Saturday, April 5, 2014

Wage Structure and Welfare Reform

People complain about the welfare system making it more profitable for some people to be on welfare than to work. And I definitely agree that that is wrong. But what is the problem here? Is it the welfare system, or the wage structure, or both? If a person wants to work, shouldn't they be able to earn enough money doing so to make going on welfare a less viable option? And if they don't want to work, should we just give them a free handout?

As a manufacturing supervisor and manager in the semiconductor industry, I frequently had good, productive, long-term employees, especially working mothers, faced with a situation where they could no longer afford to work, as they could just quit and draw more money on welfare than we were paying them. Many worked that way for years, because of pride, job satisfaction, or just being away from a bad situation at home. But I lost a number of them, usually with a lot of tears involved - theirs and mine. Usually, the immediate cause was the loss of a free child care arrangement with a relative. The resultant turnover led to extremely high training costs and lost productivity. These were, generally, demanding, highly skilled positions, with long training regimens, and with new-hire success rates in the 50% range. Even in that environment, the wages we paid our first-level employees were a joke. Most of our employees up to and including middle management, were constantly having to struggle with their personal finances. It was kind of a pleasure to have the big bosses come around, just to see some nice suits.

The problem with trickle-down economics is that there always seems to be an intractable plug in the downspout. If a rising tide is supposed to lift all boats, why does it only seem to lift the bigger yachts? It's because the mooring lines on the smaller boats are tied to points way beneath the surface with little bitty short ropes. As the tide rises, so does the cost of living, and many of the smaller boats get totally swamped! Even a lot of the medium sized craft take on a lot of water.

The acceleration in the separation of wealth since the beginning of the Reagan administration is astounding, primarily due to the reduced taxes on capital gains and the stagnation of the minimum wage. A lot of figures get tossed around, but perhaps the most graphic is the comparison of the combined wealth of the country's richest family - Sam Walton's six heirs - (not individually the six richest people in America, but in the conversation) with that of the poorest 42% (129,000,000). As of 2010, that family had more money than those poorest 129 million people combined! And one has to speculate about what percentage of Walmart employees are among those 129 million.

So, it would seem that some (oh, those despised words) redistribution of wealth is badly needed in this country. It has to start with a reform of the wage structure, but a switch back to a less regressive tax structure wouldn't hurt, either.

As far as the welfare system is concerned, why should it be a pure dole? Why don't we get some bang for those bucks we pay out on welfare? Why not require recipients to perform community service? Speaking of child-care, why not staff low-cost child-care centers with welfare recipients? That would enable more mothers to work and stay off welfare. Let others do first-level maintenance, cleaning, etc. for public facilities, roads, and other infrastructure items. The sort of dirty work that nobody seems to want to do. In the process, they would be developing job skills. And this would be a perfect recruiting pool for permanent public works positions. And if they don't fulfill their community service requirements, they get their dole cut. Why should we just be throwing free money to people to stay home and do nothing?

This line of requiring bang for the buck could be extended to unemployment benefits, as well. There should be an initial period with no community service to allow for getting a job hunt rolling, then community service should kick in, with the weekly hours escalating with time. Credit might be given for serious job interviews, to be certified by the interviewer, and for training courses. 

Get people off their duffs and involved in their communities. Give them something to do and to be proud of. Provide people a raison d'ĂȘtre.