Why People Are Not Going Back To Work

    There seems to be a lot of talk in the public media about why there seems to be a labor shortage. Or, instead, why jobs in specific industries seem challenging to fill. All too often, I hear the phrase repeated that suggests federal efforts to stimulate the economy have resulted in a moral hazard [my words, not anyone else’s]. More specifically, I hear something like, “why are those people so lazy?” Yeah, it is usually about those people.

    First, one must place our economy in a historical context: Since the 1970s, we have effectively become a plutocracy. Over time the economy has explicitly been sculpted to benefit the wealthy. The economy has been designed to reward equity over labor. The net result of this transformation has been a transfer of something on the order of $47T from the lower 90% of the U.S. economy to the upper 10% from 1975 through 2018 (Price & Edwards, 2020). This has resulted in downward pressure on wages, particularly on the lower half of the economic spectrum. With the onset of the COVID pandemic, those on the lower end of this spectrum were placed at the most significant risk of contracting the disease. There was a well-documented racial bias to those data (Parker et al., 2020).

    Let us consider what the economy was during 2020: Individual median income in real dollars was $35,805 (Real Median Personal Income in the United States, 2020). What “median” means is 50% of individuals in this country earned less than this amount. These same data show the median income for child care workers was $25,460. This same source reports the median household income for 2020 was $67,521 (Real Median Household Income in the United States, 2020). What I find particularly interesting is the household income is less than twice that of the individual income. This suggests the following relationship for a two-income household:

P + S = $65,521

Where P  is the primary source of income and S is the secondary source. This relationship further suggests:

P + a*P = $65,521 where S = a*P

Solving for a:

a = 88.6%

So the secondary source of income in this hypothetical two-income household is:

S = $31,716

    The median yearly income for child care workers is $25,460 (Real Median Personal Income in the United States, 2020)[i]. Therefore, if you consider a median two-income household with several children, in the limit, one could argue the secondary source of income is effectively a net $6,256 per year.

    I discovered from these data that when these yearly figures are converted to a median hourly wage, the number of yearly working hours used is 2080. This number is what one gets when multiplying 40 hours per week by 52 weeks per year. In my world, we call this a full-time equivalent or FTE. In general terms, people working that many hours per year is seldom heard of because of holidays, sickness, vacations, etc. Nevertheless, this number is a helpful number of hours to use in order to find a common baseline for comparison purposes. However, the implication is the source of the secondary income in our hypothetical example is working for a net $3.01 per hour, in the limit.

    Let us ask the question again: Why are those people not going back to work? These data strongly suggest the answer:

why bother?

 

References

Parker, K., Horowitz, J., & Brown, A. (2020, April 21). About half of lower-income Americans report household job or wage loss due to COVID-19. Pew Research Center. Retrieved September 26, 2020, from https://www.pewsocialtrends.org/2020/04/21/about-half-of-lower-income-americans-report-household-job-or-wage-loss-due-to-covid-19/

Price, C. C., & Edwards, K. A. (2020, September). Trends in income from 1975 to 2018. RAND Corporation Objective Analysis. Effective Soltuions. Retrieved November 8, 2021, from https://www.rand.org/pubs/working_papers/WRA516-1.html

Real median household income in the United States [Data set]. (2020). Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/MEHOINUSA672N

Real median personal income in the United States [Data set]. (2020). Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/MEPAINUSA672N

 

 

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[i] This citation was corrected from the original.

Confirmation Bias

 

After the 2020 general election, during the midst of the turmoil associated with the vote count and validation, I had a conversation with an individual associated with the construction company that built my home[1]. This individual was born and raised in North Carolina. Based on previous conversations, it is clear this individual is politically conservative. This particular conversation was one the individual initiated as he was trying to get his head around the November 2020 election outcome. Specifically, this individual could not understand how one particular candidate could get over 70 million votes and lose the election[2] (Lindsay, 2020). I tried to explain the general increase in the population eligible to vote. I also explained the increase in the percentage of eligible voters who voted (that percentage was 67% (Lindsay, 2020), the highest in 120 years, although that figure was not available to me at the time)). In response, the individual asked me, “do you believe in the ‘deep state’” (G. Turner, personal communication, December 10, 2020).

Honestly, the question caught me off guard. My response was that I did not. I should have asked for a definition of terms. I presumed that the individual was referring to the so-called conspiracy theory (I am not using that term to convey the scientific connotation). My presumption was that he meant the conspiracy theory that holds there is a cabal of individuals working behind the scenes to control the government for their own benefit. It is my understanding that this is a relatively widely held belief. At least in 2018, 74% of the individual polled believed that such a cabal either definitely, or probably, existed (Morin, 2018). I find that number to be breathtakingly high. How is it that such a significant number of our fellow citizens believe that there is some sort of shadow government operating behind the scenes clandestinely to manipulate our government? What would be the point of such a shadow government? What problem does it solve to believe in this cabal? What kind of model must one have that it would require the existence of such a cabal to explain the world around us[3]? I use this term to distinguish between this so-called cabal and the corps of dedicated civil servants who work hard every day to perform their duties as best they can.

We all build a model (a theory, in the scientific context) that explains how we see the world operating around us. This model is the narrative arch we construct to help us make sense of how and why people behave the way they do. This model will have a heavy cultural bias, as it reflects the society in which we live and our upbringing. Once we have either constructed such a model or adopted one, the challenge is: How does one correct this model given new information? This dilemma is the problem of confirmation bias (Confirmation Bias, 2021). This very human trait causes everyone to look for evidence that reinforces the model we have adopted and tend not to look for evidence that is contradictory.

There are several components to confirmation bias (Confirmation Bias, 2021). The cumulative effect of this cluster of biases is to cause groups of adherents to separate. This separation creates the idea of the “group” and the “other.” Once the concept of “other” has been created, it is possible to see this out-group as “less than” the in-group members. Much of what is wrong with our society can be explained in these terms. In our time, this separation of groups and the resulting potential for conflict is exacerbated by the dominance of social media (Orlowski & Rhodes, 2020). Perhaps it was not one of the intentions; however, the algorithms used by platforms such as FaceBook, Twitter, and YouTube [plus subsiteraries] steer members to those areas of discussion that reflect choices made. Since we all pay more attention to things that confirm our respective models, these algorithms tend to steer us further and further apart. The argument could be made that much of the polarization we are experiencing today in American life can be laid at the feet of social media (Orlowski & Rhodes, 2020).

The SOE[4] Conjecture

I would submit that the following two figures represent the entire explanation for all that is going on with our society today.

Figure 1 Productivity vs. real wages since 1973 (Gould, 2020, Figure A)

 

Figure 2 Rate of earnings growth (Gould, 2020, Figure B)

As these figures suggest, since the so-called Reagan Revolution, the U.S. economy has become effectively plutocratic. The U.S. government has become the facilitator of this economic shift, particularly since the Citizens United decision by the Supreme Court, which removed most constraints on the influence of donated money on our political system (Citizens United V. FEC, 2021). While both political parties have been at fault here, modern conservative thought has been at the forefront of this transformation. This pronounced shift from economic equity has been so dramatic a recent study from the Rand Corporation shows that $50 trillion has been moved from the bottom 90% of the American population to the top 1% during this period[5] (Hanauer & Rolf, 2020).

 

The results of this significant shift in wealth have shown themselves in many, often destructive, ways. One of the most astonishing has been the emergence of the so-called opioid crisis (Opioid Epidemic in the United States, 2021). This crisis has cost the lives of a significant number of people, biased toward economically depressed areas that are generally conservative politically and are a subset of the so-called deaths of despair (Diseases of Despair, 2021). Much of the responsibility for the opioid crisis, in particular, has been laid at the feet of the family that owned Purdue Pharma (Opioid Epidemic in the United States, 2021). This company has been driven into bankruptcy because of the family's egregious actions to foment addiction to opiate-based drugs. There are many other examples of the destructive impact of this shift towards plutocracy. The obvious racial bias of the effects of the COVID-19 pandemic has been well articulated recently in a white paper proposal addressed to Walden University concerning the establishment of an Institute for Racial and Economic Equity Research (E. Jordan & J. Glenn, personal communication, January 18, 2021).

Earlier, I asked what problems conspiracy theories were trying to solve. I would suggest these theories, such as that of the so-called deep state, attempt to resolve the cognitive dissonance (Cognitive Dissonance, 2021) that results from supporting political ideals that are destroying society's fabric the believer thinks is being protected. The damage that has been done to our society since the 1970s is real, it is deep, and it is systemic. This latest experiment that has been forced on us with the Trump ascendancy is a direct result of attempts to deal with the impacts' of the cognitive dissonance as implied by the figures presented earlier. I would submit this results from having a world model that does not have a mechanism that allows for correction to incorporate new information: That is the conjecture.

Conclusion

Each of us develops a world model to help explain what we see and how people behave. This model

must be capable of correction to incorporate new information. The so-called theory we develop represents the narrative arch that articulates that model must be capable of incorporating new information but reduces the old model for those cases developed initially. This approach represents the power of the scientific method (Scientific Method, 2020); it allows us to step outside our own confirmation bias. In this way, we may accumulate wisdom.

References

Citizens United v. FEC. (2021, January 7). Wikipedia, the free encyclopedia. Retrieved January 17, 2021, from https://en.wikipedia.org/wiki/Citizens_United_v._FEC

Cognitive dissonance. (2021, January 16). Wikipedia, the free encyclopedia. Retrieved January 18, 2021, from https://en.wikipedia.org/wiki/Cognitive_dissonance

Confirmation bias. (2021, January 2). Wikipedia, the free encyclopedia. Retrieved January 2, 2021, from https://en.wikipedia.org/wiki/Confirmation_bias

Diseases of despair. (2021, January 9). Wikipedia, the free encyclopedia. Retrieved January 16, 2021, from https://en.wikipedia.org/wiki/Diseases_of_despair#:~:text=The%20number%20of%20deaths%20of,150%2C000%20per%20year%20in%202017.

Gould, E. (2020, February 20). State of working America wages 2019. Economic Policy Institute. Retrieved September 29, 2020, from https://www.epi.org/publication/swa-wages-2019/

Hanauer, N., & Rolf, D. M. (2020, September 14). The top 1% of Americans have taken $50 trillion from the bottom 90% - and that's made the U.S. less secure. Time.com. Retrieved September 14, 2020, from https://time.com/5888024/50-trillion-income-inequality-america/

Lindsay, J. M. (2020, December 15). The 2020 election by the numbers. The Water's Edge. Retrieved January 3, 2021, from https://www.cfr.org/blog/2020-election-numbers

Morin, R. (2018, March 19). Poll: Majority believe 'deep state' manipulates U.S. polices. POLITICO. Retrieved January 3, 2021, from https://www.politico.com/story/2018/03/19/poll-deep-state-470282

Opioid epidemic in the United States. (2021, January 13). Wikipedia, the free encyclopedia. Retrieved January 17, 2021, from https://en.wikipedia.org/wiki/Opioid_epidemic_in_the_United_States

Orlowski, J. (Director), & Rhodes, L. (Producer). (2020). The social dilemma [Film]. Netflix. www.netflix.com

Scientific method. (2020, December 29). Wikipedia, the free encyclopedia. Retrieved January 27, 2021, from https://en.wikipedia.org/wiki/Scientific_method

 

 

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[1] This particular blog is not as academic as is typical for here. This blog post is based primarly on my observations, my opinions, and uses some commonly available material designed for popular consumption.

[2] According to Lindsay (2020), the final count was 81.4 million for Biden and 74.2 million for Trump.

[3] Actually, I do have an hypothesis (in the scientific sense) as to the point of this belief. More about this later.

[4] Spooky Ol’ Edgar

[5] Yeah, I know it is a secondary source; get over it.