Incentives matter: Work and welfare edition

The Wall Street Journal has a must-read interview with Bob Funk, CEO of Express Employment Services — a $2.5 billion employment services agency. There’s also a good companion piece, Won’t Work for Food Stamps.

Funks covers some key points from a report his company plans to publish on Monday called, The Great Shift.

Here are snippets:

[Funk believes] “anyone who really wants a job in this country can have one.” With 20 million Americans unemployed or underemployed, how can that be?

To land and keep a job isn’t hard, he says, but you have to meet three conditions: “First you need integrity; second, a strong work ethic; and, third, you have to be able to pass a drug test.” If an applicant can meet those minimal qualifications, he says, “I guarantee I can find employers tomorrow who will hire you.”

He thinks the notion of the “dead-end job” is poisonous because it shuts down all sense of possibility and ambition. One of his lifelong themes, Mr. Funk says, is that “a job—any job—is by far the best social program in America and the ladder to success.”

The primary jobs problem today, Mr. Funk says, is that too many workers are functionally unemployable because of attitude, behavior or lack of the most basic work skills. One discouraging statistic is that only about one of six workers who comes to Express seeking employment makes the cut. He recites a company statistic that about one in four applicants can’t even pass a drug test.

“In my 40-some years in this business, the biggest change I’ve witnessed is the erosion of the American work ethic. It just isn’t there today like it used to be,” Mr. Funk says. Asked to define “work ethic,” he replies that it’s fairly simple but vital on-the-job behavior, such as showing up on time, being conscientious and productive in every task, showing a willingness to get your hands dirty and at times working extra hours.

He fears that too many of the young millennials who come knocking on his door view a paycheck as a kind of entitlement, not something to be earned. He is also concerned that the trendy concept of “life-balancing” is putting work second behind leisure.

Funk admits to a prejudice (emphasis added):

“I guess I’m a little prejudiced to the immigrants and especially Hispanics,” he says. “They have an amazing work ethic. They don’t want handouts and are grateful to have a job. Our company has a great success rate with these workers.” This focus on work effort is seldom, if ever, discussed by policy makers or labor economists when they ponder what to do about unemployment. To most liberals, the very topic is taboo and is disparaged as blaming the economy’s victims.

The author of the WSJ piece includes some eye-opening stats to back Funk’s claims. There are 47 million people receiving food stamps, 14 million people collect disability benefits and with unemployment insurance extended to 90 weeks, Funk calls these:

…[the] vast social welfare state programs that have become a substitute for work. There’s a prevalent attitude of a lot of this generation of workers that the government will always be there to take care of them. It’s hard to get people to take entry-level jobs when they can get unemployment benefits, health care, food stamps and the rest.

The companion piece shows the sharp rises in such social welfare programs. The cost of food stamps has more than doubled since 2008 to $83 billion and one in seven Americans receive food stamps. The government spends ‘roughly $40 million a year…to convince to enroll’ in food stamps.

1 thought on “Incentives matter: Work and welfare edition

  1. While shopping at WalMart today with my better half, an announcement was made that the store couldn’t access the state computers with the result that they couldn’t accept ACCESS CARDS today. For a minute, we wondered what an “access card” was, but then realized that is the new name for what used to be called food stamps.

    Now it’s referred to as SNAP (Supplemental Nutrition and Assistance).

    Recently, we had a brief discussion regarding “food insecurity” and the correlation (not causation) between poverty and/or people on food stamps and obesity. While some have postulated (not proved) that poverty/food insecurity leads to obesity, others have postulated that it may be the other way around, i.e. fat people are more likely to be poor (because they are fat) and hence eligible for food stamps. The fact remains that if you’re on food stamps, your BMI is likely to be higher than if you’re poor and not on food stamps. A higher BMI is associated with increased morbidity and mortality.

    In terms of effects on the economy, Keynesian leftists insist that food stamps stimulate the economy by putting money in the hands of poor people. Evidently, they are unaware that those dollars came from somebody else who no longer has those dollars to stimulate the economy as they wish or that the perverse incentives make it less likely that the welfare recipient will be motivated to actually produce something with production being what ultimately increases our nation’s well being.

    But back to names – or labels. There used to be some appropriate level of shame in being on the public dole because welfare recipients recognize that their benefits ultimately came from someone else’s pocketbook. Most understood and acknowledged that they shouldn’t be on welfare if they truly didn’t need to be. Today, things have changed. The term “access card” implies that what limits the recipient is not the fact that he isn’t earning a living, but that he doesn’t have access to something. It changes the paradigm from making a choice between A and B (food versus cigarettes/beer/toys) to one where food is considered on its own and it’s simply a matter of being “denied access.” When the government convinces someone that they are being denied access to something, we must ask, “who or what provides the rest of us to access?”

    It isn’t a matter of access. It’s a matter of choice and personal responsibility. Resources are limited. I can have A or B, but not both (unless I make some other tradeoff). If my choices are food or beer, I can’t have both unless I make some other tradeoff, i.e. my free time for money from working a second job. Many of our welfare recipients don’t want to make the tradeoffs the rest of us make. They have been told that they are entitled to these things and don’t have them only because they have been denied access.


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