Sticky Wages and Getting Stuck

Economic decisions are made every day, even in what may seem very mundane circumstances. To the jobless poor, however, the decisions and circumstances are not mundane, but a matter of survival.

   Unemployment benefits, minimum wage laws, and union contracts all interfere with the classical economic theory that wages respond to supply and demand pressures just as any other factor of production. And because of these benefits, laws and contracts, wages are "sticky," and cannot slide downward during economic downturns, either for a firm, an industry, or a society.
   Meanwhile, despite humanitarian concerns, ultra-conservatives condemn public assistance programs as "socialist" -- a dirty word to them, which they use to demonize the opposition. As for the poor, even the working poor, the radical righteous maintain that "It's their own fault. They should have saved for a rainy day, and we should not have to pay for their bad behavior."
   But is it "bad behavior," or are they caught in a fiscal or economic vise not of their making? Granted, some are "irresponsible." But not all. Moreover, this is also true of the ultra-rich; the irresponsible wastrels of the wealthy are forgiven their "bad behavior" more often than the poor.
   Some claim unemployment benefits discourage job-seeking and are a waste of government resources. These payments go to the "takers," they charge, who stay on the jobless rolls rather than accept employment. The reality, of course, is that for some the only jobs available -- if any are available at all during a recession -- pay little more than government benefits. So they make an economic decision, especially if they have minor dependents. Taking a low-wage job and then paying for daycare would mean less money for food.
   An extreme example, perhaps, but not only possible but plausible.

   In any data set, there are outliers -- those 12.5 percent on the edges of the famous bell-shaped curve who are not within three standard deviation units from the mean. In other words, one size never fits all. The best you can hope for is that a standard benefit will help 86 percent of the population.
   In fairness, those who insist that the poor act responsibly should also take responsibility for their own actions, and not hide behind or take refuge in tax breaks or bankruptcy proceedings.
   Laws and options are in place for a purpose. If developers can take advantage of government programs to help them through rough financial straits -- even if, as with banks and mortgage lenders, they brought the problems on themselves -- fairness would stipulate that similar options be available to those without lawyers on corporate staff or without political influence.

   If banks are too big to fail, people are too many to be ignored.