Is This Why Americans Have Lost The Drive To "Earn" More

Tyler Durden's picture

In the recent past we noted the somewhat startling reality that "the single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045." While mathematics is our tool - as opposed to the mathemagics of some of the more politically biased media who did not like our message - the painful reality in America is that: for increasingly more Americans it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is such an important topic that we felt it necessary to warrant a second look. The graphic below quite clearly, and very painfully, confirms that there is an earnings vacuum of around $40k in which US workers are perfectly ambivalent toward inputting more effort since it does not result in any additional incremental disposable income. With the ongoing 'fiscal cliff' battles over taxes and entitlements, this is a problematic finding, since - as a result - it is the US government that will have to keep funding indirectly this lost productivity and worker output (via wealth redistribution).


As we noted before (details below):

We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and... have the same disposable income at the end of the day.

Naturally, the topic of wealth redistribution is paramount one now that America is entering the terminal phase of its out of control spending, and whose response to hike taxes in a globalized, easily fungible world, will merely force more of the uber-wealthy to find offshore tax jurisdictions, avoid US taxation altogether, and thus result in even lower budget revenues for the US. It explains why the cluelessly incompetent but supposedly impartial Congressional Budget Office just released a key paper titled "Share of Returns Filed by Low- and Moderate-Income Workers, by Marginal Tax Rate, Under 2012 Law" which carries a chart of disposable income by net income comparable to the one above.

But perhaps the scariest chart in the entire presentation is the following summarizing the unsustainable welfare burden on current taxpayers:

  • For every 1.65 employed persons in the private sector, 1 person receives welfare assistance
  • For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.

The punchline: 110 million privately employed workers; 88 million welfare recipients and government workers and rising rapidly.

And since nothing has changed in the past two years, and in fact the situation has gotten progressively (pardon the pun) worse, here is our conclusion on this topic from two years ago:

We have been writing for over a year, how the very top of America's social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn't, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.

But for now, just stick head in sand, and pretend all is good. Self-deception is now the only thing left for the entire insolvent entitlement-addicted world.

* * *

Full must read presentation: "Welfare's Failure and the Solution"


Some other thoughts on this topic: DOES IT PAY, AT THE MARGIN, TO WORK AND SAVE?

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DanDaley's picture

Come on, you lazy 110 million, row harder!

CH1's picture


And, one by one, they are opting out. Met a Ron Paul supporter not too long ago; he was setting up to Go Galt right after the election.

I'll be looking for him in Atlantis.

American34's picture

I will meet you at the Gulch.

Will To Live's picture

"Line up. If you are ready".  Says the man.

kaiserhoff's picture

I've seen this stuff before.  When you get into the details, it's both better and worse than portrayed.

Government benefits are overstated, because a lot of the "value" is in "free" corporate drug pusher medicine.  Not something worth anything like what the gubbermint pays for it.

On the other hand, "free" food, housing, and utilities are, by far, the most stable things these poor creatures have in their lives, or have ever had.  Remove them suddenly, and they are up a shit creek.

Poverty defined by cash flow is absurd.  In small town/rural areas, rent is almost nothing, you can raise your own food, and heat with fire wood.  If you are a lazy fuck, you can freeze and starve in the dark.  Many problems were created by welfare's lure into the cities.  Another hard drug habit to shake.


Karlus's picture

Why, pray tell, would a pol reduce welfare payments to his suffering constituents while those darn Yuppies and clingers (who didnt vote for him) can still make their Lexus lease payments?

Squeeze em harder! Its Social Justice(tm) I tell yah!


economics9698's picture

Conk island seagulls, would fly out to the Gulf Stream very early, feed, because of the rich fishing in the Gulf Stream, the shrimp & fish boats & then went back to St. Augustine. Fishermen threw a lot of the debris overboard, these seagulls figured out, I don’t have to get up early in the morning & fly out there & feed, I can sit on my fat butt on this island & wait for the shrimp boats to come back & wait until they throw the debris they throw into the water.


After a few generations, the conk island seagulls forgot how to go into the Gulf Stream & feed & they relied on the shrimp boats in the harbor. The area got fished to death & the shrimp boats went somewhere else, the seagulls, that’s all they knew. They didn't remember how to fly out to the Gulf Stream anymore, the sea gulls died out. The shrimp boats are going to leave eventually & you don’t know how to fly out to the Gulf Stream & feed. 

Harlequin001's picture

True, we had knowledge in our communities that went back thousands of years, passed on from generation to generation. Break that link just once and it's gone for good.

Big pharma knows that. How much knowledge have we lost in the last 10 years, never mind 50?

Now your average Joe knows only which pill to take for headaches, every narural remedy has been made the stuff of witch doctors...

and as for such simple things as the value of money, or how to manage your personal finances...

economics9698's picture

Go back to 100% money backed by gold, let the peasants starve to death, in 10 years it would all be back to normal.

Oh regional Indian's picture

In many different ways and for all good reasons, give this one a read if you have not.

The 110 million will benefit, as will the 88 and the rest. :-)

It changed my life, a little over 3 decades ago..

Nice analogy 9698..

Jonathan Livingston Seagull


willwork4food's picture

I remember years ago as a teen I read the book and loved it. Upon reading a negative commentary from a fundi official in the paper editorials I wrote him a letter that did not necessarily included the phrases "best wishes to you and your wife".

He mailed it back without saying a word.

markmotive's picture

In all honesty, I don't expect much from a society in which 7% believe the Planet of the Apes might come true.

willwork4food's picture

The simple fact that you are here and are not mindlessly watching American Idol says quite a lot about the possibility of a better future.

CheapBastard's picture

"In all honesty, I don't expect much from a society in which 87% watch Dancing with the Kardashians every night and 18 hours of non-stop Balloon Boy.".

GetZeeGold's picture




Paris Hilton for President 2016.....yeah she's white but she's a lot better looking than the old black guy.

TBT or not TBT's picture

So instead of watching debates we would be scoring sex tapes and outtakes from MTV shows.

nufio's picture

the author seems to be implying disjoint sets. What about all the private sector workers that get welfare? 

SilverDOG's picture


As brutal as that may be. Far less brutal, than continuation of our current trajectory.

Prepare, or be a peasant.

LetThemEatRand's picture

Sort of like earning money via government contracts, yes Economics9698?

kaiserhoff's picture

A contract to do work as opposed to a contract to turn food to shit?

I see what you mean.  If you have shit for brains, there is no difference.

icanhasbailout's picture

Make that chart really meaningful: subtract assumed liabilities from government debt for each income level based on the percentage of taxes paid by that income band, times the number of those individuals in that same income band, from the total net wages + benefits scale.

mpyre's picture

and the lure into the welfare-rich cities over the past 60 years was a clever ploy to create welfare "plantations," i.e. congressional districts, where the benefits kept flowing if you returned certain elected officials to office...too cynical, maybe, but there is certainly no urgency in those "distructs" to break up the dependency pays, both ways.

Lord Koos's picture

It wasn't "welfare's lure" that brought people into the cities.  It was millions of good jobs -- jobs that are now gone forever, outsourced all over the world.  "Welfare" didn't exist at the time of the large rural-to-urban migrations, which were mostly from the agrarian south into the industrialized north. There was no "war on poverty", no foodstamps, no unemployment offered by the federal government at that time. Try reading a history book.

AnAnonymous's picture

No war on poverty?

Fabled past, fabled past...

Nope, there was no welfare going on. Simply the largest fastest land transfer ever recorded in human history.

Nothing worth including in any analysis of the situation.

'American' economics, transfer of wealth is central.

Lord Koos's picture

Many of those who migrated north had no land, they were sharecroppers in debt to the company store.

LetThemEatRand's picture

"Met a Ron Paul supporter not too long ago; he was setting up to Go Galt right after the election."

I sure hope he did and that many more ideologically blinded Tea Party types follow suit.  As a small business owner, I would love to pick up their slack and take back the country for those of us who see plenty to go around if we could get rid of the worthless moochers at the top.

GernB's picture

Well, thats progress. Its a step in the right direction. Feeling responsible enough for others that you stop careing what people better off than you do. Now, if you can just take the next leap and decide that you respect for other peoples lives means it is morraly wrong to force others take on that responsibity against thier will, then you will have made Ayn Rand proud.

LetThemEatRand's picture

It's like arguing with a college freshman who just read her first Rand novel.   

CH1's picture

a college freshman who just read her first Rand novel.

A little late, maybe, but a good start. Rothbard next!

economics9698's picture

I love it when Rothbard describes how the king stole from the peasants in the mercantilism period.  Makes 2012 seem normal.

GFKjunior's picture

Excellent suggestion.


LetThemEatRand always brings up Ayn like ZH quotes her in every post. I've been a daily reader for a while and have yet to hear Tyler praise Rand. Even the comments rarely bring her up, does LTER even know of any other writers.


Mises, Rothbard, Hayek, those are real thinkers. Do a little reading and get to know them LetThemEatRand, you may forget about your pet Ayn.

GMadScientist's picture

Maybe you should look further up the thread before commenting...who said "Gulch" and "Galt" first?

We'd love nothing more than to forget that hack trollop.


BKbroiler's picture

I've been a daily reader for a while and have yet to hear Tyler praise Rand

If you were familiar with her works, you wouldn't have to look very hard.  All these articlees about the rich leaving because of the socialism and the moochers... this is all Randian.  You don't have to mention the name.  And while I don't agree with everything he says, LetThemEatRand is one of the few on here not totally brainwashed by Tea Party Propaganda.

 Poor people are not evil.  People on food stamps are not evil, and they are not the problem. From my experience, they are the hardest working people in the country, working difficult jobs and shitty hours for bad pay and no benefits.  The problem is the oligarchy, the problem is the nepotism that keeps ungrateful, shortsighted, me-first generation of spoiled brats in positions of power both in politics, public and private sectors.  The character assasination of anyone making less than 30K has been a really shameful con on the american people.  Everything starts at the bottom.

Lord Koos's picture

In my experience, immigrants, legal and illegal, are the hardest working people in the country.

Winston Churchill's picture

Too many syllables for him to understand.

Seems to have necrophillic fixation with Rand though.

Central Bankster's picture

I suppose getting tag teamed by Obama and Geithner does make you technically a "working" man, but small business owner... ??  That's a bit more than I can handle.

LetThemEatRand's picture

I'll bet half of your monthly rent or mortgage that you do not own a business, and that you probably live with a relative.  Okay, I'll up it by $20.  That would make the bet $20.

Central Bankster's picture

Haha, that last one stung a lil, did it?



But I will play along, just because I know deep down this will frustrate you.  I run my own business, live by myself, and I own a home.  Thanks for playing :)

CH1's picture

As a small business owner, I would love to pick up their slack

Have at it slick! They're looking for fresh suckers.

economics9698's picture

Small businesses has become an exercise in who can best suck a government tit and bend over when called upon.

LetThemEatRand's picture

Okay, I mostly ignore you now (other than above), but you are a fucking government contractor, economics9698, as you admitted in past posts several months ago when you let your guard down.  What.  The.  Fuck.  Have you no shame at all?

Terminus C's picture

It's only bad when others do it.

GMadScientist's picture

File under the "everybody acts like me" thesis.

If you're a thief, you'll probably worry about your shit being stolen.


Dave Thomas's picture

You obviously don't run a "small business". I've never taken a government penny, and work my ASS off. Matt Lesko was so 1998 dude. Get a clue.

GMadScientist's picture

I'm pretty sure Wendy's has taken a motengator of govt cash there, "Dave".

Love the backed potatoes.