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Most of us, along with almost all economists and, well, anyone who's ever experienced reality, scoff at suggestions, often asserted by Republican politicians and pundits, that the unemployed are jobless because they are lazy and that unemployment benefits and the other components of our meagre social safety net significantly encourage the unemployed not to seek work.  Well, as evidenced by an article I read earlier this morning, it appears that we, in fact, may have been on the wrong side of this one.

As you may have read, in December of last year, AFD Corp., a diversified holding company headquartered outside Chicago, announced that it was laying off approximately 5,000 employees to cut costs.  

For an article that came out in this morning's edition, The Chicago Sun-Tribune followed up with some of the recipients of pink slips to see how they were getting along several weeks after losing their jobs.  You might have expected that getting laid off would have been a devastating event in their lives.  Think again.  On the contrary, getting laid off appears to have been a gift and a revelation.  For it seems, upon losing their jobs, these former hard-working employees of AFD instantly realized that they were, in fact, lazy ne'er-do-wells:

"At first I was shocked when I got my pink slip a couple months ago," former AFD employee Sally O'Malley remarked.  "But then right away, in a strange flash, I realized that the market-clearing hourly wage simply doesn't adequately compensate me for giving up a marginal hour of leisure.  I'm actually glad they let me go.  There is simply no incentive for me to sell my labor.  I don't know why I never felt this way before I got canned."

"I never realized it before, but I'd rather sit on the couch, eat Cheetos and watch Cheers re-runs all day than go to work," said another former AFD employee who didn't bother to leave his name.  "Up until a few weeks ago, every morning before going into the office I made a fully-informed, rational decision about whether the value I would receive for my time on the job that day would exceed the opportunity cost of my lost free time.  After nine years of working long hours, nights and weekends at AFD, once I got fired, I finally saw that apparently it didn't!  It took receiving a pink slip for me to recognize my true identify as a lazy bum!  Who knew?"

And it seems the protections provided by our social safety net are contributing to their laziness:

"You know, I've thought about maybe looking for a new J-O-B, but I don't think that's right for me," admitted a single mother of two who had been with AFD for eleven years.  "For the next six months or so, I will collect unemployment benefits equal to almost half my former salary.  I've got health insurance through COBRA.  How's that for sweet?  Long term, I doubt I'll be able to keep up with my house payments.  But even if it goes into foreclosure, why get a new job?  The temporary benefits I am enjoying will technically keep my family and me above the federal poverty guidelines through most of the summer; I just feel disincentivized from trying to provide a better life for my kids.  One of these days, maybe we'll qualify for SNAP and buy a Cadillac!  Isn't that what President Reagan said food stamps were for?"

The interviewer asked former AFD employees about their thoughts on the Democrats' push to extend unemployment benefits.  Perhaps surprisingly, those efforts don't appear to be winning much support:

"We have a perfectly functional, free-market social safety net in this country," opined Mark Rube, a former AFD employee, while tending to the chickens he is now raising in his backyard.  "I don't understand why the Democrats in Congress have to mess with it.  Get your government hands off my unemployment benefits!"

The article continued by exploring whether this round of lay-offs could, perhaps, spur a new era of entrepreneurship.  As indicated by the response of one former management-level AFD employee, that doesn't appear to be the case:

"I was talking with a Republican neighbor of mine the other day about starting my own small business," a former AFD unit vice president noted.  "At first I thought that would be a terrific idea.  But then I started thinking about how the people still employed at AFD are all required to work harder for the same pay, and AFD is expecting to produce just as many goods and services as it did before they laid us all off.  So there are now about 5,000 fewer people with steady incomes and just as many goods and services on offer in the economy.  I mentioned this to my neighbor and asked him where he thought the demand for whatever it was I was going to sell at my small business might come from.  He looked confused and muttered something about capital gains taxes.  And you know, that made a lot of sense.  It's not that there's no market for whatever good or service my not-yet-existent small business might sell.  It's that once the business blows up and makes me a multi-millionaire, in 20 years or so when I sell the thing and retire to Saint-Tropez, I might have to throw a couple bones to Uncle Sam to pay for roads and stuff.  And that would just make the whole endeavor not worth my while, you know?  Republicans really know a lot about business."

For argument's sake, the article asked whether lowering the minimum wage might be able to reduce unemployment.  Well, there might just be a case for that:

"I got laid off, yeah, but that just made me realize that I don't really want to work anymore," admitted Ted Ender, a former AFD mail-room assistant.  "And that's because I now see that the ability to screw around all day is worth more to me than what I could earn if I had a job.  But you know, if they lowered the minimum wage so that I could make even less?  Yeah, maybe I would change my mind and look for work again."

Fortunately the Sun-Tribune interviewer spent some additional time with Mr. Ender, who provided a great deal of insight.  While his response above might seem somewhat counterintuitive, here's his reasoning:

"You see, it would make me feel like a jackass to think I was putting any pressure whatsoever on the profitability of the multinational corporation I work for.  Where do I get off being able to afford food, shelter and shoes for my kids when it might cause my CEO's annual cash incentive bonus to fall from $15,000,000 to $14,999,900?  Sure, he'd still get his base salary, retention bonus, longevity bonus, stock awards, stock option awards, life insurance, relocation expenses, office decoration expenses, company cars and free use of the corporate jet and corporation-owned resorts.  And when he leaves or gets canned he gets a ginormous termination bonus and pension.  That might sound like a lot, but I hear it's not all that much after taxes.  Yeah, I'd sacrifice my dignity and my children's health to preserve the profits of my employer and the lavish compensation of its executives.  That's the American Dream, right?  I'd be dirt poor, but at least I'm white and could still look down on the poor black family down the street.  Wait, uh..., you're not going to print that last bit, are you?"

While the article did not include any analysis from academic economists, it appears the Sun-Tribune did attempt to get some expert input:

At press time, Milton Friedman and Friedrich Hayek were still dead and therefore unavailable for comment.  However, several writers for the Wall Street Journal editorial page offered to speak for them.

Originally posted to Chicago Lawyer on Thu Apr 01, 2010 at 10:05 AM PDT.

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