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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willwork4food's picture

..and you might stll get that cute Japanese girl born in '46 for a can of milk..today.

Eally Ucked's picture

I hope your daughter or granddaugther will get the same offer shortly. Youll be happy then you fuck! I dont even down arrow you fuck face - you're not worth it!

 

 

jballz's picture

Well I was just trying to stimulate the economy. Truth is you can go to any third world country and bang a smokin hot eighteen year old for a hundred bucks. Here you have to pay triple that for some haggered mule woman that can't even make a living waiting tables and sucking welfare on the side.

Obama. What a fucking jerk, eh?

Eally Ucked's picture

That's what you should fuck all your life, mulls with silicon tits and aspiration to become stars on the world entertainment firmament. For the rest of the world, just give them donation because they're working all their life for you. And fuck off!!

 

jballz's picture

 

I am not into that. But check it out. All these broke ass women with no job prospects and the only thing keeping them from turning tricks for grocery money is Obama loading up their snap cards every month. It's bullshit. Cut the welfare and we'll be getting us some serious ass.

It's the way it's always been fella, don't get mad at me. If the system weren't so fucked up with the free handouts you wouldn't be all warped into thinking I am suggesting something immoral.

You'll see.  

Eally Ucked's picture

And how you made your money to make such an offer you fucken ubermensch?

cranky-old-geezer's picture

 

 

Cut the benefits to zero - and you get at least another 20 million Americans entering the labor force, probably many more.

Assuming jobs exist for them.  If not, then you have 20 million rioting looting zombies doing ther best to bring the rest of society down.  If they can't have a comfortable life, you're not gonna have a comfortable life either.

 

economics9698's picture

If there was no minimum wage there would be jobs for them.

Eally Ucked's picture

You're absolutely right, and that fuck does not understand basic priciples of peaceful life. He thinks he will pay 2$/hr and make 50$/hr resaling chinese products for ever.

AGuy's picture

"Cut the benefits to zero - and you get at least another 20 million Americans entering the labor force"

I am not a fan of entitlements, but Doing what?  People that have left the workforce years ago have little to no change re-entering it. Most of the jobs lost were shipped overseas and are not coming back.

"How much would that reduce crime?" Probably increase it considerably. With no Job and a needy stomach, many will turn to crime to meet ends. Some will opt to get arrested for the 3 daily free meals and healthcare in US prisons.

Eventually the house of cards will crash. When it does there will be blood on American streets.

 

 

Alternative's picture

Possibly.

 

But the basic Government's premise (meaning also all those who voted for them) is that so-called poor would rather stage a 'revolution', killing and pillaging, than work.

 

Thus, your only option is to placate them to maintain some order. 

They may try hide it under some pretense at humanitarian help to thy brother and sister, but that's like Facebook do gooders, sharing nice images and sayings of good deeds and inspiration, while being complete morons who would kill at seeing somebody scratch their Lexus.

Umh's picture

Working people are to busy to stage a revolution which explains why most revolutions are started by children of the affluent. The children of the affluent have the time to start and organize a revolution. If we look at it in terms of free time perhaps giving the poor money/bribes to placate them isn't a good idea.

Alternative's picture

Possibly.

 

But the basic Government's premise (meaning also all those who voted for them) is that so-called poor would rather stage a 'revolution', killing and pillaging, than work.

 

Thus, your only option is to placate them to maintain some order. 

They may try hide it under some pretense at humanitarian help to thy brother and sister, but that's like Facebook do gooders, sharing nice images and sayings of good deeds and inspiration, while being complete morons who would kill at seeing somebody scratch their Lexus.

tenpanhandle's picture

well then, let's cut taxes to zero also as the cake is indeed baked. before that happens though, we have to use a thick willow switch to drive the hogs from trough. question is: who'll be first to switch the hogs?

kaiserhoff's picture

You could hire half the commenters here for that job.

The only gubberming jobs that appeal to me are:

Minister in Charge of Firing Kleptocrats and Shutting Down Agencies, or

Free Lance bounty hunter of illegal aliens

Poetic injustice's picture

To be honest I'd sign up for "Regulations simplification and elimination".
Alternative would be "Tax reduction and abolition of tax code exemptions".

Then, when there is no regulation to enforce, agency can be fired completely, yes.

CaptainObvious's picture

The only gubmint job that appeals to me is Chairman of the Federal Reserve Bank, because I'd love to be the one who pulls the plug from that motherfucker for good.

Urban Redneck's picture

The first chart would look a lot better with the median income and quintile bands plotted-

Slightly Insane's picture

This year, when I fill out my taxes ... I'm claiming 150 million dependents.  The absurdity of this is specifically directed at wiping out the middle class, and rewarding people not to be industrious, or to work, all engineered by THE GOVERNMENT!

BoNeSxxx's picture

Yup... a quick scientific check of my cul du sac shows the following:

5 homes

1 Retiree (gets Social Security and Medicare)

1 Gov't Worker (military contractor)

1 Gov't (non military contractor)

1 Doctor

1 Sales guy (me)

That's 2 workers to 3 sponges or 1:1.5

I approve the math in this article.

Terminus C's picture

You and the doctor produce things?

interesting... people are so removed from production these days that they don't even know what it is.

Calmyourself's picture

Okay Trotsky, only urban factory workers produce, ha.  Exactly why the services in the USSR sucked for so long..

Mao did not want more Doctors either he wanted blast furnaces in backyards to "produce" it do not work out so well.

Poetic injustice's picture

See 0 factory workers in your list?

Hubbs's picture

Speaking as a doctor, and calling a spade a spade, I too am a government worker, and if it were not for all the Medicare and Medicaid, My "services"would be drastically decreased. So would my income, but then so would my overhead and hassles that govt care has brought about.
Then think of all the government auditors, Joint commissioners, EMR software sales, adminsitrators and all the other bureaucracy I am forced to carry would fare.. the facti is one half of the health care dollar is from government sources.

There are a lot more people on the dole in more ways you can think.

Moe Howard's picture

I was born in the mid 1950's. We did not have health insurance of any kind, my whole childhood. I remember the doctor making a housecall about me when I had chickenpox or something, I must have been 4 or 5. We lived in Chicago, not some backwoods. My dad paid cash. As he always did when we went to the doctor.

My how times have changed. Now I go to the doctor, he doesn't even talk  to me, he looks at the tests and what the nurse wrote and prescribes some drugs. Before I quit smoking, everything was caused by smoking. Now it is caused by "side effects".

I have removed myself from the "healthcare system". I think they are doing more damage than good for me.

CaptainObvious's picture

I stopped patronizing doctors a decade ago, upon the realization that the solution to everything was a little white scrip.  I've been handling my own health care since then and I'm doing just fine, and it costs a whole hell of a lot less, too.

There are still doctors who perform house calls and accept cash for payment.  It's called concierge medicine, and it's only available for the people who can afford it.  You and I?  We aren't members of that country club.

BoNeSxxx's picture

Absolutely spot on... a little OT but spot on

+1

 

My doc wanted to put me on meds for hypertension and cholesterol -- both of which would have been considered in the 'normal' range 10 years ago.

Anyway, I dropped animal protein from my diet and went back to see him a year later... my BP and my cholesterol were both super low and I lost 30 lbs...

He aked me what I did and I said, 'stopped listening to you'

Jam Akin's picture

Absolutely right.  My father was an insurance actuary who participated in some of the first studies in support of a new product - heath insurance - in the early 60s.  Heath insurance has been around for less time than some of us here and thus it is not preordained to stay as it is forever.

disabledvet's picture

i've been trying to find that scene in Waterworld where they row the Exxon Valdez actually. It's kind of what our economy feels like to me. "The Deacon" throwing the crowd cigarettes to "keep them at bay" as he tries to explain how "all is well...we'll find dry land soon." it sure feels like we're in an Ocean of Liquidity that's fer sure. And yes "the Government taxes EARNERS not savers." there is a Breaking Point however...
http://www.youtube.com/watch?v=Cdm3yb3G8kw

smiler03's picture

Your wish is my command. Waterworld rowing scene:

 

http://www.youtube.com/watch?v=_XWHxbbTISY

fade2black's picture

Here's a good analogy... from the first line to the last... as we go down the drain...

http://www.youtube.com/watch?feature=player_embedded&v=Oh0OdgjOdDk

 

Harbanger's picture

"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."

In Obama's Utopia, you are punished for success.

midtowng's picture

This article is full of half-truths.

For instance, the use of the term "welfare" in this article includes any government benefits.

Secondly, a whole bunch of those people collecting "welfare" also work for a living already. The best example is the working poor who collect food stamps because they don't earn enough to live on.

If the article is going to lie about simple things like that, then it isn't worth reading.

Central Bankster's picture

You failed reading comprehension.

zilverreiger's picture

AGAIN THIS ARTICLE? DUPE ALERT

ebworthen's picture

Quote from first paragraph:

"This is such an important topic that we felt it necessary to warrant a second look."

Racer's picture

If they taxed companies/ the fat cat 0.1% properly and got rid of their loopholes to avoid contributing that would be a start

Urban Redneck's picture

Actually, in terms of addressing the issues presented, NO, IT WOULDN'T.

LetThemEatRand's picture

The all caps made your non-substantive argument even LESS CONVINCING.  P.S.  The very top owns more in non-productive assets (offshore accounts, commodities, numerous luxury homes, foreign currencies and U.S. dollars) than the debt (all of it, not just the current deficit) by multiples of 50 or more.  A wealth tax would allow the U.S. to right its balance sheet and focus on a tariff structure that would require trading partners to have roughly equivalent worker protection.  The U.S. would in fact thrive if we stopped with the idea that dynastic wealth passed from generation to generation of unproductive heirs of past oligarchs is somehow necessary and good for society as a whole.

surf0766's picture

You first. Forward half of your assets to us. Wealth tax communist bullshit

LetThemEatRand's picture

When I make my first $25 million I'll let you know.  Now let's have a debate about whether it is communist merely to desire a society where unelected oligarchs do not run the show, which is the current state of the Land of the Free and the inevitable consequence of allowing wealth to concentrate among a few hundred people (400 individuals control more total wealth in the U.S. than 50% of the population combined).

Urban Redneck's picture

You are full of BULSHIT.  The US debt is 16.323T, fity times that is USD 816 Trillion.  That is greater than the world wide money suppy, the worldwide debt supply, and the worldwide equity supply, combined.

Any fool with $30,000 and a day trading account can easily a trade a notional $1million, without even venturing to lowest margin brokers offering triple digit leverage- that doesn't make them a millionaire.  The US debt cannot be paid off by taxing wealth THAT DOESN'T EXIST.  Have you ever even set foot in the worlds larger wealth management institutions, much less looked at how much wealth they manage

BTW my point was entirely substantive, the article is about breakeven on making vs taking in the ballpark of the median incoome, and the ratio and producers supporting the consumers of government largesse; not about the capicity of outliers to impact the short or medium term sustainability of the unsustainable

http://www.bcg.com/media/pressreleasedetails.aspx?id=tcm:12-106884

LetThemEatRand's picture

You're right.  The wealth of the .01% (one-one hundreth of one percent) is only ten times the national debt.

Urban Redneck's picture

You numbers still don't make sense unless you're infinitely rehypothecating Yamashita's gold.

At 10 times the US public debt- that would still be $160 trillion held offshore by Americans...

Worldwide Wealth Management Industry is $123 trillion which includes huge privately held chunks of:
USA Public Debt/Money Supply $16 trillion (only $11.5 trillion held publicly, and much of it is held domestically)
EUROZONE Public Debt/Money Supply 14.52 trillion USD
JAPAN Public Debt/Money Supply 9 trillion
Global Equities $4 trillion market cap (the US is trading at a price-to-book of 2)
All the gold ever mined in world history $9 trillion
(Yeah I simplified the definition of money supply)
And Americans are only a fraction of the wealthy worldwide.

That scale of wealth simply doesn't exist.

Have you inadvertently channeled man Math Man and started counting oil that hasn't been pulled out the ground yet? Which is actually owned by the land owner and not the lessee until extracted under Common Law, or the State under Civil Law, and still not the oil companies under Maritime Law? If not, there is some serious errant leverage in your calculation.

On second thought-

If you are talking about the top .01% of WORLDWIDE rich dudes, not just Americans, that would reconcile the ballpark numbers, but if the individual is not a US citizen or resident, then the IRS has no right to tax them, and I hardly think that the 99.99% in the US wants to start paying direct taxes to support the largess of EU socialism in a reciprocal arrangement.  In the NWO globalist frakshow, you are getting more than your fair share if you make more than $10,000.

GetZeeGold's picture

 

 

Fortunately you don't really have to learn math in our new public education system. They hand you a trophy in the lunch room under the towering mural of Bam Bam....and then they send you on your way.

Calmyourself's picture

LTER is a troll jealous af anyone with a buck more than her..  She hates the rich so much she will not let her own employees unionize as she took all the risks and wants al lthe rewards.  Besides the talking points with that one read like an obamabot with a script in front of it.

nmewn's picture

Couples making 250k IS NOT the .01%. That's the latest "proposal".

Furthermore, corporations pass EVERY tax levied on to their customers (you & me). Meaning, prices you pay AFTER TAXES (you pay income taxes, remember?) go up, meaning less buying power for your labor.

In essence, you advocate for a hidden tax on everyone...when you say RAISE TAXES ON COMPANIES OR CORPORATIONS. They are in business to make a profit, if they cannot make a profit they close their doors and fire people.

This is the last time the topic of "raising corporate taxes" needs to come up on ZH...its mindlessly fucking stupid...America already has one of the highest corporate tax rates on the planet and many of them get a government subsidy to offset that rate.

Look up the word fascism to get a clue.