New/Old Thoughts on Welfare

Right From the Start

Right From the Start

Every now and then the Oregonian, perhaps unwittingly, produces an article that should set Americans thinking about changing the status quo. This past weekend was one of those instances. In the September 6, 2015 edition, Joseph Rose wrote an article recalling the halcyon years of the Works Progress Administration or Works Project Administration (WPA) as it became known as in later years:

“With Labor Day approaching, it’s a perfect time to take the wayback machine to the Great Depression and take a look at the mind-blowing stuff built by the WPA in Oregon.

“Born from President Franklin D. Roosevelt’s New Deal in 1935, the Works Progress Administration — later renamed the Work Projects Administration — employed millions of unemployed workers to design and construct public buildings, bridges, roads, hydroelectric dams and public art.

* * *

“Raised from the Depression’s fear and unimaginable desperation, and amid protests much like Carson’s, the program ultimately underscored the grit, resourcefulness and imagination of the American worker.

“In Oregon, the projects also redefined the landscape and altered the economy, giving us Bonneville Dam, Timberline Lodge, the state Capitol building in Salem, Rocky Butte Scenic Drive, Yaquina Bay Bridge, and the start of what would eventually become Portland International Airport.

“In the Portland area alone, the WPA employed 25,000 people, many of them unskilled workers, after former timber broker and Democratic fundraiser E.J. Griffith called in a favor to the White House.”

Lest one thinks that I have become a latter day progressive I highlight this article not because massive public employment with all of its intended political machinations (public employee unions and use of taxpayer money to create economic and therefore political dependency) is a good thing; but rather there is a lesson to be learned from the quid pro quo of the WPA.

The August 2015 jobs report from the United States Labor Department’s Bureau of Labor Statistics indicated a drop in the number of new jobs created to 173,000 – that is less than the number required to accommodate new entrants into the labor market – a number generally pegged at between 200,000 and 225,000 per month. And yet, the unemployment rate dropped from 5.2% to 5.1%. These numbers suggest two things:

First, the unemployment rate is farcical. How can the unemployment rate drop when there are insufficient jobs being created to keep up with the number of new people entering the workforce? Well, precisely because it doesn’t measure the number of people unemployed but rather the number of people receiving welfare assistance in the form of “unemployment insurance” payments. There are a vast array of people who are unemployed whose benefits have expired because of chronic unemployment or who have simply given up seeking a job in favor of accepting the plethora of welfare assistance in other forms.

A better indicator is the Labor Force Participation Rate which is defined by the Bureau of Labor Statistics (BLS) as:

“Labor force participation rate is the percentage of working age population that is part of the labor force. It is a measure of what proportion of a country’s population is employed or actively looking for employment. Higher the labor force participation rate, more of the country’s population is interested in working.”

The “labor force” including both those working and those who are unemployed but seeking work (those eligible for unemployment insurance payments) is divided by the total “working age population” – those 16 years and older, not institutionalized and not engaged in volunteer or homemaking activities. So even here the “labor force” is skewed to include those who are actually unemployed. Even at that, the participation rate is at a near four-decade-old low at 62.6 percent. Not since the latter part of 1977 has the rate been this low and it has been on a steady decline since President Barack Obama took office in January of 2009. If the number of person seeking employment (eligible for welfare benefits in the form of unemployment insurance payments) were removed from the definition of the “labor force” – they are not working and therefore are not actually a part of the “labor force” – the rate would drop dramatically to 59.4 percent.

And yet as the number of people actually unemployed increases monthly, there are a myriad of anecdotal stories of available jobs going unfilled. Washington produce growers were forced to import workers from Jamaica to pick apple and berry crops. While the area newspapers blamed it on stronger enforcement of immigration laws, the fact is that there were more than enough “unemployed” workers available in Washington who simply declined to do that hard work because they were already receiving unemployment and other welfare payments. A Wall Street Journal article from August 12, 2015 noted:

Last year, about a quarter of Biringer Farm’s strawberries and raspberries rotted in the field because it couldn’t find enough workers. Samantha Bond was determined not to let that happen again.

A machine developed by a Spanish entrepreneur automates the process of picking small produce like strawberries. Many farm owners hope it will help alleviate the impact of labor shortages.

Early this year, Ms. Bond, human resources manager for the 35-acre farm in Arlington, Wash., offered 20% raises to the most productive workers from the last harvest. She posted help-wanted ads on Craigslist, beside highways and on the bathroom-stall door at a church. She also successfully lobbied local high schools to broadcast her call for workers during morning announcements.

Despite Ms. Bond’s efforts, Biringer again faced a worker shortage and typically drew fewer than 60 of the roughly 100 employees it needed on harvest days. “There was definitely hair-pulling going on,” she said.

Ms. Bond’s travails reflect a broader struggle by U.S. fruit, vegetable and dairy farms to secure farmhands as illegal immigration from Mexico declines and a strengthened U.S. economy makes it easier for people to find less backbreaking work, often in areas with cheaper housing costs. In an industry notorious for poor working conditions, farm companies are wooing employees by raising wages faster than inflation and enhancing medical and other benefits. Even so, many farms say these efforts have failed to meaningfully address their worker shortfalls.

A March 10 article in Cedar Rapids Gazette described a labor shortage at the University of Iowa Children’s Hospital. An April 24, 2014 article on Bloomberg described a labor shortage in Austin and central Texas. A September 4 article from CNBC noted that a labor shortage at warehouses are hampering online sales delivery. A January 12 article in Gourmet Marketing discusses a growing labor shortage in the restaurant sector. A January 7 article from the Gibson Blog reports:

“The Associated General Contractors of America (AGC of America) reports that 83% of contractors are having difficulty finding qualified skilled labor to meet the demand.

And the list could go on and on. The Bureau of Labor Statistics reported that there were 5.2 Million job openings as of the end of June of this year. Even in Oregon, dominated by work adverse Portland, the Oregon Department of Employment lists 53,308 job vacancies.

In 1965, President Lyndon Johnson introduced the War on Poverty. A recent summary of the War on Poverty by the prestigious Heritage Foundation noted:

In his January 1964 State of the Union address, President Lyndon Johnson proclaimed, “This administration today, here and now, declares unconditional war on poverty in America.” In the 50 years since that time, U.S. taxpayers have spent over $22 trillion on anti-poverty programs. Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all U.S. military wars since the American Revolution. Yet progress against poverty, as measured by the U.S. Census Bureau, has been minimal, and in terms of President Johnson’s main goal of reducing the “causes” rather than the mere “consequences” of poverty, the War on Poverty has failed completely. In fact, a significant portion of the population is now less capable of self-sufficiency than it was when the War on Poverty began.

And yet after an initial reduction in poverty, the combined myriad of social welfare programs initiated and funded by the federal government have resulted in a poverty level in 2015 that approximates the poverty level in 1967 – three years after the programs began. Forty-eight years of massive spending and no progress on the intended consequences of the War on Poverty.

But there has been progress on the unintended consequences – the increase in the number of people who will not work. I don’t mean those that cannot work but rather those who will not work. Those who prefer a life on welfare rather than a life in the labor force. With over five million job openings in America – a number that has grown steadily during Mr. Obama’s terms – one can assume that a significant percentage of those receiving welfare benefits have declined to avail themselves of those employment opportunities. There is an old saw that goes:

5000 years ago Moses said
Pack your camel
Pick up your shovel
Move your arse – I will lead
you into the promised land

5000 years later Lyndon Johnson said
lay down your shovel
sit on your arse, light up a Camel
for this is the promised land

The concept of sloth is not new. It is as old as mankind. For many, if you don’t have to work, don’t bother. There are people who are starving in America – not because there is insufficient food or resources but primarily because they have not found the abundance of welfare programs that allow virtually anyone to live a not uncomfortable life free from the rigors of work and the responsibilities of a job.

This needs to change. Even Pope Francis, who is selectively being embraced by the agnostic left, was recently quoted in an August 19 edition of

“In his weekly Angelus message Wednesday, Pope Francis praised the value of hard work and a willingness to do one’s part for the common good rather than freeloading of society.

“Citing Saint Paul, Francis said that ‘anyone unwilling to work should not eat” and added that being called a hard worker is the highest form of praise for a “serious, honest person.’”

. . .” Saint Paul’s injunction that people who don’t want to work shouldn’t eat is a “good recipe for losing weight,” he quipped.

“Paul’s denunciation of idleness, Francis continued, “refers explicitly to a false spiritualism of some who lived off the backs of their brothers and sisters while ‘doing nothing.’” In the Christian outlook, a commitment of hard work is not opposed to a deep spiritual life, Francis said, referencing the example of Saint Benedict who taught that “prayer and work can and should be found together in harmony.”

Which brings us back to the WPA. President Roosevelt sought to attack unemployment and the resulting poverty by creating jobs. President Johnson sought to attack poverty by giving people welfare payments. And President Obama pretended to create jobs by spending nearly a trillion dollars on increased wages and benefits for public employees under the guise of his stimulus program while simultaneously increasing the number of people on food stamps – a number that has remained stubbornly high during his entire administration.

After an initial period in which a person can seek employment (in their qualified field) a person refusing employment – any employment – should be denied further welfare assistance. There is anecdotal information that suggests that such a proposal will, in fact, provide sufficient incentive for the slackers to return to work. Not surprisingly Economic Research, a publication of the Federal Reserve Bank of St. Louis, noted:

“In summary, we find that the extension of unemployment benefits affected the labor market status of long-term unemployed workers in late 2013. Without extended UI benefits, these unemployed workers would have been more likely to be employed, more likely to exit the labor force, and on average 1.9 percent less likely to remain unemployed in the following period. In short, our simulated early termination of the EUC program lowered the unemployment rate by 3 to 5 basis points, suggesting that the December 2013 expiration of the EUC program might have slightly lowered the unemployment rate in early 2014.”

While you may deem this harsh, there is nothing harsh about letting a person reap the results of his or her own actions, or inactions as this case may be.