Why Big Business Loves Desperate Workers
And how a strong social safety net can make us all more free
We don't think enough about the economic functions of social welfare policy, or about the relationship between the safety net and labor markets, and this hinders our ability to make sense of why some people fight so hard against programs that aid poor and low-income people: We mistake them for anti-welfare ideologues, and dismiss them as cruel or ignorant, but there's an economic logic to their activism, one that's revealed if we look at the relationship between welfare and work from both the employee's and the employer's perspective. Let me explain.
Imagine that we have two workers, worker K and worker O, each with two young children.
Worker K is laid off when the company "downsizes." K is nervous, but has some savings, is eligible for Unemployment Insurance benefits, Medicaid, food stamps (SNAP), and TANF, has access to free local day care, and lives in a Section 8 apartment, with their monthly rent tied to their income.
While K is not living as well as when working, if K were eligible for all of these programs, which would be highly unusual, K will be able to get by. K can pay the rent and buy food and remain insured and with some belt-tightening, will be okay for a while.
Worker O, by contrast, is fired, even though O didn't do anything wrong. O is therefore ineligible for UI. O has no savings, cannot afford insurance, even with a subsidy through the Affordable Care Act, is not eligible for Medicaid or food stamps or TANF, has no reliable, affordable day care, and has no access to a housing subsidy. As a result, O is in trouble, and is desperate and perched on the edge of homelessness.
Now, let's turn our attention to an employer with a job to fill, Z. This job is terrible. It's minimum wage, has no health benefits, no paid days off or vacation time, has irregular hours -- some weeks you'll need to work days, some weeks nights (and you won't know in advance so you can plan), and you'll get 20 or maybe 30 hours each week, if you're lucky. There's no opportunity for upward mobility, it's a two-hour drive each way, with no reliable public transportation to get you there, and the working conditions are unsafe -- there have been lots of injuries there. As I said, it's a terrible job.
Employer Z offers unemployed worker K the job. What's K's answer? It's no, of course. Maybe even hell no. Does K say no because K is lazy? No. K says no because this is not a job that will help K raise a family and move up the ladder, and taking it would mean being unable to look for something better, among other things. It is rational under these circumstances, smart even, to turn down this job. If you can. And K can.
Now, Z offers O the job. What does O say? O says yes. Maybe even yes please. Why? Because O does not have any choice. O is desperate. O is in no position to bargain, or to wait for something better.
It may be even worse than this, because there might be a worker called V who is even more desperate than O. So, V says: "I know you can't legally pay me less than minimum wage, but if you hire me instead of O, I'll come in early and work for an hour before punching in, and then after I punch out at night I'll stay for an extra hour then too." When workers are desperate, they bid down their own wages.
If you are a worker, would you rather live in a country where most people were in K's situation, or in O's? K's, of course, right? Because in that world, with very generous social welfare benefits, you would have some security, and some bargaining power.
If you are employer Z, would you prefer to live in a country where most people were in K's situation, or in O's? O's of course, right? Because in that world, with very limited social welfare benefits, workers would have no choice but to accept whatever job you offered under whatever conditions; in a world with very generous social welfare programs, by contrast, everyone would have the ability to decline work, and if you want to hire someone, the burden would be on you, the employer, to make the job more attractive -- you might have to offer higher wages, paid vacation or sick days, a regular schedule, health insurance, and opportunities for promotion. Many of those would mean lower profits.
This is why business and their elected allies fight efforts to expand food stamps or unemployment insurance or TANF. A desperate worker is a cheap and compliant worker.
So the next time someone is fighting against a proposal to increase the assistance available to poor and low-income people, take their objection seriously and ask, simply, who benefits?
We are at a crossroads
This country and this world are at a monumental crossroads. US voters have an opportunity to beat back the forces of fascism and confront the billionaires who are rigging the economy, our media system, and our democracy, making it increasingly impossible for ordinary people to get by. We’re not just talking about the election. We’re talking about what must be done once these fascist elements are vanquished from power. We need a bolder set of solutions than what either major party has so far been willing to offer and a working-class movement ready to fight like hell for it. Trump didn't emerge from nowhere. The conditions that fueled MAGA authoritarianism were created by decades of radical neoliberal economic policies and a corrupt political system dominated by corporate interests. They slashed taxes on the super-rich, promising that the benefits would trickle down. They said giveaways to the corporate titans would make life more affordable for the rest of us. It was all bullshit. And when a bitter, betrayed populace searches for someone to blame, right-wing demagogues have little trouble finding scapegoats. People know when they're being lied to, but you won't hear any of this from the corporate media. Only independent journalism—powered and funded by people who believe in building a better world—can deliver truly trustworthy daily news. Our Fall Campaign is underway, and we need your help. To power our newsroom through the rest of the year, we need to raise $125,000 by midnight on October 31. So if you share our vision, please contribute whatever you can to sustain our work. |
We don't think enough about the economic functions of social welfare policy, or about the relationship between the safety net and labor markets, and this hinders our ability to make sense of why some people fight so hard against programs that aid poor and low-income people: We mistake them for anti-welfare ideologues, and dismiss them as cruel or ignorant, but there's an economic logic to their activism, one that's revealed if we look at the relationship between welfare and work from both the employee's and the employer's perspective. Let me explain.
Imagine that we have two workers, worker K and worker O, each with two young children.
Worker K is laid off when the company "downsizes." K is nervous, but has some savings, is eligible for Unemployment Insurance benefits, Medicaid, food stamps (SNAP), and TANF, has access to free local day care, and lives in a Section 8 apartment, with their monthly rent tied to their income.
While K is not living as well as when working, if K were eligible for all of these programs, which would be highly unusual, K will be able to get by. K can pay the rent and buy food and remain insured and with some belt-tightening, will be okay for a while.
Worker O, by contrast, is fired, even though O didn't do anything wrong. O is therefore ineligible for UI. O has no savings, cannot afford insurance, even with a subsidy through the Affordable Care Act, is not eligible for Medicaid or food stamps or TANF, has no reliable, affordable day care, and has no access to a housing subsidy. As a result, O is in trouble, and is desperate and perched on the edge of homelessness.
Now, let's turn our attention to an employer with a job to fill, Z. This job is terrible. It's minimum wage, has no health benefits, no paid days off or vacation time, has irregular hours -- some weeks you'll need to work days, some weeks nights (and you won't know in advance so you can plan), and you'll get 20 or maybe 30 hours each week, if you're lucky. There's no opportunity for upward mobility, it's a two-hour drive each way, with no reliable public transportation to get you there, and the working conditions are unsafe -- there have been lots of injuries there. As I said, it's a terrible job.
Employer Z offers unemployed worker K the job. What's K's answer? It's no, of course. Maybe even hell no. Does K say no because K is lazy? No. K says no because this is not a job that will help K raise a family and move up the ladder, and taking it would mean being unable to look for something better, among other things. It is rational under these circumstances, smart even, to turn down this job. If you can. And K can.
Now, Z offers O the job. What does O say? O says yes. Maybe even yes please. Why? Because O does not have any choice. O is desperate. O is in no position to bargain, or to wait for something better.
It may be even worse than this, because there might be a worker called V who is even more desperate than O. So, V says: "I know you can't legally pay me less than minimum wage, but if you hire me instead of O, I'll come in early and work for an hour before punching in, and then after I punch out at night I'll stay for an extra hour then too." When workers are desperate, they bid down their own wages.
If you are a worker, would you rather live in a country where most people were in K's situation, or in O's? K's, of course, right? Because in that world, with very generous social welfare benefits, you would have some security, and some bargaining power.
If you are employer Z, would you prefer to live in a country where most people were in K's situation, or in O's? O's of course, right? Because in that world, with very limited social welfare benefits, workers would have no choice but to accept whatever job you offered under whatever conditions; in a world with very generous social welfare programs, by contrast, everyone would have the ability to decline work, and if you want to hire someone, the burden would be on you, the employer, to make the job more attractive -- you might have to offer higher wages, paid vacation or sick days, a regular schedule, health insurance, and opportunities for promotion. Many of those would mean lower profits.
This is why business and their elected allies fight efforts to expand food stamps or unemployment insurance or TANF. A desperate worker is a cheap and compliant worker.
So the next time someone is fighting against a proposal to increase the assistance available to poor and low-income people, take their objection seriously and ask, simply, who benefits?
We don't think enough about the economic functions of social welfare policy, or about the relationship between the safety net and labor markets, and this hinders our ability to make sense of why some people fight so hard against programs that aid poor and low-income people: We mistake them for anti-welfare ideologues, and dismiss them as cruel or ignorant, but there's an economic logic to their activism, one that's revealed if we look at the relationship between welfare and work from both the employee's and the employer's perspective. Let me explain.
Imagine that we have two workers, worker K and worker O, each with two young children.
Worker K is laid off when the company "downsizes." K is nervous, but has some savings, is eligible for Unemployment Insurance benefits, Medicaid, food stamps (SNAP), and TANF, has access to free local day care, and lives in a Section 8 apartment, with their monthly rent tied to their income.
While K is not living as well as when working, if K were eligible for all of these programs, which would be highly unusual, K will be able to get by. K can pay the rent and buy food and remain insured and with some belt-tightening, will be okay for a while.
Worker O, by contrast, is fired, even though O didn't do anything wrong. O is therefore ineligible for UI. O has no savings, cannot afford insurance, even with a subsidy through the Affordable Care Act, is not eligible for Medicaid or food stamps or TANF, has no reliable, affordable day care, and has no access to a housing subsidy. As a result, O is in trouble, and is desperate and perched on the edge of homelessness.
Now, let's turn our attention to an employer with a job to fill, Z. This job is terrible. It's minimum wage, has no health benefits, no paid days off or vacation time, has irregular hours -- some weeks you'll need to work days, some weeks nights (and you won't know in advance so you can plan), and you'll get 20 or maybe 30 hours each week, if you're lucky. There's no opportunity for upward mobility, it's a two-hour drive each way, with no reliable public transportation to get you there, and the working conditions are unsafe -- there have been lots of injuries there. As I said, it's a terrible job.
Employer Z offers unemployed worker K the job. What's K's answer? It's no, of course. Maybe even hell no. Does K say no because K is lazy? No. K says no because this is not a job that will help K raise a family and move up the ladder, and taking it would mean being unable to look for something better, among other things. It is rational under these circumstances, smart even, to turn down this job. If you can. And K can.
Now, Z offers O the job. What does O say? O says yes. Maybe even yes please. Why? Because O does not have any choice. O is desperate. O is in no position to bargain, or to wait for something better.
It may be even worse than this, because there might be a worker called V who is even more desperate than O. So, V says: "I know you can't legally pay me less than minimum wage, but if you hire me instead of O, I'll come in early and work for an hour before punching in, and then after I punch out at night I'll stay for an extra hour then too." When workers are desperate, they bid down their own wages.
If you are a worker, would you rather live in a country where most people were in K's situation, or in O's? K's, of course, right? Because in that world, with very generous social welfare benefits, you would have some security, and some bargaining power.
If you are employer Z, would you prefer to live in a country where most people were in K's situation, or in O's? O's of course, right? Because in that world, with very limited social welfare benefits, workers would have no choice but to accept whatever job you offered under whatever conditions; in a world with very generous social welfare programs, by contrast, everyone would have the ability to decline work, and if you want to hire someone, the burden would be on you, the employer, to make the job more attractive -- you might have to offer higher wages, paid vacation or sick days, a regular schedule, health insurance, and opportunities for promotion. Many of those would mean lower profits.
This is why business and their elected allies fight efforts to expand food stamps or unemployment insurance or TANF. A desperate worker is a cheap and compliant worker.
So the next time someone is fighting against a proposal to increase the assistance available to poor and low-income people, take their objection seriously and ask, simply, who benefits?