@TBPInvictus here.

An IBD editorial picks up on a story originally run over at CNS News. Here’s the lede at CNS (emphasis mine):

(CNSNews.com) – Americans who were recipients of means-tested government benefits in 2011 outnumbered year-round full-time workers, according to data released this month by the Census Bureau. They also out-numbered the total population of the Philippines.

There were 108,592,000 people in the United States in the fourth quarter of 2011 who were recipients of one or more means-tested government benefit programs, the Census Bureau said in data released this week. Meanwhile, according to the Census Bureau, there were 101,716,000 people who worked full-time year round in 2011. That included both private-sector and government workers.

That means there were about 1.07 people getting some form of means-tested government benefit for every 1 person working full-time year round.

 

Screen Shot 2013-10-26 at 2.33.52 PM

 

Screen Shot 2013-10-26 at 2.33.36 PM

 

Putting aside whatever relevance the population of the Philippines might have, the point being driven home here is clear – the takers outnumber the makers. We’ve become a society of good-for-nothing moochers who have turned the social safety net into a hammock and all want to live off government largesse (notwithstanding occasional GOP claims about Americans being the hardest working people on the planet).

CNS and IBD would have their audiences believe that the two groups – “year-round full-time workers” (makers) and “recipients of means-tested government benefits” (takers) – are separate and distinct.

The CNS/IBD conservative world view looks like this, where the two groups are mutually exclusive:

 

Screen Shot 2013-10-27 at 9.43.07 AM

 

In fact, nothing could be further from the truth, as was reported earlier this year by the Center on Budget and Policy Priorities (this piece focused on the Supplemental Nutrition Assistance Program – SNAP):

The overwhelming majority of SNAP recipients who can work do so.  Among SNAP households with at least one working-age, non-disabled adult, more than half work while receiving SNAP — and more than 80 percent work in the year prior to or the year after receiving SNAP.  The rates are even higher for families with children — more than 60 percent work while receiving SNAP, and almost 90 percent work in the prior or subsequent year.

The number of SNAP households that have earnings while participating in SNAP has been rising for more than a decade, and has more than tripled — from about 2 million in 2000 to about 6.4 million in 2011. The increase was especially pronounced during the recent deep recession, suggesting that many people have turned to SNAP because of under-employment — for example, when one wage-earner in a two-parent family lost a job, when a worker’s hours were cut, or when a worker turned to a lower-paying job after being laid off.

And there’s this from the UC Berkeley Labor Center:

Nearly three-quarters (73%) of enrollments in America’s major public benefits programs are from working families. But many of them work in jobs that pay wages so low that their paychecks do
not generate enough income to provide for life’s basic necessities.

Finally, as was widely reported just recently, a McDonald’s internal human resources line suggested an employee explore applying for the very benefits the GOP is apoplectic about dismantling. This from the LA Times:

Nancy Salgado has worked at McDonald’s for 10 years and struggles to support her children with a wage that keeps her under the poverty line.

So she called the fast-food behemoth’s employee hotline, known as McResources, in hopes of finding help making ends meet.

But instead of getting any company assistance, the McDonald’s operator suggested Salgado try food pantries, federal food stamps and Medicaid.

The conversation – which was recorded and released to the public Wednesday by labor advocacy group Low Pay Is Not Ok – comes as attention is growing around the taxpayer burden of so many low-paid workers in the fast-food industry.

In the reality-based world, where the two groups are not mutually exclusive, things actually look like this:

 

 

Screen Shot 2013-10-27 at 10.04.25 AM

[NOTE: This is a simple rendering, not to any scale,  not based on any specific data.]

 

So, there are two points to be made here:

  1. There is huge overlap between “year-round full-time workers” and “recipients of means-tested government benefits,” and even organizations as blinded by ideology as CNS and IBD should recognize as much.
  2. The American taxpayer – through the various safety net programs mentioned – effectively supplements the unlivable wages provided by companies like McDonald’s which is, I suppose, “increasing shareholder value” by outsourcing part of its employees’ incomes to SNAP and other taxpayer-funded programs. If such companies paid their employees a livable wage, said employees would, I’m sure, be delighted at the prospect of not being on public assistance. Hence, if the GOP wants to slash the social safety net, it must consider agreeing to a raise in the minimum wage. You can’t have it both ways – advocating for no minimum wage and then bemoaning the number of people seeking assistance.

And, for the record, I reject the notion that we’ve become a “nation of whiners” suffering through a “mental recession.”

Shame on IBD and Terrence Jeffrey.

Update (November 2): Fox News decided to run with – and further distort – Mr. Jeffrey’s fictional story. Their rendition of it was immediately debunked by Media Matters.

Also, a right-wing talk radio host offered up this particular bit of pablum to his listeners and PolitiFact debunked the story as well.

 

Category: Cognitive Foibles, Economy, Employment, Financial Press, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

34 Responses to “Makers and Takers”

  1. rj chicago says:

    I would like to see the detail behind these stats REGARDLESS of political ideology. On the surface this appears a disaster!!! More people in the cart than pulling it – but still I think the detail would be important to see.
    The other comment I have is regarding the federal largesse. The only fed largesse is debt driven money printing – period!

    Invictus: The data is as available to you as it is to me or anyone else, so by all means have at it. The point – which apparently wasn’t clear enough – is that this is not a matter of those in the cart and those pulling the cart. There is significant overlap of the two groups, however a workhorses vs freeloaders narrative works much better for the conservative agenda. Sadly, it’s simply not the case.

  2. rd says:

    Did they include the recipients of agricultural subsidies, oil and gas subsidies, other industry subsidies, TARP, government pensions, etc. in their “takers” category, or are they considered to be “makers”?

    Oh yes, and the refusal to prosecute financial crimes because it would be destabilizing to the economy while throwing millions of poor people into jail for drug-possession felonies so they can’t find work in the future since that is not destabilizing is another bizarre maker-taker discrepancy.

    • mwbugg says:

      USDA farm programs are means tested, but the income limits are a little higher than with food stamps.

      “The 2008 bill denies commodity payments (direct, counter-cyclical, ACRE, marketing loans or LDP, milk income loss contract, and disaster payments) to individuals if they have an adjusted gross income of more than $500,000 (or, in many instances, $1 million for a married couple), even if more than 75% of their overall income is from farming, forestry, or agriculture.
      In addition, the 2008 bill denies direct payments to an individual with over $750,000 (or, in many instances, $1.5 million for a married couple) in adjusted gross farm income. In this case, though, all other forms of payments and benefits other than direct payments would be unaffected.”

    • Jeff L says:

      @rd – ADM. BAC, XOM etc…they can just plain “taker”, no means testing necessary. /sarcasm

  3. mwbugg says:

    USDA payments are means tested, but the income limits are a little higher than for food stamps.

    “The 2008 bill denies commodity payments (direct, counter-cyclical, ACRE, marketing loans or LDP, milk income loss contract, and disaster payments) to individuals if they have an adjusted gross income of more than $500,000 (or, in many instances, $1 million for a married couple), even if more than 75% of their overall income is from farming, forestry, or agriculture.
    In addition, the 2008 bill denies direct payments to an individual with over $750,000 (or, in many instances, $1.5 million for a married couple) in adjusted gross farm income. In this case, though, all other forms of payments and benefits other than direct payments would be unaffected.”

  4. chartist says:

    spot on rd….How would the Chinese punish a crime that had the potential to destabilize the entire economy? I am ready to bring back public hangings.

  5. blackvegetable says:

    Pleased to see Terry landing a new gig after the precipitous shutdown of Der Stürmer.

  6. USSofA says:

    Don’t forget that everyone on medicare is in a means tested government program too.

  7. Francisco Bandres de Abarca says:

    What is being stated here is essentially this: Many corporations do not need to offer competitive wages, because competitive compensation pressures have been removed from the marketplace. The desired and benefits, in many cases, will be provided instead by government programs, which are paid via the issuance of government debt (i.e, taxpayers). (BTW – there has been no balancing of that budget for a while, now.)

    • Francisco Bandres de Abarca says:

      Errr . . . ‘The desired *compensation* and benefits . . .”

      Man, I really need to proofread before hitting that ‘Submit Comment’ button!

    • wally says:

      Bingo!

      “There is huge overlap between “year-round full-time workers” and “recipients of means-tested government benefits,”

      You can work full time in the US and not be able to afford housing, health care, education… etc.
      The biggest “welfare” recipient in the US today is WalMart because the government makes it possible for them to hire and pay a less-than-living wage. We all pay those employees what WalMart does not… same for the fast-food industry.

  8. Bill says:

    Are they talking about people or households? From what I can tell from looking at the census data, households taking government assistance is around 32 million. So the 108 million must be people – including kids. And I don’t think we are expecting kids to be working full time, are we?

    Like some have said, check the numbers behind the headlines and draw your own conclusions.

  9. 4whatitsworth says:

    I happen to agree with you that minimum wage should rise however I would tell you that historically minimum wage has never been enough to truly be a living wage, this is nothing new and I am not sure that it is a substantial problem. What is new is the systematic exploitation of government and charitable benefits either by large companies like Wallmart and McDonalds or by lawyers exploiting the disability benefit of social security or by smooth talking individuals running non-profit groups for large profits (PAC’s come to mind!) These are the real takers.

    This is unfortunately the not so brave new world of social change we live in. Because of our priorities there is no money to create blue collar jobs that people need and even if there were the environmentalists would shut them down. For those who work here is where your tax dollars go.. http://www.heritage.org/multimedia/infographic/2013/08/federalspendingbynumbers2013/page-2-chart-2
    Next time you hit a pot hole and spill your coffee, wait in line to pay a toll, or are forced into an overpriced and undeserved government license scheme remember you are working for the greater good. Oh and when your phone rings make sure you answer it because if you have ever donated to charity they have your number.

  10. DeDude says:

    Looking a little closer at table 2 in the Census Bureau link it is clear that one of the ways these numbers get so big is by including every person in a household if just one person get a benefit. The other thing worth noting is that about 80 million get Medicaid so the fact that we allow companies to dodge providing health care benefits yet pay so little in salary that their workers cannot afford health care, is the shocking explanation.

  11. Frilton Miedman says:

    Profound, 73% of means tested entitlements go to full time workers, puts A crimp in the counterargument that Americans are becoming lazy or dependant on government.

    Also makes an interesting statement about the GOP’s farm bill vote – to continue farm subsidies while cutting food subsidies for low income families.

    IMO, Invictus doesn’t blog often enough.

    Invictus: Flattered, Frilton. Thank you. And I wish I had more time to blog, I really do. It’s cathartic.

  12. b_thunder says:

    1. I’m tired of subsidizing Sam Walton’s kids. Nothing against them personally, but the working ppl routinely pay over 45% in combined fed+state+local taxes, while Waltons *might* pay 15% cap. gains tax sometime in the future.

    2. Gov’t benefits invite fraud and abuse: there are hundreds of thousands if not millions who abuse these programs, both the “takers” by working off the books, as well as benefit “providers” such as doctors who abuse Medicare/Medicaid ans steal tens of billions annually. The more complex the regulations are, the more chances there is to steal from the system. The more people are eligible, the more abuse there will be.

    3. Question for Invictus: if WalMart is forced to raise wages from, say, $8 to $12, would Costco, Amazon and other businesses that pay $12 now will be forced to raise their wages or risk higher turnover? Wouldn’t someone making $12 after a decade of work for some fast food chain be “upset” if new hires instantly get $12 and he only gets 2.5% raise or nothing at all? Wouldn’t the whole low wage spectrum shift up, causing wage inflation? What sort of historical precedents do we have?

    4. Rent is TOO DAMN HIGH (in most of the country and in large part b/c of the Fed.) The cost of healthcare is Too Damn High (ACA does next to nothing to reduce overall costs which are 2X greater than the developed world average) If these 2 expense categories are brought under control, a lot of “takers” wouldn’t need assistance.

    • DeDude says:

      3. Yes if we give the guy making $8 a 50% raise (to $12) then the guy making $12 would likely get a 25% raise (to $15) and the guy making $15 would get a 10% raise (to $16.50). There would be a push on wages, but it would mostly be in the lower end of the scale. The result would be less income inequality and it would provide people on the lower end of the income scale the ability to pay for most of their basic needs. It would also create a little more inflation which is exactly what the economy needs right now.

      • Gnatman says:

        That large base of recipients would probably trip some trigger at the FED to raise rates because it would be perceived as “inflationary”. You can’t move the mass without the scale showing the result.

      • DeDude says:

        @Gnatman, its hard to predict exactly when the Fed would react but right now they would certainly welcome a little more inflation. If it got to be to much they would counter it. But two steps forward and one back, still net you one step forward.

    • winstongator says:

      Making $12/hr at WalMart will never be the same as making $12/hr at Costco. Working conditions & general boss-employee relations matter. If WalMart raised their wages significantly, they would be out of business. Imagine all the empty WalMarts. What will fill those spaces? It took a long time for the Circuit City shells to be filled.

      The rise of WalMart was one shift in American commerce. Its decline will be another shift. It is working to keep its relevance by expanding its grocery operations.

    • katya422 says:

      Don’t know if anyone will see this now, but yes, there is historical precedent.

      In 1986 or 87 the minimum wage was raised from $3.35 to $4.25. I had recently started a fast food job (high school) and the people already making $4 weren’t happy, but I don’t recall anyone getting raises due to this.

      It would be interesting to see what happened then. I was only 16 so not following financial news much at the time.

  13. Joe says:

    I strongly disagree that we are not a nation of whiners. I hear a lot of whining. Especially from people who have money and begrudge people who don’t, getting help.

    We had an issue between two guy’s at my job prior to my retirement. I took one aside and said, “Understand this about the other guy; If I approached him and said, ‘Things worked out way better than I was expecting. Here’s half a bucket of cash. It’s yours.’ The first word out of his mouth would be, ‘Who took the rest of my money?’

    Resentment as a way of life drives me up the wall because it poisons everything. I do well and I try to be gracious and generous. It’s a pretty neat way to live. I have a lot of fun.

  14. san_fran_sam says:

    Makers and takers? Maybe we should start calling business elites givers and grabbers.

    Maybe if corporate American paid workers a decent wage that had gone up with productivity and inflation for the last thirty year. Maybe if corporate America and their Republican lackeys hadn’t spent the last thirty years convincing the working class that unions were evil. Maybe if the grabbers in the executive suites had been givers instead then maybe there wouldn’t be so many Americans needing government assistance.

    Don’t bother flaming me. I won’t be back to this discussion.

  15. LeftCoastIndependent says:

    One of these days the entire house of cards is going to come crashing down.

  16. bigsteve says:

    I have been blessed and never needed public assistance. But I have over the years known many people who were on food stamps or today snap. All were working, most full time. When workers are so little paid that they need welfare to survive what we really have here is corporate welfare. Thanks for telling it like it is Mr. Ritholtz .

  17. theexpertisin says:

    The year round productive citizen circle has a leak that is not shown in either illustration.

  18. Marc P says:

    Interesting article. Like most people I am very concerned about income inequality and the effects that the financial meltdown have had on our economy.

    That said, I have to wonder about this: “Nancy Salgado has worked at McDonald’s for 10 years and struggles to support her children with a wage that keeps her under the poverty line.”

    I am curious about how someone works at McDonalds for 10 years and can’t or won’t move on to a higher-paying job. People call fast food jobs “entry level” for a reason. This is not to disparage Nancy Salgado. McDonalds has high standards so if she has worked there for 10 years then she is very likely to be reliable, dilgent, and good at her job. What is holding her back? Lack of education? Motivation? Knowledge about other jobs, industries, careers? Articles such as this seem to me to have glaring holes when they omit any text about the source of the situation.

    • Frilton Miedman says:

      There is one job available for every three job seekers, regardless what their education of skill level is, even so -

      Consider Mz Salgado’s options:

      1- Get a degree with debt while raising children, at risk of learning the area she’s gotten said degree in has diminishing labor demand through globalization or technology after the fact.

      2 – Save money to get into business herself, making $8/hour raising children.

      Anecdotally, you might claim she’s collateral damage, she get’s what she deserves for her past decisions, but that approach masks the real problem of diminishing labor demand, there is going to be a fixed percent of the population that will “get what they deserve” regardless how much college or work skill they have.

  19. pekoe says:

    This is not so complicated. Low wages are supplemented by tax-derived benefits. This is an indirect transfer of wealth from taxpayers to the low-wage employers. Yes, the employers. All the anger about “takers” and “makers” is misdirected, regardless of which side you think are really the takers or makers. It is the same as if alms given to churches were used to “help the poor”, which is another kind of transfer from givers to bad employers. For perspective, this country was built by slavers and slaves, and over the centuries, we have kept as close to that system as we can without precipitating riots (which is a moving target). Curiously, the poor never, ever, fully avail themselves of the powers they have, let alone take what they could. The biological reasons for this would really be interesting to know. Imagine, a pill that could be the cure for poverty, a pill that that would make people see anew their comparative situations, rise up and say to their own astonishment: “We will not be subject to this abuse any more!” What would be the fate of such a pill?

    • Frilton Miedman says:

      That’s ridiculous.

      You’re saying the poor are empowered to alter labor demand, that somehow the lost MFG jobs to China for pennies per hour, or the MFG, IT & tech jobs replaced by robotics, automation & software can be “willed” back into existence.

      Heck, how many CPA’s have lost jobs to Turbotax? Are they empowered to get those jobs back?

      10 years ago a web page would cost me $1500 and a few weeks wait….now it’s virtually free, using drag-drop software and a few hours of my time….how many of those designers work at McD’s now?

  20. [...] See previously: Makers and Takers [...]