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The 'working poor' scam


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The 'working poor' scam

Thomas Sowell

June 1, 2004

BusinessWeek magazine has joined the chorus of misleading rhetoric about "the working poor." Why is this misleading? Let me count the ways.


First of all, Census data show that most people who are working are not poor and most people who are poor are not working. The front-page headline on the May 31st issue of BusinessWeek says: "One in four workers earns $18,800 a year or less, with few if any benefits. What can be done?"

Buried inside is an admission that about a third of these are part-time workers and another third are no more than 25 years old. So we are really talking about one-third of one fourth -- or fewer than 10 percent of the workers -- who are "working poor" in any full-time, long-run sense.

Nevertheless, the personal human interest stories and the photographs in the article are about people in this one-twelfth, even though the statistics are about the one-fourth.

As for "What can be done?" that is a misleading question because the article is about what other people can do for the "working poor," not what they can do for themselves, much less what they did in the past -- or failed to do -- that led to their having such low earning capacity.

The theme is that these are people trapped by external circumstances, and words like "moxie" and "gumption" are mentioned only sarcastically to be dismissed, along with "Horatio Alger." But the cold fact is that what the intelligentsia call the American Dream is no dream.

An absolute majority of the people who were in the bottom 20 percent in income in 1975 have since then also been in the top 20 percent. This inconvenient fact has been out there for years -- and has been ignored for years by those who want more government programs to relieve individuals from responsibility for making themselves more productive and therefore higher income earners...

...This is an agenda article and facts that get in the way of the welfare state agenda get little attention, if any. Meanwhile, notions that have no factual basis are asserted boldly.

For example: "Working one's way up the ladder is becoming harder, not easier." Evidence? Wage rates for people in the bottom 20 percent have not risen much over the past 30 years.

The fallacy here is that it is not the same people in the bottom 20 percent over the past 30 years. Most people in the bottom 20 percent do not stay there even one decade, much less three. Young, inexperienced beginners do not remain young or inexperienced or beginners their whole lives.

Some people, of course, never learn -- and never rise. Creating entitlements for them reduces any need to learn. But that is the way BusinessWeek urges us to go.

They want higher minimum wages imposed, despite evidence that minimum wage laws reduce employment. Why would anyone think that making labor more costly would not affect employment, when higher prices reduce the amount of anything else that is bought?

BusinessWeek wants "better day-care options" -- "especially for single moms." In other words, unmarried girls should have babies and expect the taxpayers to pick up the tab for taking care of them. And if we subsidize such irresponsible decisions, will that not have the same effects as subsidizing other things?

Another liberal notion promoted by BusinessWeek is making it "easier to form unions." Workers can get unionized right now just by voting for a union in a government-supervised election. How much easier should it be?

The problem is not a difficulty in forming unions. What has happened is that workers themselves increasingly vote against unions because they have learned the hard way that unions cost jobs, even if BusinessWeek is unwilling to learn that lesson.


I have one quibble with Sowell's piece here and it's on the day-care subject. First of all, to suggest that all single moms are that way because of getting pregnant out of wedlock is insulting. Some are single moms because they are widowed. Many more are single mothers because of divorce. I'm sure some of the divorces were the woman's fault but I'd venture to guess at least as many if not more were because of a deadbeat father or maybe equal guilt on the part of both parents. So I don't think the "single mom" phenomenon can be written off as the result of "irresponsibility".

Secondly, I am actually in favor of better day-care options. However, I favor plans and incentives to encourage more companies to offer on-site child care for their employees, not a system of government run child care centers. While realizing that the ideal situation is for a mom to be at home with her children, not everyone can do that. Obviously a single mom can only do that if she's on welfare and I don't think anyone thinks that's a good option. But even some married couples simply can't make ends meet on dad's salary alone. And this would be a boon to single dads as well.

The other upside to this is that I'd be willing to bet (and I do believe studies have shown) that companies that do offer this see significant increases in productivity and decreases in absenteeism. The combination of convenience and peace of mind plus fringe benefits like being able to check in easily on your child or take them to lunch just makes it a win-win for everyone. And programs like this will decrease the likelihood that a working woman will seek an abortion, which is a very important thing to me.

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