Threatening People with Starvation to Make Them Work

“I had a student this year when I was trying to explain the disincentive effects of unemployment insurance – and I was being a good economist and explaining moral hazard, and how this is going to discourage people from working. Student raised his hand and said, is it really moral to use the threat of starvation to motivate people to work?

“And I didn’t have a good answer for him.”

Labor economist Betsey Stevenson is a professor at the University of Michigan. Her words above come from an interview with Ezra Klein of the New York Times. Their focus is all about tension in America’s economy right between labor and capital. So they’re calling it the “Take This Job and Shove It Economy.”

The Economy Is Changing

Economic activity is growing briskly. Inflation is making some noise. Employees are feeling bold to quit dead-end and underpaid jobs. So employers are having to dig deeper to come up with pay to attract workers. At the same time, there’s a movement to cut off food and unemployment programs so that people will feel a bit more desperate for a job.

“Take this job and shove it” meets “work or go hungry.”

Do Work Requirements Work?

A recent study from the National Bureau of Economic Research suggests that these “work requirements” don’t really work. Colin Gray and colleagues analyzed administrative data from SNAP and found that work requirements have only one effect. They serve to kick people out of the program. Often, these are people who are homeless. But the requirements don’t do anything to stimulate employment.

In fact, Adam Morgan at the Greater Pittsburgh Community Food Bank says it often does the opposite:

“Reducing access to nutritious food does nothing to help a person find adequate employment. Removing their source of food only makes it harder for people to find consistent, stable employment.”

A Shift in Economic Power?

This is a time of uncertainty in the American economy. Some, like economist Diana Farrell, see the possibility of a shift toward more leverage for workers in pay and work conditions. Others see threats of more economic disparities. Mackenzie Tran, an unemployed worker in Missouri, calls it “limbo nation” and tells the Washington Post of her experience:

“There’s this feeling and accusatory tone that you must just be lazy if you aren’t working right now. But people’s lives have been disrupted drastically. People tell me I should just go work at McDonald’s, but that’s not my career.”

One thing is clear about the economy. Uncertainty is great and “we have to be humble,” as Fed Chair Jerome Powell said this week, because this is a very unusual time. In the midst of such uncertainty, we come back to the question posed by Stevenson’s student. Is it really moral to use the threat of starvation to make people work?

Click here for the conversation with Betsey Stevenson, here for the study by Gray et al, and here for further reporting on that study. For more on how the economy is changing, click here.

Lonely Lunch, photograph © Mayastar Lavi / flickr

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June 27, 2021