Monday, July 5, 2010

Mowing yards, unemployment, the joys of the lake, and perverse incentives

Imagine that you need to find a neighborhood kid to mow your lawn. 
You bang on three different doors, but none of the kids want to come outside.  You learn that the parents at all three houses are paying their children to "house sit".  The kids could make a little more money mowing yards than house-sitting (i.e. - doing nothing) but not much.  It's not worth their while to get up and mow yards just for an additional, say, $1.00 per hour. 
For you, the frustrating thing is that all three groups of parents owe you money.  They are using your money to pay the kids to sit and play video games, watch TV, and surf the internet all day. 
So you either mow your own yard or you hire a lawn service whose employees are already putting in 60 hours a week. 

*******

I've been unemployed before, once for about 4 weeks.  It wasn't fun, but it was comfortable.  I went to the unemployment office downtown, filled out some paperwork, and then checked my mailbox for a check every week. 
I made a few efforts to find jobs that paid as much as the one I had lost.  There were none. 
Every two or three days I put on a suit and made the interview rounds, but The Cooking Channel beckoned.  Blockbuster Video had tons of movies I'd not yet rented.  Short trips to the lake were suddenly possible every day. 
Various companies offered me jobs that were almost exactly the amount of my unemployment compensation.  But why in the world would I want to take one of those and work for 40 hours a week when I could get the same amount by staying at home and learning how to cook Peking Duck and watching old episodes of Monty Python?  Where were the incentives? 
The incentives eventually came in the form of Mrs. Whited, who told me to take a job, any job, because she was tired of coming home from working all day and seeing me unshaved, unwashed, and on the couch. 
I took a job that paid around .75 cents an hour more than my unemployment compensation.  Within about a year and a half, I was up to my old salary again. 
But man, it was hard to tear myself away from cable TV, Blockbuster Video, and the lake. 

******

I've interviewed three different people in the last month who knew that the jobs I was trying to fill were perfect for them.  They knew that they would fit in well.  They had friends who worked for me.  They were perfect for what I needed. 
But dammit, the government was also paying them (with your money) to sit at home.  The government's pay rate is about 80% of what I offer to start at some of those jobs. 
Unemployment insurance is a good thing.  But when it is automatically extended and extended and extended, just to show how compassionate politicians are in an election year, it can totally destroy incentives.  But get ready for a barrage of political ads denouncing the evil meanies in Congress who voted against extending unemployment benefits through the end of The Obamessiah's term.   

******

Hope everybody had a good 4th.  I'm gonna go get they guys started in one of the warehouses and then see if I can find a kid to mow my yard.

******

Addition: Go here to see a totally different point of view from The Obamessiah's pet journalist/economist Paul Krugman.  Mr. Krugman neglects to mention the root cause of so much of the unemployment we're seeing - The Teleprompter Jesus demonizing employers, forcing corporations to become nannies, and demanding that those who put their capital at risk pay even more tribute money to Washington if they're succesful.  
I've been able to see things from Paul Krugman's point of view a few times in the past, but it was uncomfortable having my head that far up my ass.    

7 comments:

Stephen M. Smith said...
This comment has been removed by the author.
Stephen M. Smith said...

But think of the stimulative effect paying those kids to sit at home and play video games has on the economy.

CenTexTim said...

re: Krugman - he may be prolific, but he's also inconsistent.

http://www.businessinsider.com/paul-krugman-caught-in-contradiction-on-the-negative-effects-of-unemployment-benefits-2010-3

Nick Rowe said...

Krugman has probably never held a real job in his entire life. He's likely never been broke, never been homeless, and has never been on unemployment. He didn't come from a wealthy family, but I don't think he ever suffered the "pinch" of poverty.

One needn't have had those experiences to understand how one becomes and stays unemployed, but not having those experiences certainly explains why someone doesn't understand.

When I was a kid, I had a paper route. When my friends and my sister quit their paper routes, I combined them all and was soon earning more than any kid I knew. It was a lot of work, but I liked the money.

During the winter, my friends and I would grab shovels and go door-to-door offering to clear sidewalks and driveways of snow. Our standard fee was "whatever you honestly think the job is worth." We often got paid more than we would have asked for. We cleared the sidewalk and huge driveway of one old lady who paid us NOTHING, but she gave us warm tea and cookies afterward. In retrospect, I'm sure the old woman had tons of money but at the time we were pleased to do her a service.

I was a broke, homeless and unemployed teenager in 1985. Sitting in a Dunkin' Donuts at 2am, a homeless bum sat next to me. In him I saw a picture of me 10 years later if I didn't take charge of my life. I left the restaurant and headed out of town. Along the way I found an Army recruiting station. The next morning, I was enlisted.

After the Army, I was again unemployed but this time receiving a check. I was in no hurry to find a job. I made my three weekly contacts but it was lip service - I didn't want any of those jobs. I had thousands of dollars in savings, and I spent my days mostly watching CSPAN. I took a vacation to see my girlfriend in Germany. After about twelve weeks of that, I got so tired of looking at the same four walls that I found a great-paying job within a couple of weeks.

I was unemployed twice after that, most recently during THIS recession. I got three immediate job interviews but all of them fell through. My unemployment check was about 20% of my prior salary and I was living with family so I was pretty eager to get a job.

In California when a person had a high income job, unemployment pays you only a small percentage of your prior pay. If you had a low income job, unemployment replaces almost all your salary - it's a redistribution from high skill to low skill people. That's how the People's Republic rolls! Oh, but their unemployment fund was broke and they needed $9 billion from the Federal government to bail them out. What did they do with all the money my employer and I paid them?

I was into my fifth month of unemployment when I was offered a job at about half my prior salary. I didn't have much choice, so I took it. I hated the job but I gave it my best effort. Luckily a few of my prior applications were still active. I left after only five months and took a much better, higher paying job. Now in my third year, I've recovered a good chunk of my prior salary but I'm still short about 15%.

Krugman's brilliant brain has been warped by liberal dogma. Don't let that happen to you, Ralph. :)

Mark Adams said...

I don't know anything about the jobs you were trying to fill, or your employment policies, but I happen to be one of the 1-in-5 young Americans on unemployment, and while I agree that it's not worth my while to take a job that pays the same as my unemployment benefits, the error in your assumption is that "starting" wages are not perpetual caps. If I could take the past five years that I spent working my ass off (in three different companies, three and two years of "temporary" assignments with a third one concurrently in the middle of the other two) just trying to get my bosses to learn my name, much less pay attention to the quality of my work, and convince one of their competitors that I in fact have several years' relevant experience, and start at a worthwhile pay rate, I'd be over the moon. Instead, in today's reality of perpetual strings of revolving-door employment, a young person just out of high school today is looking at fifty years of alternating stints of eight months at one dead-end job, ten months of unemployment, seven months at another dead-end "entry-level" job, ad infinitum. And of course, during those eight-month gigs (I hesitate to use the word "jobs", much less "careers"), they're at perpetual minimum wage with no benefits (because the first three-to-six months at any job is "probationary") but still forced to buy health "insurance" (thanks, Obama!) which serves no purpose other than to subsidize the baby boomers who dug us into this grave in the first place (I quit paying for health insurance when I realized it covered gynecology but not my eyeglasses). These long-term costs (then again, who is capable of perceiving long-term costs and still voted for Obama?) make it much more than just a stay-home-today-or-go-to-work-today? issue.

The Whited Sepulchre said...

Mark,

One comment, slightly off-topic.... On your Blogger profile, you state that you are a fan of the novel "Jennifer Government".

I LOVED THAT BOOK.

Good to hear from you, and good luck with the job search. Do you mow yards?

Doug Watson said...

I don't know where you are, or how the state laws are structured. However, in at least two of the states I have lived in, if a prospective employer could show proof that a recipient of unemployment insurance payouts had turned down appropriate employment, said payouts could be halted.

Just sayin.....