Scott Sumner  

Are ZMP workers uneducated or unmotivated?

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A survey on communist symbols... Murray Weidenbaum, RIP...

This is a touchy subject, so let's begin with an analogy to clarify things. Years ago I read that drunk drivers were involved in 1/2 of all traffic fatalities. I'd guess the ratio was also high for accidents that put people in wheelchairs. Now let's think about the class of people in America today who are paralyzed due to traffic accidents. Do you think that group of people are disproportionately drunks? That inference seems kind of logical, doesn't it? And yet I think almost everyone (including me) would view that claim as being deeply offensive and unfair. Adding insult to injury. Literally. After all, lots of victims (probably most) are not drunks, and just imagine how they'd feel about hearing that generalization. The term 'disproportionately' might mean only 20%.

Now think about the class of Americans who have personal characteristics that might fairly be labeled "lazy and incompetent." Are you unable to think of that class of people? Then stop reading this post; it's not for you. My claim is that calling the long term unemployment "disproportionately lazy and incompetent" is offensive in roughly the same way that calling accident victims "disproportionately drunk." It may be technically true, but it's misleading and offensive. I'll circle back to this point later, but first a study discussed in a recent Tyler Cowen post:

There is new Brookings research by Alan B. Krueger, Judd Cramer, and David Cho:

"The short-term unemployment rate is a much stronger predictor of inflation and real wage growth than the overall unemployment rate in the U.S. Even in good times, the long-term unemployed are on the margins of the labor market, with diminished job prospects and high labor force withdrawal rates, and as a result they exert little pressure on wage growth or inflation."

Consistent with my earlier views, this work is suggesting that many of the long-term unemployed are/have become an economically segmented group. This is noteworthy too, as it implies the problem is not merely initial discrimination:

"...even after finding another job, reemployment does not fully reset the clock for the long-term unemployed, who are frequently jobless again soon after they gain reemployment: only 11 percent of those who were long-term unemployed in a given month returned to steady, full-time employment a year later."

I would consider that evidence for a notion of zero marginal product workers.


Let's abstract from the current depressed labor market, and examine the people who have a hard time keeping jobs in good times. Many economists point to a lack of human capital, deficiencies in our educational system, etc. That's obviously correlated, but doesn't get to the root of the issue. Indeed when I read those explanations it just makes me think that most economists are far removed from the real world. Perhaps they don't even know lots of long term unemployed people.

America has an enormous appetite for unskilled workers. So much so that we draw in millions of unskilled migrants from middle-income countries to nail shingles to our roofs, pick fruits and vegetables by hand, and clean toilets in hotels. Businesses can't find enough Americans to do this work at anything close to current wage rates, although obviously there is SOME wage rate that would get even me up on the roof (I've done roofing when I was young.)

So what is the problem with the long term unemployed? I recall Tyler Cowen once mentioned that some low-skilled workers have a bad attitude, and that this reduces their productivity. That is certainly true in some cases. When we compare the migrant workers to the American workers who are part of the long term unemployed during booms, it's easy to imagine a motivation difference.

So far it sounds like I'm engaged in the typical conservative "bashing the victim." But I'd like to offer a different way of thinking about the issue. I'd encourage you to see low motivation as a characteristic of the system, not the person. Here are a few examples.

1. In the Middle Ages the poor were highly motivated and worked hard. The rich were unmotivated, and tended to be lazy aristocrats.

2. During the 1950s America's rich had very little motivation to produce vast fortunes, and based on income tax receipts at the 90% MTR, they did produce very few vast fortunes. Unlike today, poor women were more motivated to work than rich women.

3. In my profession, tenured professors are less motivated to produce research than nontenured faculty, and we've all seen examples of how that differential motivation affects productivity.

The reason I particularly like the last example is that it takes some of the overheated emotion out of the issue. No one would claim that tenured professors have intrinsically different personal characteristics from nontenured professors. They are the same people, just at different stages of their lives. Similarly there is no fundamental difference between low-skilled American born labor and low-skilled Mexican born labor that snuck into the US. But they face very different incentives, very different consequences from not working hard, and thus look like they have very different personal characteristics.

Now this conclusion must be qualified to some extent, due to the sorting problem. Mexican migrants to America are probably some of the most ambitious of the unskilled labor in Mexico, and the long term unemployed are probably disproportionately among the less ambitious low-skilled workers in America. That's a logical inference.

But don't forget the earlier example, there is more to life than logical inferences. Would you feel comfortable telling an accident victim in a wheelchair that "his type of person" is disproportionately composed of drunks? If not, be careful in making generalizations about the unemployed.

A welfare state in a country with lots of low skilled workers will produce low motivation people. This will create resentment and prejudice among middle-income workers, especially if they are disproportionately from a different ethnic group. I wish people didn't think this way, but they do.

PS. Nothing in this post has any bearing on sticky wages, and/or the fluctuations in unemployment associated with the business cycle. (I hope it's obvious that those fluctuations are not caused by sudden bursts of laziness.)

PPS. I pay unskilled workers about $40/hour to do simple jobs like painting. Even during the recession. But that's partly Boston; in Texas I would pay less.

PPPS. Sometimes I fail to get my point across, try as I might. Here's the short version of the post: It's wise to avoid thinking of the poor and unemployed as being intrinsically different from the rest of us. Or if you must think of them as being different, do so in roughly the way you'd think of serious accident victims as being different from the rest of us.

Update: Several commenters mentioned that they know people working in the underground economy. I've also met people like that, which makes me think there are quite a few people in that situation. I believe that in aggregate there must be a lot of people who are officially not in the workforce, but who are actually working. Not a large number in percentage terms, but large in absolute terms. Perhaps several million. Another reason to believe the poor are not as "lazy" as many people suggest.


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CATEGORIES: Labor Market



COMMENTS (21 to date)
Thomas Sewell writes:

Some of the backlash you may get for this post is that it sets up, but doesn't really ask, a question along the lines of "So what factors demotivate poor individuals from working?"

And of course, the obvious answers will step on several sacred cows for a significant portion of the academic and general population.

Too far down that path and you may end up preaching personal responsibility, marriage, culture, etc... and be called a racist.

Garrett M writes:
Thomas Sewell writes: Some of the backlash you may get for this post is that it sets up, but doesn't really ask, a question along the lines of "So what factors demotivate poor individuals from working?"

The main takeaway from the post for me was this line: "I'd encourage you to see low motivation as a characteristic of the system, not the person."

That is (or should be) chapter 1 of Econ 101. So I would infer that the answer to your question would be the well-known theoretical frictions and barriers in public policy.

Scott Sumner writes:

Thomas, I should have spelled out that I think high (implicit) MTRs is one factor that demotivates people (rich and poor alike.)

Garrett, That's exactly my point. I'm trying to get people to focus less on issues like "culture" and more on public policy. Culture is partly endogenous.

Greg G writes:

Great post Scott. I hired (and occasionally fired) entry level sales clerks for many years. We always found good people but we also always saw a lot of applicants that I would not have let near my customers if they had been willing to work for free.

There are plenty of ZMP workers now and there always have been. What is different now is not that human nature has changed. It is that the workplace has changed. There used to be a lot more work that needed to be done that didn't require interacting with customers or technology.

I retired six years ago. Even the best of my former employees are having a much harder time finding jobs they are not overqualified for today than they did in the past.

Lee Kelly writes:

There is also the sticky issue of assortative mating.

People vary in their genetic propensity toward traits like intelligence, conscientiousness, competitiveness, ambition, patience, and so on. How much is the genepool being divided by genes which tend to to regulate these characteristics? It may very well be that the long-term unemployed, as a group, really are different, because they exhibit a different frequency of such genes.

Peter H writes:

I think, especially among low skill workers, there is also a strong incentive to be employed in the informal economy, which distorts the figures. The extremely long-term unemployment insurance of the 2008-2011 period also exacerbated this. That is, a lot of these people may be employed and lying about it.

The combination of high implicit marginal tax rates, high explicit marginal tax rates (EITC rampdown), and the cliff of UI being withdrawn on getting a new formal economy job means for many people that an off the books job may effectively pay double what an on the books job does, at least for a while.

If you know you've got 80 weeks of UI coming to you, the job working in your cousin's car wash off the books at $6 an hour looks a lot better than the job as a Wal-Mart cashier at $8 an hour.

Anon writes:
I think, especially among low skill workers, there is also a strong incentive to be employed in the informal economy, which distorts the figures. The extremely long-term unemployment insurance of the 2008-2011 period also exacerbated this. That is, a lot of these people may be employed and lying about it.

This is true, at least in the southern rural community where I live. A lot of people work off the books doing jobs which simply wouldn't exist otherwise. Some of them also exploit welfare programs such as unemployment insurance or foodstamps. Most people just turn a blind eye, because it's not their business. The United States is a diverse place, with lots of variation in wealth and income. If you live in a community with a high proportion of people living under the official poverty line, then many labour regulations are just luxuries nobody can afford. Working off the books, cash-in-hand, or under the table is, therefore, very common--it's not just something that illegal immigrants do.

The interesting thing is how many people seem quite contented with their low income. Of course, they want extra money, but not if it means changing their present habits, prejudices, and lifestyle. It's not even just a matter of whether people work hard, but the types of work they want to do. Some of the hardest working people I know have very low incomes on their tax returns, because they choose occupations which aren't very remunerative for one reason or another. They would rather be paid very little to fix a car engine than be paid a lot to work in an office. A lot of people pay dearly, at least monetarily, to indulge other preferences or vices.

Taras writes:

This semester I am taking a computer engineering class that I do not meet the prerequisites for. Therefore towards the end of August I went into the university library's section on computer engineering, grabbed a textbook about circuits and flip flops and started reading. The amount of knowledge that exists there is staggering, and you don't even need a library card or student ID to get in.

Similarly, there exists a plethora of information online, and it is possible to order materials and software at a much lower cost than it was thirty years ago. So why can't everyone who is at least moderately intelligent use these resources to land a great career as an engineer or software developer?

It seems obvious to me that we do not have the institutions or incentives that would encourage people to do so. Part of it is that the culture that is formed in high school makes people averse to studying science and math.

Scott Sumner writes:

Everyone, Good point about the underground economy, I'll add an update.

MingoV writes:
I read that drunk drivers were involved in 1/2 of all traffic fatalities.
That is a lie promulgated by the CDC and other organizations. The correct statistic is that half of all driving-related fatal accidents involve alcohol. What does that mean? A sober driver has an accident with another sober driver. Both cars carry three passengers. Everyone is killed. One of the passengers has a 0.10 alcohol level. That passenger's alcohol level is high enough to be classified as intoxicated. Thus, an intoxicated person was involved in an accident with eight fatalities.
Scott Sumner writes:

MingoV, I accept your data, but it doesn't really change anything in my post. It was just an analogy. Surely drunk DRIVERS are also disproportionately involved in fatalities, albeit at a level well below 50%. After all, drunks as a share of overall drivers are probably below 5%.

Rajat writes:

And yet even if you point out that it's 'the system's' fault some people are unmotivated, many will find that offensive, at least in countries like Australia with relatively generous welfare systems. For example, I heard a discussion on ABC Radio National (kind of like a government-run PBS) about the government's changes to the single parenting payment, which put mothers on the much less generous UnN benefit after their youngest child turns eight. Seems pretty reasonable doesn't it? Well, the single mother and researcher interviewed argued that it was deeply unfair because it presumed that single mothers didn't work when many did and in any csse, they were all already doing the best they could under the circumstances. There was not a scrap of recognition that generous parenting payments continuing until a child turned 18 could effectively result in many mothers never working again. Ultimately, welfare recipients and their advocates will fight hard for their benefits, irrespective of the moral slant one uses when discussing their predicament.

Massimo writes:

To summarize: blame the socioeconomic system for incentives that foster unmotivated workers and poor work ethic. And be very careful about your phrasing, as many unemployed and poor are well intentioned victims.

Extremely clever analogies, entertaining post, but this is preaching to the choir. The people reading this site are generally already overwhelmingly convinced of this conclusion.

Glen Smith writes:

Most people who drive drunk will likely not get into such an accident. The backlash occurs not because some ZMP workers are lazy (maybe unmotivated) or shirk personal responsibility but that high marginal product workers are as likely to be lazy and/or shirk personal responsibility.

Thomas Sewell writes:

Scott & Garrett,

Agreed. Unfortunately, it's also a bit of a Bootleggers and Baptists story.

If you consider no one responsible (or worse, some scapegoat group, like "Jews", or "The 1%") for someone not having a legitimate job, then it's easy to say "It's all luck, that could be me" and advocate just paying those folks via some sort of (efficient or not) income distribution mechanism. That's a popular position that allows people to control others' lives while feeling good about themselves for doing it.

Once you start suggesting that the same welfare system may be a contributing cause of someone not have a legitimate job, or that there are other structural issues with popular poverty "remedies", or that in a rational system people should be responsible for themselves because that will give them the most motivation to go get a productive job, you'll immediately run into the Baptists explaining why you're just blaming the victim.

Don't get me wrong, I'm not against helping people who need it. I am suggesting that the current government system that has spread (somewhat unevenly) across most first world countries owes itself more to satisfying the "Baptists" feelings than convincing the "Bootleggers" to turn into the productive member of society they are capable of being.

If you started examining what specifically motivates people to find a productive job, even if it's not an enjoyable one, then need for food, shelter and security is one, desire to provide that to a family you are responsible for is another (which is where, IMHO, marriage and culture start coming into play), pride in accomplishment, social pressures, etc...

If structurally, you had to depend on people who knew you and knew your circumstances in order to get help, then your motivations would differ than if all you must do is fill out a form and a nameless bureaucrat drops money into your debit card account.

But the Baptists in our story aren't really trying to design something to accomplish motivating people to get productive work, or become more valuable to society, or anything along those lines. They're looking for folks they can point to in order to rail about how horrible it is and how they must have more power to do something about it.

Andrew_FL writes:
But they face very different incentives, very different consequences from not working hard, and thus look like they have very different personal characteristics.

They also face different legal and regulatory conditions. An illegal alien's labor is de facto not subject to several regulations that may be barriers to doing certain work for legal residents.

After all, if an employer is willing to accept the risk premium of hiring them in the first place, it's not like he's going to be in much more trouble for not counting them towards his number of employees for determine whether or not he has a small enough business to escape many regulations, and he is certainly not worried about paying them the minimum wage.

What are they going to do, report their employer to the authorities that will deport them?

In contrast for the legal resident. Well it's not a job an "American won't do," it's one he legally can't do.

Tom DeMeo writes:

This discussion seems to be about the last war.

ZMP is starting to happen with the formerly high skilled now too. You could be a doctor. You could be a programmer, or a lawyer. All you have to do is stop learning much for 3 or 4 years and you will begin to slide towards irrelevancy.

Daublin writes:

Regarding the system, I think the elephant in the room is an accumulation of anti-work legislation such as Obamacare and an increased minimum wage. These are price floors, raising the minimum price of labor. Without these price floors, many of the currently enemployed would be able to get a starter job.

Regarding "offensive", I don't see the relevance. Any study of demographics is going to be offensive, because it paints with a broad brush. To follow your example, I will bite the bullet and say tha tif a large proportion of the disabled are disabled due to tehir own stupid decisions, then surely that affects what the ideal policy response is.

If you want to talk about moral obligations to the unfortunate, then I really like Bryan Caplan's framework: think about desert, about how you would treat strangers, and so on. If you want to take a more consequentialist approach, on the other hand, then you have to group people into categories, and doing so is going to be offensive.

rcory writes:

By a reasonably objective view I am a lazy, unmotivated unemployed person, although intelligent, and fairly characterized as one of the "deserving unemployed."

I believe that the ascending tendencies in American public thought and policy, including the soft libertarianism/liberaltarianism which most here would look on with favor, will increasingly rapidly increase the ranks of low-conscientiousness, low-motivation individuals like myself. This does have the benefit of reducing competition for the thinning supply of jobs.

Scott Sumner writes:

Everyone, One point that I was trying to get across that didn't receive much discussion is that I'm challenging the claim that there is very little hope for the uneducated American in the modern high tech economy. I'm claiming there are lots of opportunities for the uneducated, it's just that our system gives them little motivation to find them. In that respect the poor are no different from the rich, just facing different incentives.

Mark V Anderson writes:

Yes, Scott, your last point is a good one. Lots of folks talk about ZMP as if structural unemployment is inevitable in our economy, and doubtlessly will get worse, simply because labor is not needed as much as it was. The problem is that we can't make that judgment based on what structural unemployment we've seen, because of all the labor regulations that make it so difficult for low value employees to get work (and maybe higher value ones in the future, Tom DeMeo).

I don't believe in ZMP because I think if labor laws disappeared then everyone would be able to get a job if they wanted one. Maybe not a customer facing one, as Greg G discusses, but some job. Everyone has some marginal value. Maybe they don't have enough value to make a living wage (even a real living wage, not one defined in some leftist's imagination as a nice apartment and nice things). That's what the EIC should take care of. Without labor laws, then welfare spending could truly be for those who can't make enough to live on.

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