What would happen if all the people at or under the poverty line somehow left or disappeared (let’s not worry about the logistics)? Let’s call it the poorest 20% of the population.
This is obviously a significant number - some 60 million people. There would be issues with respect to the reduction in consumers, given that consumption is 70% of GDP, but they are the consumers who spend the least.
Local and state tax revenues would fall, but the Federal tax position would be improved. Medicaid expenditure would fall. I don’t know how Medicare would fare overall - poor people pay less into it (to the extent that many don’t qualify for Medicare at all, but have to rely on Medicaid), but use it more until they die earlier. Ditto for Social Security.
In the “rich” thread, some people are saying that the rich would be replaced fairly seamlessly by their near subordinates. If the poor left, would the nearly-poor fall and replace them, or would the poor have largely disappeared permanently?
This is a racial angle, of course. The disappearance would disproportionately include minorities and immigrants. I am not particularly interested in discussing that - this thread is intended to be more about effects on the economy.
In the short term, the government would save a lot of money on welfare, policing, and SSDI and Medicaid. Prisons would be mostly empty.
In my state at least, there is no sales tax on food or clothing, so that would reduce the impact on local tax revenues.
One of the greater impacts would be on the underground economy, where people work off the books as nannies or at day labor. Farm labor would have to be more automated than it is now, for fruit picking and such.
Lots of people start off poor, and then their incomes rise as they age. So if this was an ongoing phenomenon, where every year poor people disappeared, the population would decline over time. If it were a one-shot, the greatest decline would be in chronic, long-term poverty.
I don’t know. That is effectively one of the things I am asking. Would the near-poor be forced into doing these jobs because it is all that they could get, and hence become the new-poor? There would presumably be layoffs nearly all the way up the chain to reflect the 20% drop in consumers, so would people in general ripple down to lower levels, with lower pay? (Maybe we reverse the Peter Principle and companies become more effective.)
Or will there be a chronic shortage of labor for the lowest-paid jobs because the near-poor will refuse to do them? Georgia has recently introduced an Arizona-style immigration bill which is discouraging immigrants from coming to work on the farms picking fruit. Farmers are complaining that native Georgians will not do the work. Would a similar thing happen if the poor left? Or would the farms/restaurants etc. simply be forced to pay more to attract workers, presumably leading to some inflationary increase in prices?
The first problem is that it isn’t true to any great extent.
The odds of surviving epidemic were slightly better for the very wealthy, but that was largely due to an ability to leave the community. However even that wasn’t anything like certain immunity. Most epidemics the wealthy were something like 20% better off. IOW instead of killing 30% of the wealthy, it would kill 24%. That’s not really comparable to the OP.
In wars, the wealthy generally don’t fare a whole lot better at all, and in many cases they fared much worse. Invaders generally see the local poor as a workforce and tax base. They see the local wealthy as a threat, a source of unrest and a source of plunder. When talking about “foreign” wars, the wealthy have actually tended to suffer disproportionately, since they are the “officer class” and almost obliged to fight. It’s only in minor skirmishes with conscription that the poor suffer more than the wealthy.
Famine is the thing that really hits the poor disproportionately.
The second problem is that those events disrupt society on their own. The fear, loss of community structure and so forth all cause problems that swamp any effects of disproportionate loss of the poor. This is particularly true of famine, where almost by definition all productivity has ceased.
When you’re talking about the poorest 20%, as the OP is, they aren’t really doing many jobs at all. Only 58% of the 16-and-over population works now. Surely the vast majority of the poorest 20% fall into the 42% that aren’t working.
I wonder how many of the 42% are retired, and I wonder how many retired people count as “poor”. If retired people are disproportionately poor, then their removal would clearly bolster Social Security and Medicare as benefit payments would be reduced while simultaneously increasing the worker:beneficiary ratio.
I think at first wages would rise significantly as the potential labor market shrank. Even if most of the people who disappeared were unemployed, their disappearance would give low end workers more clout, as the employers couldn’t threaten to fire employees with the assumption that there would be someone there to take their job. Of course with fewer consumers demand would drop as well. Any huge shock to the system is generally bad as the economy takes time to reorganize itself. However after a number of unpleasant years shaking things out we would probably end up pretty much where we are now, although its possible that the rich/poor divide would be a bit smaller.
Europe after the medieval Black Plague saw a huge emancipation of the poorest landless farm worker. The few that survived the Plague were in high demand by the landlords that survived and their successors. Labourers had to be given better wages, land, privileges…
Agreed. We would still need people to do the low-paying jobs. If the US only consisted of middle-class and upper-class (since there would be no lower class), not many people would want to do the jobs that the lower class would have been willing to do. The US would still need people to do the jobs that no one else wants to do.
Now, what about people prisons? Are we excluding them too?
Once prisoners have released, they would most likely be working for work (if they have truly been rehabilitated. For the sake of this debate, let us assume they have been rehabilitated and are now fit to function in society. They would be willing to do the jobs that most people from the middle-class and upper-class would not want to do simply because it would be difficult for them to find employment (especially if they were ex-felons). However, I’m not sure that all the unwanted jobs would be filled if we just had ex-prisoners filling those slots.
This is just fundamentally wrong. I don’t want to imply anything about you, so let’s call the person who typically makes this argument “George.” George has never worked with his hands; maybe he’s a professor or a writer or something. He sees guys running jackhammers at a construction site and feels that he could never, ever do that eight hours a day. George may be right about that, but his mistake is thinking that nobody else could do it either, except maybe illegal immigrants. But the fact is, many people could do that. They might not like it for the first few weeks, but they’d get used to it, especially if it was the only job available. Maybe George knew some people like this when he was a kid, but he’s forgotten they exist because they are rarely seen at faculty parties or Whole Foods.
Low-paying jobs are low-paying because anyone can do them. Offer $20 to have someone do brain surgery for an hour, and you’ll find no takers. Offer $20 to have your yard raked for an hour, and you’ll find many takers, some of whom will say, “I’ll do it for $10.” The wages for different jobs are not inscribed on a stone tablet at the Department of Labor.
Supposing that the poorest 20% are composed mostly of people with no particular talents, taking those people out of the economy would cause the pay for unskilled jobs to go up. At some point you’d run out of people who would “do it for $10”.
Wrong. You are saying that all low-paying jobs are low-paying because anyone can do them? What you are saying is high paying jobs are jobs that very few people can do.
There are many people who have low-paying jobs that could easily do the work of someone who gets paid better. There are many people on the low end of the pay scale that could easily do the work of their superiors. There are many people who get paid very little and do all the work for their superiors.
Your argument is that all high paying jobs are jobs that not everyone can do and you are saying my argument is fundementally wrong? Yikes.
Also, your argument is that low paying jobs are jobs that everyone can do? Again, yikes.
This is not realistic at all. You are assuming that poor people have no particular talents at all. While you are at it, why don’t you just say the poor are poor because they are lazy?
I don’t know what your experience has been, but mine has been that people with more skills and energy are richer than people with fewer skills and energy. There are always exceptions, but they are just that: exceptions.
I am sure most floor-moppers would heartily agree with you, but that doesn’t make it true. Does this ever happen? Sure. Is it typical? Not hardly. A company that has the smart people mopping the floors and the dumb people designing the airplanes will soon be out of business.
Having said this, let me make it clear that there is absolutely nothing wrong with mopping floors for a living if that is all you can do or want to do. What is wrong is thinking there aren’t 250 million other people in the US who could do your job.
What about interns doing all the work for their bosses? What about employees doing all the work for the CEOs? Employees in general who go above the typical job requirements? There are many subordinates who do all the work for their bosses and get little to no credit. Also, very few bosses will acknowledge that there are certain jobs in which they depend on their subordinates to do because they in fact can’t do it. Let me tell you that those people doing all the work aren’t complaining about the fact that they make too much money.
Your experience is not everyone’s experience. If your argument is solely based on your experience, you do not have much of an argument.
I find that hard to believe. I could not do the jobs of most of the people who reported directly to me:
[ol]
[li]Our controller, because I do not have financial training[/li][li]Our IT guy, because I do not have IT/network training[/li][li]Our VP of Sales, because I am not a salesman[/li][li]Our CTO, because I am not technical enough[/li][li]Our head of QA, because I have no QA training.[/li][li]Need I continue?[/li][/ol]
I don’t know what you mean by more “energy” (if anyone exhibits “energy”, its people who do menial labor 10 to 12 hours at a stretch for essentially pennies.)
But with respect to skills, correlation doesn’t equal causation. Yes, income is certainly associated with certain skills (like professional degrees and certifications), but some of this is the product of richer people having more income to pursue training opportunities that the less rich can’t afford. So it isn’t just that being skilled causes people to become richer; to a certain extent, being rich causes one to become more skilled. (In this way, it’s no different than birth rates among the rich compared to the poor.)
If the poor suddenly left, there would be a vaccuum that would need to be filled for low-wage jobs. I agree that the pay for those jobs would increase, but the degree to which pay could increase without disrupting profit margins and the pay scale for other jobs is not limitless (Will brain surgeons have to take pay cuts to recruit janitors?) I think this ceiling would be far lower than it would take to fill them with a middle-class and beyond workforce.
To address the OP more generally, the poor contribute significantly to the economy because most of their income is spent, not saved. Some businesses would not exist or thrive if not for poor people (e.g. check cashing services, corner grocery stores, payday loan sharks, laundrymats). So we’re talking about lots of businesses drying up and/or becoming obsolete. That means less government revenue through corporate taxes and less economic growth.