
The poor don't work because they are economically rational - HockeyPlayer
http://www.chrisstucchio.com/blog/2011/why_the_poor_dont_work.html
======
rgbrenner
Did you filter retired people? Adjust for the disabled? It doesn't sound like
you did any of these things (if you did, you should mention it).

Did you adjust for students? Doesn't it seem odd to you that in the BLS data
the 'less than 5000' group is second only to the '70000 or more' group in the
amount spent on education? And that more of them have college until you reach
the 40000+ groups.

Then you draw conclusions from your faulty data.

Also, where are your references for this. You put footnote numbers in the
article, but didn't include the actual references.

This is what I came up with in 5 minutes. What are your qualifications?

[Edit: just to emphasize how odd the BLS data is without adjustments, it says
that the AVERAGE person in the 'less than 5000' income group spends almost
$1500 on education... more than double any other income group except the '70k
or above' group)

~~~
bonemachine
_You put footnote numbers in the article, but didn 't include the actual
references._

Weird, huh? Anyway, since I couldn't readily find substantiation for that 24%
number, and the added dubiosity coming from the fact that he doesn't even
mention whether it's adjusted for students, disabled, etc (as is standard
practice in econometrics), I didn't even bother with the other charts or
arguments he was trying to make.

~~~
yummyfajitas
_I couldn 't readily find substantiation for that 24% number_

That's because you didn't read the first paragraph of the source I cited.

~~~
bonemachine
The point is, if you're going to make not only highly charged, but basically,
incredibly insulting assertions about a very large group of people (that also
happens to be much weaker than yourself) -- especially assertions that are
readily seen to be based on flawed selection biases and other sloppy reasoning
-- then you had better make at least the numerical parts of your claims
_instantly_ verifiable from the sources you cite.

It's just as in academic research -- yeah, _maybe_ it's buried in the source
somewhere, but no one has time to parse paragraphs, and divide numbers for you
-- especially when you're already trying their patience by making such
structurally weak arguments in the first place.

Pointing fingers (and, implicitly, accusing people of being lazy or unable to
read) to distract from the fact that don't seem to have an answer for their
main criticisms of your "argument" doesn't help, either. It's just grasping at
straws.

------
bonemachine
_TL;DR_ , starting with Line 1:

 _It’s a fairly pervasive myth within the US that the poor work very hard at
unpleasant jobs. But this is nothing but a myth - according to the BLS report
A profile of the working poor, 2009, as of 2009, only 24% of people below the
poverty line were in the labor force (this means working or looking for work)
for at least 27 weeks /year._

Even if one knew where in the BLS report to dig for that 24 percent figure
(and independent of the fact that the author doesn't even _mention_ whether it
was was adjusted for traditional non-working categories -- e.g.. students,
seniors, disabled, in or recently out of detention -- or not, as is standard
practice when talking about unemployment numbers) there are so many plainly
illogical (and just plain weird) assertions jumping out of this rant that you
kind of have to wonder why he bothered.

For starters: that

    
    
        "below the poverty line" === "poor in the U.S."
    

or, my favorite:

    
    
        "in the work force at the moment" === "willing to work in general."
    

Really now?

~~~
sharemywin
don't forget in the middle of the article: 'wanting a day off' = 'want to be
long term unemployed'

~~~
yummyfajitas
Please re-read the article - the 75% or so of the poor the article concerns
itself with are not unemployed.

------
mdemare
This phenomenon is well known and usually called a "Poverty Trap" or a
"Welfare Trap".

[http://en.wikipedia.org/wiki/Welfare_trap](http://en.wikipedia.org/wiki/Welfare_trap)

One of the things that can mitigate this is the Earned Income Tax Credit
([http://en.wikipedia.org/wiki/Earned_income_tax_credit](http://en.wikipedia.org/wiki/Earned_income_tax_credit))

Also, it is misleading to claim that "the poor don't work". This article only
discusses people below the poverty line ($11,490 for an individual). If you
work 1600 hours per year at the federal minimum wage, you earn $12,000. That's
definitely poor in my book.

~~~
southpawgirl
Or make jobs paying Walmart-style salaries pay somewhat more... ? Although I
disagree with the conclusions of the article (it doesn't take lots of
complexities into account, education level, family issues, disability, etc),
the logic behind choosing welfare over a dismally paying, soul-crushing menial
job is totally sound.

~~~
mdemare
Yes, raising the minimum wage would help, but part of the problem is that when
the very poor start working, they're no longer eligible to all kinds of
subsidies (food stamps, medicaid). Greg Mankiw explains it very well here:
[http://gregmankiw.blogspot.nl/2009/11/poverty-
trap.html](http://gregmankiw.blogspot.nl/2009/11/poverty-trap.html)

------
zeidrich
Assuming your numbers are correct, a more accurate title would be "An
economically rational poor person would choose not to work a minimum wage
job."

If it is true, it is a problem that would need to be corrected. However, even
if it were true and corrected, it would not eliminate poverty, or even
necessarily change the work habits of the average poor person. Only the poor
person who makes solely rational economic decisions.

If I could find a poor person who I could be guaranteed made wholly rational
economic decisions, I would certainly employ them (and at a good wage),
because I don't even make wholly rational economic decisions and I could
benefit from it.

e: This comment doesn't really present the tone I was going for.

Poor people are in that situation for many reasons. Maybe they were born into
it, maybe there's systems that keep them from improving, maybe they don't have
educational opportunities, maybe where they live has no opportunities
available, maybe they have a mental health issue, maybe they have a physical
issue. There's a ton of social, psychological, and economic issues that can
make or keep someone poor. Rarely would I ever call it the fault of the poor
person, because rarely does someone choose to be poor.

If there's a situation where a healthy and clear headed person who can always
make the right financial decision, and they choose to not work because it's
economically smarter for them to do so, then there's a real systemic problem.
However, I don't think that's the case, because anyone that perfect would be
able to find some employment at a better than minimum wage position at the
moment.

Therefore, I think the issue of poverty needs to be addressed from a
combination of education, social, economic, psychological, and systemic
angles.

------
motters
This analysis is flawed because it assumes that there is work for the poor to
do - that there are "good jobs" for them to go to. The idea that the poor are
"consuming leisure" is also a myth, and shows that the writer has never lived
that sort of life and has no knowledge of what poverty is really about.

~~~
streetnigga
Idle time spent in poverty is not consuming leisure, the time CONSUMES YOU.
Every day that passes leaves you haggard, more lumpy, less inclined to make
clear minded decisions that have a positive result in your life.

This myth you speak of needs to die a horrific death in some back alley, but
won't as long as those better off than poverty stricken continue look at data-
sets of numbers and opine about the people those numbers represent. While
ignoring how we are all living creatures heavily impacted by our local
environments.

There is a good reason why the working man often has a thousand yard stare and
an alcohol problem.

~~~
bonemachine
You mean the time that the unemployed spend looking for work? It's just
another "day off", like the original poster says.

~~~
yummyfajitas
The article is specifically about the poor who are _not looking for work_. The
24% includes the employed and unemployed, which you'd know if you read either
my blog post or the source it cites.

~~~
bonemachine
But you never really substantiate this idea that they're "not looking for
work."

I mean, yeah, you made a line graph and such. And you cite mysteriously
precise figures like $22731 and $23706. But to conclude that people with net
expenditures in these brackets who also aren't presently working _just aren 't
looking_ (let alone that they _just don 't want to work_) requires a far
deeper (multi-factor) analysis than you're making.

It's also very hard to reconcile with the sheer length of the waiting lines at
some of the daily employment agencies I've seen _at 6AM_ in my own
neighborhood. Or the utterly dour, resigned expressions sewn into the faces of
some of the long-term unemployed that I'm sharing seating space with at this
coffeeshop, right now.

I know that observation carries no statistical weight; but it's meant to be
illustrative -- if you're going to make sweeping generalizations about a class
of people that contradict the day-to-day observations that most of the people
reading this thread seem to have about this topic -- and which are also, BTW,
rather insulting to the intelligence and character of this class of people --
you're going to have to be a lot more rigorous in arguments you're offering.

~~~
yummyfajitas
_But you never really substantiate this idea that they 're "not looking for
work."_

The claim that the poor are not looking for work is supported by the first
paragraph of my first link. The "mysteriously precise" figures are taken the
BLS consumer expenditure survey, also linked. But I guess that's just
"academic gobbledeygook".

Now it's pretty clear that you didn't actually read the blog post. But if you
had, you'd also realize that I assumed the _character_ of the rich and poor is
identical and that only their _incentives_ differ.

In any case, a year after I wrote that, John Cochrane wrote a much better blog
post on the topic. My rough calculation is more or less in line with CBO
numbers. So it looks like my rough estimates were not too far off.

[http://johnhcochrane.blogspot.co.uk/2012/11/taxes-and-
cliffs...](http://johnhcochrane.blogspot.co.uk/2012/11/taxes-and-cliffs.html)

------
roin
Mr. Stucchio isn't the first one to present this type of argument which is
explicit in that people are choosing to be poor. That probably doesn't feel
right to most of us, and that's because it's ridiculous. Jamming a complex
social problem into a simple economic model may be fun and even valuable at
times, but only if you don't buy your own BS wholesale.

I'm admittedly struggling to understand how he's drawing this conclusion, as I
think he's equating utility with expenditures? If so, this is completely
wrong. Your first few thousands of dollars are used for things like food,
shelter, and basic healthcare, and they generate massive utility. It isn't
constant.

But I also take issue with the first assumption, that each hour of leisure
time provides constant utility. Is that true? Does a poor person get more
marginal value from that last hour of "leisure time" on the streets? What
about poor people who go to bed hungry, are they doing that because they're
rationally basking in all these extra hours of leisure time?

There are many reasons people are poor, but people choosing to be poor as an
economically rational decision sounds crazy, and that's because it is. Just
measure the happiness of the non-working poor vs. people making 30k, and I
think you can put this one to rest.

~~~
yummyfajitas
_Your first few thousands of dollars are used for things like food, shelter,
and basic healthcare, and they generate massive utility. It isn 't constant._

This is irrelevant. As long as utility is _monotonic_ (more consumption =>
more utility), the conclusion holds.

 _But I also take issue with the first assumption, that each hour of leisure
time provides constant utility._

The blog post only assumes utility is monotonic in leisure (i.e., more leisure
=> more utility).

 _...measure the happiness..._

How do you reliably do that? The only thing I'm aware of which comes remotely
close to this is revealed preferences.

~~~
roin
That is not correct. You are looking for the intersection of marginal utility
of the dollars earned through work, and the marginal cost (in utility) of
giving up leisure (while hungry and cold, perhaps). You are arguing that the
marginal utility of those dollars earned through work are lower than the
utility of that final hour of leisure.

But both of those utility functions have sharp curves, and those first dollars
generate huge utility (food, shelter, etc.), while the negative utility is
very modest when you've already used 167 of 168 hours that week on leisure.

~~~
yummyfajitas
_But both of those utility functions have sharp curves, and those first
dollars generate huge utility (food, shelter, etc.)..._

The first dollars of _consumption_ (which pay for food and shelter) have high
utility. The first dollars of _earned income_ do not increase your
consumption. Work or don't work, you won't be hungry and cold either way.

Or are you trying to assert that people gain huge utility by working for no
material gains?

------
lazyant
"This means that in total, about 17% of people below the poverty line are
willing to work full time"

LOL:

% people working != % people willing to work

It seems the author has never met and talk (let alone be or lived among) poor
people.

~~~
yummyfajitas
When I live in the US, I live primarily in poorer neighborhoods. It's cheaper
and I'm not particularly worried about getting jacked - I'm 6'5", somewhat
muscular, and don't look like I'm carrying more than $12.

------
yetanotherphd
There is something _very_ wrong with the logic of this article.

The author claims that people rational people only value money because it
allows them to consume.

But that graph shows income vs consumption in a given time period. But
whatever is left over, will be consumed in the _future_ , which people also
value (and if they didn't, it would be irrational to save any money in the
first place!)

They key error is in the phrase

>I propose that utility is a monotonic function of spending - this means that
people prefer to increase the amount of goods and services they consume. A
green piece of paper doesn’t make me very happy, but the burrito I trade it
for does.

This is in itself true, but again, money allows you to consume in the future,
if you don't spend it.

A more relevant graph would be income vs post tax/welfare income. But that is
a different matter.

------
tthomas48
This also doesn't get into the fact that transportation is a huge part of
this. If you can't get to your job then you can't work it. Many minimum wage
jobs are in strip malls with no public transportation. You can't afford to own
a car on a minimum wage salary, so if you can't live close enough to a minimum
wage employment center to walk, you may not even have the option to work.

And since most businesses and neighborhoods see apartments as undesirable in
their vicinity, they're frequently not within an appropriate range of
employment centers.

~~~
yummyfajitas
75% of people below the poverty line have a car. 25% have two or more cars.

[http://www.census.gov/prod/2008pubs/h150-07.pdf](http://www.census.gov/prod/2008pubs/h150-07.pdf)

Most poor people earn more than the minimum wage - only 3.6 million workers
earn the minimum wage and there are 10 million working poor.

[http://www.bls.gov/cps/minwage2012.htm](http://www.bls.gov/cps/minwage2012.htm)

[http://www.bls.gov/cps/cpswp2011.pdf](http://www.bls.gov/cps/cpswp2011.pdf)

In fact, only 11% of min wage workers are below the poverty line.

[http://www.ncpa.org/pub/ba792](http://www.ncpa.org/pub/ba792)

------
hipsters_unite
From the article: "all else held equal, the poor would rather not work than
work"

I just don't buy that for a fraction of a second. So much of self-worth is
tied to employment, and that's besides the creative urge that most people
feel. Even if they can't use that in the workplace, I know plenty of very
creative people that work lousy jobs and get their creative fulfillment else
where. According to the OP, they'd stay unemployed.

------
danielrhodes
The assumption that people work simply so they can consume seems a bit flawed.
The premise that they don't work because they are economically rational has
more basis.

Maybe a better explanation is that the underemployed impoverished are less
motivated to work since by doing so they are not in any better position to
improve their outcome. If you make minimum wage and can only find part time
work, the rent isn't being paid either way.

------
the_watcher
Very disappointed by this. I thought there would be a much more clearly
developed theory addressing some kind of systemic issue that made not working
economically rational (my first thought: if state assistance given to someone
not working is close to the same amount someone would get working a minimum
wage job, then it would be economically rational to not work, simply in terms
of dollars generated by energy exertion).

~~~
sharemywin
or the cost of day care after taxes roughly equals a minimum wage job.

------
tluyben2
Most people don't want to work because everyone enjoys a day off? Right...

I don't know very many people who would not want to work and a lot of those
(including me) don't have to work, ever, but still they work 10+ hours/day,
most days of the year.

------
pessimizer
The poor that don't work don't work because their labor isn't necessary. Due
to their ability and overhead, to pay them enough to eat is not profitable.

That's why we feed, clothe, and house them as a society - or at least we
should.

------
sharemywin
couple things you don't seem to address. child care cost about as much as
working a minimum wage job. people not being able to find a job. also money
"under the table"

------
red94g
typical classy yummyfajitas rant. nothing much to see here

------
seanhandley
What absolute horse shit.

------
streetnigga
Giggle, this article is hogwash.

Lets take some numbers and opine about poor people. I'm sure a few paragraphs
can cover the social complexities and giant boulder on-top of soul feeling
that is poverty.

Edit: No I am not going to do an extensive write-up myself.

Try out this experiment, be born into a poor county where you produce actual
goods like automobiles. Then watch as your family has their pensions attacked
by blood thirty wealthy fucks that have think-tanks put out articles in Fox
News and WSJ how your family doesn't deserve the monies contracted to them.
How the unions they belong to, made to counter the ultra-monied's inherent
power, are "Killing America™."

All this while putting 10 hours shifts to cover you and most likely your
elder's bills. This is what the author is writing about, yet twists it into
some dry cut about why the poor don't work because they lack incentive or are
'economically rational.'

...

What's that? You can't be reborn into poverty to experience from childhood on
up? OK don't bloody write about it then.

~~~
ejk314
> I'm sure a few paragraphs can cover the social complexities and giant
> boulder on-top of soul feeling that is poverty.

By that logic we might as well throw out all social commentary.

~~~
streetnigga
Yes. Most social commentary like the parent article here is essentially
worthless. A point to start discussion, but on it's own almost completely void
of meaning.

Correct, throw it out.

~~~
yetanotherphd
No, he mean _all_ social commentary. Almost all of the journalists and
professors who preach the point of view you advocate (big bad corporations and
fox news stealing from the poor) did not themselves experience poverty. And
some right-wingers experienced it too. So "throw out stuff I don't like" does
not follow from your claim that only people who have experienced poverty can
speak about it.

