having kids to qualify for EITC (I should really know this one too, but I’m not positive). I would assume you need kids to qualify, but I believe there are some loopholes just the same. Oddly enough, they tried to give it to me last year but I didn’t fill out the form because I didn’t need it even if I did qualify (and I’m a single college student with no kids and they still tried to give it to me so I’m not sure).

In any event, the “working poor” we are most concerned about are those with kids. In general, I would think someone who is poor, and has no dependent children is in good shape to find a decent job in the first place. In such a case we may be more concerned with the hardly working issue. NOw I lived in a very poor neiborhood for I while when I was in college (I bought a house there because it was really cheap, cheaper than paying rent in theory, but not in practice:(). Well in any event, none of my neibors worked (well aside from the illegals next door that were very dedicated workers, who I might add probably didn’t even make minimum). The thing is I watched people my age, and perfectly able, sit and draw whatever benefit it was that they qualified for from the govt, and do no work. NOw a single guy my age, who is able to work should not be able to get a government subsidy, I think we can agree on that. Now we have equal rights don’t we? Well then we can assume the same for an able bodied female as well right? Well what about a married couple with no children? Again it shouldn’t be a problem, they can both work (for whatever wage) and take advantage for scale economies in their living arangements, thus they should be far better off then the identical 2 people living separately. Now I don’t like the fact that subsidizing those with children probably leads to an over production (I know, not the right word, but I am gonna be an economist) of children. However, I think we can all agree that poor families with children are more needy than those without.

btw if anybody has a definition of a living wage I’m still waiting. Seriously!!! I would really like to understand it. I heard ol Ralphy boy Nader talk about it, but his definition was no more clear than what has presented in this thread. Maybe if I understood it more, I would not be opposed, but I honestly don’t know what it is.

32

Your wish, Gadarene, is my command. There is no poverty in the United States.

This is 1995 data from the CATO institute. They claim the poverty level, for a family of three is $11,817. I wish I could find something with all this data that’s more current, since we passed a pretty significant welfare reform package in 1996.

http://www.cato.org//pubs/pas/pa-240.html

Don’t we first need a working definition of “poverty” before we can decide if we’ve solved the problem of poverty? The problem with using the official government definition of the poverty line, is that it keeps moving. The dollar figure on the poverty line keeps being raised. I remember reading something a while back that said, using constant 1980 dollars and the 1980 official definition of poverty, fully 50% of families in the twenties would have fallen below that poverty line. I don’t have a cite for it at the moment, but I’ll see if I can dig it out of my library at home tonight.

Poverty is also a relative thing; that $11,817 would be a small fortune in many, many countries, say, for instance, Botswana.

33

I don’t think this is a mystery. The wage would be equal to the cost of food, clothing, and shelter on the open market.

34

RD

I said VOTE, not LIVE.:slight_smile:
I’m not quite sure what your post had to do with mine unless you misread that part.

35

And, in fact, the Georgia Senate proposed just such legislation in 1998. Senate Bill #629 attempted to tie the minimum wage to the federal poverty level.

http://www2.state.ga.us/Legis/1997_98/leg/fulltext/sb629.htm

36

Stella Yeah, I should have been more clear. Cohabitation was definitely what I meant. Never having to have dealt with the taxation of married couples I’m not sure how it all works out, but married deduction is definitely less than twice the single deduction. As well, from a cost of living standpoint it isn’t twice as expensive to have two people in the house. This is true not just for rent, as well, but food especially. Home cooking and purchasing larger quantities of food is cheaper on a per serving basis. The single guy can hardly afford to purchase larger quantties, though, because the food would go bad. In fact, the more working people that reside in a particular household drives cost of living down tremendously because of the sharing of rent, electricity, phone, gas, etc etc. It is definitely to one’s advantage to live with another. Sex would just be a perk :wink:

RD Nader, ha. Yeah, I’m interested to see how he keeps profit incentives. As well, how would he handle corporations? They are where the big bucks are, not private dollars. Well, individual’s private dollars, anyway. Yeah, why would he call it a salary cap? Then he’d have to stop spraying pine-scent on the dung-pile. This is typical of reform programs. “We’re not stealing from the rich!” Feh. Just admit it: you’ve got a Robin Hood agenda. :wink: (that’s sure to get a few hairs up if taken the wrong way)

jmullaney
First of all, that is exactly the mystery. Food, clothing, and shelter (as a fellow Bostonian should know [sub]I think it was you that mentioned the evil Big Dig[/sub]) are very micro-priced. My 24K salary in Cleveland was VERY comparable to my 35K salary here. Too bad my lazy ass didn’t do the research before I moved. Ah, but three weeks vacation a year is nice for an entry level position.
Also, my point was that this working poor aren’t big contributors to the economy…helping them buy more isn’t going to provide any “trickle” effect. The biggest movers and shakers are big businesses. Hell, the little company I work for moves a good 200-500K of goods a month. Give US the money: we know what to do with it! :wink:

dal timgar
Good luck making a classless society :wink: But you’re right: classes are the root of the problems. Thing is, I just don’t see THAT as a problem. :smiley:

RD again
Indeed, the whole point of people making more money is that they are not replaceable people. Manual labor is highly unspecialized. Anyone can do it. Thus, by virtue of supply and demand, there are an almost unlimited supply of people who can perform these tasks. The pay needn’t be large. As we advance in specialization, the number of workers becomes more scarce and so companies are competing for employees. This is where a good salary comes from. My cousin is a CPA for some law firm. Talk about long hours. She’s just under the six figure amount, but 70 hours is a short week for her. She knows its part of the job. Too bad we can’t get the unions to see that.

37

I know, was joking, thats why I used a similey:D.

If only that were true;). What food? and How much? What type of housing? and where?

the “open market” price of food and shelter varies, by location and quality!!! So what would you propose exactly? Lobster and crablegs? Prime rib? A penthouse in Mannhattan for all? What exactly is the standard?

Ok to clarify, the original definition of poverty line was three times the minimum adequate diet (or as one of my econ profs affectionaly called it Mac and Cheese times 3:D). However, to due to COLA and a fall in the price of food relative to other items the current poverty line is actually 7 times the minimum adequate diet (Mac and Cheese times seven:D). So what it the standard you want? And whom shall it apply to? What about the teenagers? Do they deserve the same “living wage” as others or shall we make an exception? If you say we should give it to teenagers we are subsidising people who aren’t needy (most people receiving minimum wage currently are middle class teens). Now if you say we shouldn’t then we have other problems. We will cause labor mkt distortions of unimaginable proprotions. Think about it!!! We only need to pay teens say 4 bucks an hour (obviously some minium would still be in place, however, it could be even lower), but we have to pay those who qualify for the “working wage” say $10 (lets assume that would provide a “working wage” since we are lacking any concrete alternatives, and I think most would agree that this would be more than adequate [well except in SF, NYC, LA, or Chicago, but those could be dealt with separately]).

So what happens now? Any thoughts? Who would you hire assuming you are in charge and firms are profit maximizers? Teens of course, right!!! Well now there are less jobs and we substitute working poor for merely poor because now they are no longer able to find a job.

Its just not that simple folks. Politicians trying to get elected will tell you anything, but it may not necessarily work. There are soooooooo many factors one has to consider. The EITC can be targeted directly at those we are concerned with subsidizing, while minimum wages, or “working wages” either cause labor mkt distortions or cause the subsidy to go to the wrong group. Minimum wages or “working wages” are inefficent and distortionary. There are better programs for the job. I am not opposed to helping people, on the contrary. However, I would prefer to only help those in need. I think we can all agree that teenagers are not in need, right? Well they will be the biggest beneficiaries of any such system.

I wish your “working wage” would work, but it is unlikely to actually help the people it is intended to. In the best case senerio we waste our tax dollars by subsidizing middle class teens, in the worst case, we save our tax dollars, but supress the opportunities for the very people we seek to help. It just not that simple!!!

And this even neglects the possible effects on the price levels that would likely undue any increase in their wages in the long-run.

38

UncleBeer, you’ve been reading P.J. O’Rourke again, haven’t you? :slight_smile:

39

aynrandlover,

Taxation, and accounting isn’t my field, but I can give you a general over view of the marriage penalty if you like;). This is how it works. If you a married and your wife doesn’t work, you get a lower tax rate than if you were single. Similarly, if there is a large differential between what you and your wife make, there is also a tax advantage in being married (say your an account, and your wife is a well paid CEO (contrary to what most believe the average CEO only makes about 130K), then you get a lower tax rate being married). The only time the marriage penalty applies is if you both make a similar salary (which unfortunately is the most common case). In that case, you would be better off to not be married. However, that is the only case.

40

I am curious as to whether there has ever been a more scattered GD thread? I mean I cannot even follow what is being said here.

There is a lot of economic talk, but of course the underlying priciple of the OP was this:

People have a right to the necessities to live their life. Well, actually I think it said that folks who work 40 hours have the right. With any right there is a corresponding responsibility. If folks have the right to neccesities, who has the responsibility to provide them?