The Logic of Unemployment

Not all the unemployed are lazy.

In a recent development that should surprise no one, House Majority Leader John Boehner put his foot in his mouth yet again.  The Christian Science Monitor tells us:

Speaker Boehner gave a response that was... not so favorable about Americans’ work ethic. He said in part: “I think this idea that’s been born over last ... couple of years that, ‘You know, I really don’t have to work, I don’t really want to do this, I think I’d just rather sit around,’ – this is a very sick idea for our country.”

Even this gaffe-tastic quote was clumsily put; CSM did a better job in their headline which read "Boehner says unemployed ‘don’t really want’ jobs."

Being election season, the media is trying to spin this as the usual unsympathetic fatcat Republican who has no idea of how bad things are for little people.  It's not gaining too much traction, though, because that would raise the question as to exactly why things are so bad down on the ground when the President is a Democrat, and the mainstream media won't touch that concept at all.  Odds are this line will soon be forgotten.

But it shouldn't be.  Because John Boehner is on to something - not what he thinks he's discovered, nor what the media casts it as, but even more important for its obscurity.

Jobs Americans Won't Do?

One of the more galling arguments used by open-borders advocates is that America requires the services of hordes of illegal immigrants to do important jobs which Americans refuse.  Somebody has to take out the trash.  Somebody has to dig the ditches.  Somebody has to pick the lettuce, or we won't have any to eat.

This points in the direction of a trenchant observation: in the past, all these jobs were done by Americans.  Now they mostly aren't.  Both the illegal-worshipping Democrats and the welfare-bashing Republicans put forward the same explanation: Americans are lazy and cossetted, "too good" for grunt manual labor.

We all know overeducated ignoramuses who live in their parents' basements for years on end waiting for the "perfect job" which will never come.  We've all heard the paeans to the inherent dignity of work no matter how lowly.  The implicit argument of the Right is that, instead of collecting welfare, the unemployed should simply get out there and take a McJob to keep body and soul together; the Left believes that Americans won't do that no matter what and shouldn't be forced to, hence the need for illegals and for massive welfare spending.

Both are mistaken.  Sen. John McCain accidentally demonstrated this during his misbegotten 2008 campaign, when he argued for open borders on the grounds that Americans would not do those jobs no matter what.

One audience member [asked] a pointed question on his immigration plan.  McCain responded by saying immigrants were taking jobs nobody else wanted. He offered anybody in the crowd $50 an hour to pick lettuce in Arizona.  Shouts of protest rose from the crowd, with some accepting McCain's job offer.  "I'll take it!" one man shouted.  McCain insisted none of them would do such menial labor for a complete season. "You can't do it, my friends."  Some in the crowd said they didn't appreciate McCain questioning their work ethic.

The problem is not that Americans won't do the work.  They simply are not willing to do it for the pittance being offered.

You Gotta Earn Your Pay

The Left's response to this is as predictable as it is apparently logical: Raise the pay!  The past few months have seen repeated strikes and demonstrations by fast-food workers demanding a $15 minimum wage for flipping fries.

If the minimum wage were raised significantly and enforced on jobs of all sorts, including those done by illegals, then yes, Americans would clearly be more willing to take those jobs.  The problem is that there would be a whole lot fewer of those jobs.

In the case of fast-food joints, there is an entirely automatic machine that prepares, cooks, packages, and delivers hamburgers more quickly, of better quality, and far more reliably than human workers.  It costs a fair amount to buy and install it, but if the payroll suddenly doubled, don't you think McDonald's would very quickly order up as many of these as the company can crank out?

When the Left agitates for increases in the minimum wage, they forget that every worker has to produce more value for their employer than they receive in salary or the job won't exist.  How much value is being produced in the preparation of a $1 hamburger?  Not much, which is why flipping burgers doesn't pay much.

Workers producing more profitable, bigger-ticket items tend to get paid more.  Autoworkers making $30,000 cars get paid more than fry cooks even though, for modern assembly-line work, the required level of skill isn't much different.  Boeing's aircraft assemblers are paid better than UAW lineworkers because they're working on multi-million-dollar airplanes.

Yes, the consequences for failure are different in each case, it's true.  A badly cooked hamburger might make a customer sick; an improperly assembled car could kill a person or two; a defective plane could kill hundreds.  All these potential mishaps, while very real, are also vanishingly rare.

Yet the principle holds true across the economy, even for jobs which are functionally identical.  Pilots of international 747s are paid nearly ten times what a local commuter pilot receives, even though the knowledge and skills required to fly two different types of modern plane are virtually identical.  The 747 pilot is more productive as he's moving 300 people around the world, whereas the other guy is merely taking a dozen to Dubuque.

Which brings us back to the question of the lazy unemployed.  Are people who refuse to accept just any old job no matter how low, truly lazy or spoiled?

Not always.

The Psychology of Experience, Investment, and Loss

What's the stereotype of the unemployed that Boehner's depiction calls to mind?  A middle-aged man who's lost his comfortable middle-class paper-pushing job and can't find another one remotely in the same ballpark.  Boehner is arguing that he needs to get his expectations aligned with the new reality and start flipping fries instead of simply eternally answering electronic want ads that go nowhere.

Perhaps that's true.  There are some jobs that have gone away and which are never coming back, manufacturers of buggy-whips being the classic example.  We've never had such a widespread loss of whole categories of jobs, though.

At the same time, almost any modern middle-class job requires a massive investment in education and training which leaves most people staggering under crushing debt loads.  These debts are manageable with the expected type of employment, but hopeless without it.

This is a relatively new phenomenon.  Until quite recently, very few people had any significant school debts, and most companies had sizeable training budgets for keeping their employees current.  Most companies didn't expect new hires to already know everything they needed on Day 1; the expectation was that they'd arrive with basic familiarity with the general nature of the job, but would receive specific training as needed.

With the ongoing Obama Depression, training budgets have been cut or eliminated.  Companies today expect new hires to have specific experience doing exactly what the job entails, down to the last particular, so as to be profitable from the moment they walk in the door.  They can get away with this because so many people have been downsized that they're often able to find just exactly the right fit, a historical anomaly.

The flip side of this is that nobody expects any particular job to last terribly long.  The employees know they'll be laid off eventually; the employer knows the same, so why invest in developing the skills of someone who'll just take them to your competitor?

The result is that the risk and cost of education and training is increasingly borne by the employee.  What happens to someone who invests a great deal of time and effort getting trained for a job which, when they're ready for it, doesn't exist anymore?  Too bad.

Here we enter the realm of psychology.  Logically, once you've spent the money on education, it shouldn't matter to you anymore - you can't get it back so it's irrelevant.  It's a "sunk cost."

That's contrary to human nature though, and we see it everywhere.  We even have an expression for it: "throwing good money after bad."

The logical strategy for an unemployed sociology graduate would be to recognize that they have no more useful skills than someone with only a high school diploma, and start expecting pay and positions with that in mind.  Their bad choice of college and major has permanently ruined their life and that's that.  The logical strategy for the unemployed middle-manager is similar, which is what Boehner is getting at.

But that would be very much unlike the way real human beings think and act.  Boehner, being a politician, also knows that when human beings are forced to act in a way contrary to their nature, they tend to get very angry and take it out on their elected leaders.  This makes economic reality and political reality collide.

Out of the Trap?

So how do we escape our current economic trap of unemployed people vastly overeducated and indebted compared to any job they're likely to find; companies which won't invest in employees they know will leave shortly; and individuals responsible, not only for paying for their own education, but somehow accurately foreseeing what college majors will be a worthwhile investment and what majors will be a bankrupting disaster or worse?

The fast food machine shows the way: every day we see new technology that doesn't do anything we couldn't get done before, but now does it without people.  The Google self-driving cars won't drive (much) faster than a cabbie, but they won't need a cabbie so cab drivers all lose their jobs.  Microsoft Word and Google eliminated armies of secretaries and researchers; improved algorithms are doing the same for paralegals, managers, even some doctors and diagnosticians.

Science fiction authors have long imagined what a future automated society would look like.  Sometimes it's a Utopian world of total wealth, as in Star Trek.  More recently, it's been an ultimate-inequality dystopia like Elysium where a handful of rich people own everything and everybody, and the vast masses contribute nothing because they have nothing of value to contribute.

If that's the future, and if you've dropped out of the running for becoming one of that handful - why not just "sit around"?  If there's no hope, you may as well be comfortable on a day-by-day basis.

What we need is some reason to cheer up, to get up off the couch, to think that there can be hope and a brighter day, a "Morning in America."  Reagan was the master of making Americans feel better; FDR was even greater, since he was able to do it without giving them any actual substantive reason to feel better.  Today we have neither.

Our current president offers doom and gloom, Hillary has no vision for the future, and none of the Republican candidates have offered much in the way of hope.  Although they're pretty gloomy, very few Americans have absolutely given up all hope forever, and we're sick of being told how bad it is.

All this country needs is for someone to communicate a Reagan-like vision, and he'll get elected 2 years from now.  It worked for Obama even though it

Petrarch is a contributing editor for Scragged.  Read other articles by Petrarch or other articles on Economics.
Reader Comments

Good article Petrarch. I would like to have seen the point that is made about doing away with the minimum wage. After all, a burger flipper in Idaho and one in NYC have quite different costs of living. The job should reflect the local demand for the talent of flipping burgers.Let the market decide. This student loan thing is a terrible idea for the student. Remember when you were 18-22? when you signed a note that wasn't to come due for several years later you really couldn't comprehend what you were signing. When it comes due there is a big awakening. This Student Loan business is simply welfare for the teachers that do nothing more than what they did prior to the student loan fiasco except maybe be a little less productive as they are more secure via higher salaries. This needs to come to an end. And don't think that their argument that the schools have to keep their valuable professors holds water. There are many professors available who would gladly take their jobs and teach better and for less. What we have created is a paid for voting class that you and I are paying for.

October 1, 2014 10:58 AM

Maybe we should do an article about some of these issues you discuss. The student loan problem has a lot of other causes and I don't really think it's the professors. Yes, professors can be quite well paid - but there are very few of them. Colleges have been ditching tenure-track positions for years, and today the majority of courses are taught by adjuncts who, as contractors, often barely make minimum wage.

Administrators and other bureaucrats, on the other hand, have quadrupled in number proportionate to the student body. So colleges are a lot like our government, in that they trim the muscle and build on the useless fat.

Competition should help with some of this - but a good deal isn't optional, Federal rules require all sorts of pettifoggery and PCness that non-religious colleges can't get out of. That's why religious colleges are often far cheaper even though usually their teachers are mostly full-time permanent staff.

October 1, 2014 11:17 AM

I don't understand the need to put politically motivated statements at the beginning of the article. The article starts with an attack on the media as left leaning mongers looking to get democrats elected regardless of the facts. Regardless of the veracity that statement it not related at all to the rest of the article. The inclusion of those statements only services to turn away those with differing political views and encourage those with similar political views. It appears to me that the start of the article causes the rest of the article to be only to the choir (as it were). It will cause people to view the rest of the article emotionally, either positively or negatively for reasons that are completely unrelated to the point of the article.

That being said, I do strongly agree with the general thesis of the article, people are not motivated to take jobs that do not pay them enough to compensate them for the time, money, and risk they put into their education. This makes people very unwilling to take low paying jobs. However, great rhetoric won't succeed in getting anyone into jobs. There is quite simply not enough good paying jobs in America because we have far more people than available work. This isn't caused by immigration its caused by a belief that a person's life should be better than their parents. That is not an economic reality. Jobs that are essential are decreasing every year and are being replaced by low skill service jobs. The way to turn around the dismal view is to have less children. This is already occurring through out the developed world. Economic down turns decrease the reproductive rates in countries and this will continue and spread to the developing nations as their economic realities change.

This was discussed in Wealth of Nations, children were an asset in America and as such people had large families and widows with children were highly sought after. While in Europe children were not an asset, people had smaller families and widows with children were very unlikely to marry. The problems we face today are not new and the solutions that are available have not changed much.

Of course the only reason I know that is because I made the 'bad decision' of having a history degree. All that did was give me the ability to research, evaluate facts from different sources, evaluate biases, write effectively, and argue points from positions of facts. Therefore I am completely unmarketable as an employee. However, I think the world would be a much worse place if it was filled with nothing but engineers and no musicians. Statisticians and no writers. It is true the economically I made a "bad decision" but I am a better person today for taking the economically "bad decision." I'll be paying about 5% of my income to student loans for the next 20 years (7 years on from my graduation) but I wouldn't change my decision and the world will be a worse place if everyone did.

After all, if everyone went after the highest paying jobs then those jobs wouldn't pay very well any more.

October 1, 2014 11:56 AM

Quick side note for clarity, the world would also be much worse if it only musicians and no engineers. Writers and no statisticians. My goal was not to rate any one as greater than the other directly but to simply indicate that diversity of knowledge, both that which is economically useful and that which is not, is very important to the general welfare of a socity.

October 1, 2014 12:01 PM

You've touched on a point well worth pondering, jonyfries.

I'm sure most rational people would generally agree that the world needs both musicians and engineers. The world needs people of all sorts.

The question is, a) how MANY of what, and b) how are the costs of their life to be met?

There have always been people who were consumed by their passion for art, to the detriment of their own material well-being. That's where the term "starving artist" comes from. In the past that was fine, because people chose to be artists and therefore to starve, which didn't harm anyone else.

Today's artists aren't starving; you are paying for them through various welfare programs, and also through ludicrous set-asides such as government requirements that X% of procurements must be spent on public art. As a result, we get crap "art" and are going bankrupt.

To me, it's abundantly clear that we have 10x more artists than we really need because barely 1/10 of the "art" being produced is of the slightest artistic merit. Now, you might say, who am I to judge? If I weren't paying for it, it wouldn't be my place to judge. But since I'm being forced to, then yes, my opinion and yours ought to matter - but it does not, which makes the arrangement immoral.

The same is true for many other similar academic disciplines. We need historians, and we need history teachers who perform useful work of educating students which is proper to pay for. But it seems like we have more history majors than teaching positions, which suggests that we need to stop having so many history majors.

I'm beginning to wonder if perhaps the modern demand for everyone to get a college degree in **something**, is a wrong turn. Most jobs don't need college degrees, and let's face it, a fair number of people simply lack the intellectual or educational background to benefit from one. Why should people be encouraged to mortgage their entire lives for 4 years of drunken debauchery?

Perhaps the old percentage of 15% having college degrees was closer to what it needs to be.

October 1, 2014 12:25 PM

The laws of economics suggest that when any one group takes more of society's goods and services than they contribute, a balancing will occur over a period of years and fairness will be regained. Those that have, are engaged in a creative attempt to distort and prevent such balancing and protect their turf in any way they can. All we are seeing right now is a fight between those groups who are distorting the economics. The efforts to raise minimum wages vs automation are mentioned above. Some of the distortions are very serious as they have little to no balancing force once they progress too far.

October 1, 2014 12:45 PM

On another matter, the media are reporting that the White House intruder overposered an agent and got into the green room. One of the media reported that the intruder overpowered a female agent. Women are smaller and weaker than men. Whatever training she had in hand-to=hand combat didn't work - this guy overpowered her.

Political correctness run amok! Why are we demanding that jobs that require maximum body strength, like bodyguarding, admit females who can't do the job?

October 1, 2014 11:11 PM

If teaching history is the only use of knowing or studying history then there is not purpose to knowing or studying history. Knowing history is useful in understanding perspectives of other places and cultures. Studying history is useful for providing the knowledge needed to critically analyze a source and to always check the bias of every writer to determine what sorts of distortions are likely to appear in the source. These are skills that are not essential for every member to have in society but the more that do have them the better.

Given the cost of attending college it is true that the less people that attend college the better it is for both people that attend college and those that don't. At this point have a college degree is as economically useful as a high school degree around 50 years ago (I don't actually know if the year is correct but the idea remains the same.) The more people have college degrees the less economically useful they are to each individual. With enough people graduating college the college degree becomes required to get a job even for jobs that will in no way use the degree.

Long story short, yes there is some point where the rewards and risks of college are equalized. Either by decreasing the number of people attending college or decreasing the risk (by have, for example, free higher education).

@Nate: From what I've heard the guard was not aware that there was an intruder as the alarms had been disabled and therefore she was taken unaware. Even I have a chance against a heavy weight champion if I was able to catch them unaware and the person who over powered her was also trained in hand to hand combat. Concluding that the female secret service agent is unqualified or got the job as a result of lower standards for women is not supported by the evidence currently available. If we could keep the topic focused here though that would be great.

October 2, 2014 1:08 AM

My grandfathers both had college degrees: one a two year business degree, and the other a four year law degree. They both graduated in the 1920's. In those days they were in the top 5% and 2% respectively. I graduated in 1967 with a four year engineering degree putting me in the top 10% of Americans. Today, you need a masters degree to match my bachelor's degree or my grandfather's 2 year business degree.

Social norms are maddening. I would prefer to be a college dropout worth several billion. Society says one thing (get an education) and rewards another. My brother-in-law was an excellent auto/truck mechanic and made much more than 80k per year.

As the German saying goes: Wissen ist macht - o wie falsch dedacht. Wissen ist wenig - Koennen is Koenig! (Knowledge is power - how falsely thought. Knowledge is little - Ability is King.)

October 2, 2014 8:37 AM

Well said SparkyVA, that is certainly true for the economic benefits of college. There is more to college than just the economic benefits though. However, given the economic costs associated with going its hardly surprising that less tangible benefits are considered by most people.

October 2, 2014 9:42 AM

<I wish I could edit posts at least for a minute after putting them up, I always find the typos after I hit submit...>
That last line should be "...that less tangible benefits are not considered by most people."

October 2, 2014 9:44 AM
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