What to Do with Displaced Workers, Old Folks, and Children?

Jim, one of my childhood mentors, was a copy machine repairman. I don’t know his full story, but I know he got shot in the Vietnam War. Every Sunday, he carried a tote filled with candy to our church and distributed his loot liberally if we kids could recite Bible verses. He was a hero.

Jim started repairing Xerox machines in the 1970s or 1980s when they were high-value machines, mechanically complicated, and easily broken. He was good at his job and earned a decent living. But by the early 2000s, copy machines had changed. They were cheaper, computerized, and more durable. Jim found himself laid off in his early 50s, with skills that would not fetch a professional salary.

He went back to school to ‘learn to code,’ paid for by a government program for structurally unemployed workers. But old dogs don’t learn new tricks very well, and there weren’t many of those jobs in our small town. For a time, Jim took a job in his new field 3 hours away in Peoria, Illinois. Peoria (for those who have not visited) is bleak. He returned each weekend to visit family and friends until, when the Great Recession hit, he was laid off. Jim gave up. He retired in his late 50s and qualified for government disability benefits. By his mid 60s, Jim was sick, old, and bored, and he passed away. Bleak.

The labor market is a market. In markets, not everything gets exchanged; some people are left on the sidelines of the job market just like some bananas rot at the grocery store. Technological change destroys jobs and creates jobs, but usually for different people. So where do people go who don’t participate in the job market?

This isn’t a new problem, or a USA problem. In industrialized economies, around half of all people usually work in the labor market. How are the rest surviving?

Family and savings. My 2 year-old doesn’t work, but we feed her using money we earn in the labor market.

Government redistribution. The majority of US government spending is given to citizens as cash or expensive commodities, like health care.

Non-market production. From subsistence farming, to gardening, to cooking your own meals – what people do at home can go a long way toward supporting them.

Reducing consumption. People live on peanut butter and ramen; they live on the streets or in their car; sometimes they go hungry.

When my friend Jim left the labor market, he likely used all four of these supports. He had some savings; the government paid disability benefits and Social Security; he started cooking more at home; and he vacationed less.

The point of this article is to question: What should the government’s role be in encouraging the right mix of non-labor market supports to help Americans who are excluded from the labor market be healthy themselves and raise productive children who can thrive in the labor market.

Although honest minds could disagree, it seems to me the US government (along with other rich governments) mainly relies on redistribution to provide for people excluded from the labor market. We provide fish instead of fishing poles. There is a place for redistribution, but living one’s life on the government dole is really unhealthy. It creates all sorts of incentives to not improve one’s situation, and work (market or otherwise) is healthy for humans.

So what else could national, state, and local governments be doing? Here’s a list of my ideas, some which are already done. Please contribute your own ideas in the comment section!

  • Encourage healthy families. This doesn’t mean we want more kids. Rather, we want family members to like each other more - so they’ll take care of each other when needed.

  • Encourage personal saving. American savings rates are a dumpster fire. It doesn’t help that interest rates have been low since 2008. Instead of constantly stoking Americans to spend for short-term economic benefits, we should work on programs to encourage saving.

  • Train people to help them re-enter the labor market when possible. It’s not always effective, but worth a try.

  • Help people provide for themselves at home. In many settings, this has meant giving small plots of agricultural land to people.

  • Make low-cost living healthier. Right now, unhealthy food is cheaper than healthy food, schools are bad in poor areas, and crime is high. So too many poor people end up fat, dumb, and in jail - with kids who become fat and dumb and go to jail. If we prioritize the well-being of poor people, their kids will be more productive citizens.

PS - The labor market is and should be the main source of productivity and income for every-day people. And there are myriad ways the U.S. could improve that would help labor market functioning. But that’s another blog post. This post is about how to help people who can’t participate in the labor market, of whom there are many.

Written on August 15, 2020