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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knukles's picture


Bait and switch

Tax the millionaires.

And just for shits and grins call that $250k for a couple.
Which in NY, CA, etc., is way the fuck not not even a 1%er.  (Might look pretty damned nice in the middle of the Ozarks)

Ya know, I can handle the ideology, can deal with it, but the downright evil shit like this goes on angers the piss outta me.
The Republicans are hypocrites, but these Dems are just plain fucking evil.

nmewn's picture

The dims (as presently constituted) are evil.

Pelosi is fine with giving Presbo an unlimited debt ceiling at his discretion? She said it. She also doesn't like reading her own legislation that she pushes. Reid, dirt bag that he is, refuses to pass any budget for four years...apparently distrustful of the public finding out (through debating the actual budget line items) what is being spent where.

Fuck em...let it burn...they need us, we do not need them.


LetThemEatRand's picture

"The dims (as presently constituted) are evil."

Agreed, on a national level, but only if we can also agree to exempt Kucinich and a few other outliers who believe in freedom from the MIC/police state.  I voted for Ron Paul even though I disagree with his view on free markets.  In my opinion, the Blue and Red Team properly constituted would both agree to dismantle the military/police state machine, and leave us all to argue over the role of government in the economic machine.   Could you imagine going down to the polls and actually thinking you vote would make a shit bit of difference?

nmewn's picture

"I voted for Ron Paul even though I disagree with his view on free markets."

I don't believe you voted for RP for one second.

LetThemEatRand's picture

Denial is one of the early steps if I recall.

You can live in your world of ideology, or you can try to change things.  You've chosen the former.

nmewn's picture

"Denial is one of the early steps if I recall."

You would know.

"You can live in your world of ideology, or you can try to change things."

I am and have.

LetThemEatRand's picture

Large U.S. corporations are structured to enrich a few at the top, and those receiving dividends on shares that were issued long ago and that do nothing to raise capital for the company.  The problem is a tax and (lack of) shareholder-rights legal structure that encourages that behavior and that also rewards paying workers as little as possible.   Having said that, I agree with you that merely taxing corporate "profits" or income would be counter-productive.   As usual, the black and white answers are not the correct ones, but debating them makes for easy point-making for whichever ideology you wish to espouse.

nmewn's picture

"The problem is a tax and (lack of) shareholder-rights legal structure that encourages that behavior and that also rewards paying workers as little as possible."

You've never recieved a proxy in the mail? Having not, I assume you've never exercised your RIGHT as a shareholder for what the Compensation Committee allows. If its a "coup" involving theft maybe should have been more interested.

"Having said that, I agree with you that merely taxing corporate "profits" or income would be counter-productive. As usual, the black and white answers are not the correct ones, but debating them makes for easy point-making for whichever ideology you wish to espouse."

As usual, you're full of shit.

Here's a "black & white answer". Stop executive compensation in company publicly traded stock, make it in taxable wages like everyone else. Is that black & white enough for you? If you have a hard on for CEO's & board memebers "printing" themselves compensation, thats how you stop it.

Then stand back and watch the implosion and suffering 401k holders while being short...this is also the last time I'll say what needs to be done in this regard.

Now, YOU take it and run with it as your own...afterall, I'm Tea Party...douche.

LetThemEatRand's picture

"Then stand back and watch the implosion and suffering 401k holders while being short."

Exactly.  Do you receive a proxy for each company's stock held by mutual funds in your 401K?  Mutual funds, hedge funds, trusts, etc own the large majority of most large companies' stocks.  An individual receiving a proxy statement has exactly zero chance of affecting the compensation of the executives of GE, Apple, Halliburton, etc.  Fund managers are never in a million years going to vote against the goose that lays their golden eggs.  Suggesting that proxy statements give individuals rights to challenge executive compensation -- as you do -- exemplifies the simplicity of your thinking.

The oligarchs have successfully invested virtually everyone in their Matrix of multi-national corporations being the bulk of the U.S. economy.  Remember the expression, "What is good for GM is good for America?"  How about we eliminate the very concept of the corporation?  Why do we have a system of laws that allows the complete escape from personal responsibility of those who run multi-national enterprises?   Hint -- a few people make a shit ton of money from that system.

nmewn's picture

A corporation is there to separate the individual from personal financial loss. What you forget (or ignore) is the corporation is also there to protect the hourly employee from personal loss.

If an hourly employee accidently installs Item B where Item A was suppoesed to go...he is not personally liable, it was an accident, unintentional. The corporation assumes that liability.

You sure you're a business owner?...I trust your slip & fall insurance for your customers is paid up in full to that corporation ;-)

LetThemEatRand's picture

As usual, you are wrong.  An employee can be sued individually for his own wrongdoing.  Only shareholders and officers are protected by the corporate form.  Do you really not know that?   Holy shit.  ;(

The law of all states I think also holds the corporation responsible if the employee was acting in the course and scope of his employment.  Most individuals injured by an employee of a company sue the corporation because it has deep pockets and because corporate insurance policies cover the acts of employees, and they don't bother suing any individuals.  Obviously you do not own your own business.

Corporations have insurance to avoid liability of the corporation.  The same insurance could be purchased to protect against lawsuits against employees and managers were there no corporate form.

nmewn's picture

"An employee can be sued individually for his own wrongdoing."

I said...accidently...not "wrong doing"...implying malicious intent of...wrong doing. Very clever...but no cookie.

There is a multitude of case law on this if you would like to entertain them...from an employee not properly protecting open manholes to broken mayonaise jars in grocery store ailes.

The employee can be sued but unless there was flashing arrows erected for the customer or pedestrain to "Walk Here" WITH the ntent to cause harm to the public or the corpration is always resolved to the corporations liability.

Intent vs the employ of, LTER.

Some are 20-80...some are 60-40...or zero, victim vs corporation. No employee has ever been forced to pay personally for something he or she did without FIRST proving dereliction of assigned duties or malicious intent.

Perhaps you can find one for me? ;-)

LetThemEatRand's picture

Again, wrong.  "Wrongdoing" = negligence.  If it is an accident that is not the result of negligence, neither the employee nor the employee will be held at fault.  If there was negligence by the employee, both the employee and employer can be held at fault.   Look it up, winker. 


nmewn's picture

Dumbass...I don't know why even I bother.

"Wrongdoing" = negligence."

Ummm, no.

1: evil or improper behavior or action <cleared of any wrongdoing> 2: an instance of doing wrong

Wrongdoing carries WITH IT AN INTENT to do wrong.

Gawd you're fucking're a complete waste of my time.

LetThemEatRand's picture

So you can't admit you were wrong?  Of course not.   

Employees of corporations can be sued individually for negligence.  Admit or deny winker?  If you admit, then you admit you were wrong.  If you deny, you admit that you care not about the truth and care only about defending your own ideology.  Which is it?

By the way, employers are not usually liable for the intentional wrongdoing of employees (there are exceptions, such as negligently hiring someone with a criminal past, negligent supervision, and others).  If you go to work for your employer (assuming you have one) and kill somone out of anger, your employer is not liable for your intentional wrongdoing unless he/she had a reason to know that you are violent, or failed to tell you to keep your gun at home, etc.  So your attempt to parse words is not only transparent, but as usual -- wrong.  ;(

GMadScientist's picture

No, you're fucking stupid.

The business will get sued; not necessarily because they're responsible, but because they have all the damn money. People usually sue to make some money...not likely when punking a 16 year old "negligent" employee, but much more so when they cast it as the corporation's responsibility to keep tab A out of slot B precisely because our economy must continue to function even in the face of ignorant drop-outs from Florida.

The small business will have insurance, the employee will be covered under said insurance if and only if they are performing the duties of their job as indicated. 

You've never heard of manslaughter or a wrongful death suit after an industrial "accident", Mewn? Get out more.

nmewn's picture

"You've never heard of manslaughter or a wrongful death suit after an industrial "accident", Mewn? Get out more."

You compariing an industrial "accident" to willful violation of the companies own safety procedures in that high risk enviroment? Yeah, industry is all about destroying its own infrastructure. Maybe you should get out more.

Lednbrass's picture

Are you seriously asserting that a manufacturing employee is legally liable if they make an error, the product fails in some way and an individual is harmed?

LetThemEatRand's picture

Yes, if it could be somehow proved that the individual employee caused the error.  Employees are liable for their own negligence, period.  The corporate form does not protect them, though insurance generally does.  The corporate form does protect shareholders and management.  Are you seriously asserting that you don't know this?

Lednbrass's picture

Show a single example please.

LetThemEatRand's picture

Read the law.  Or is that too complicated for you?  If so, then why in the fuck do you think you have something useful to say?

Lednbrass's picture

As expected, you have no idea and can only resort to insults because you made an assertion that you are utterly incapable of backing up. You have no examples to back up your claim because it doesn't work that way and you are entirely too stupid to even realize it.

Rather than some vague general assertion about the law, provide a case of what you say actually happening and try to avoid your usual frothing non sequiturs about Ayn Rand.

LetThemEatRand's picture

Ignorance is bliss.  Or you could look it up.

Lednbrass's picture

I actually work in manufacturing you ignoramus. It does not work that way, and beyond the voices in your head there is absolutely nothing to your statement that an individual employee can be sued if they make a bad widget that fails and causes death or injury due to their personal negligence. As with nearly every issue under the sun, you haven't the remotest idea what you are talking about.

Thanks for illustrating yet again the pointlessness of attempting debate with the mentally ill, the drug addled, or the intellectually challenged. In that sense you really are a walking hat trick.

Kickaha's picture

Try woriking in law.  LTER is 100% right in every statement he has made in this thread.

We lawyers don't sue individual employees becuase when we file the case, we have no fucking idea which individual employees committed an act of negligence when making the defective product.  It's not like they sign their names to it.  Also, it is so expensive in terms of cost in bringing a product liability suit that you could never collect a Judgment from an average worker. You don't bring the lawsuit unless massive damages were suffered by the client.

Besides, the whole operation is covered by insurance, so you get insurance lawyers defending the case if you sue an individual or the company.  The insurance company then pays most of the judgment.  There are deductibles involved in some cases.

Want an example?  Resident at hospital leaves a clamp inside the abdomen.  Sue the doctor and sue the hospital.

The ignorance on this basic point of law is absolutely shocking.  Does anybody here really think that once you go to work for a corporation, you no longer have any personal responsibility whatsoever for your actions, and that signing a W-4 form is a grant of immunity from being sued?

LTER is also right about the company not being liable for the intentional misconduct of an employee unless it was misconduct ordered or sanctioned by management, or unless you can prove negligent hiring or supervision.  Imagine you own a small business.  You send an employee to the bank to deposit the days proceeds.  The employee decides that as long as he is going to be at the bank, he might as well pull out a shotgun and rob it.  There is no civil liability for the small businessman in that situation, nor should there be as a matter of public policy.  If your worker wants to commit a crime, there is no effective way the employer can prevent him from doing so.


Lednbrass's picture

The example given was in manufacturing where it most certainly IS possible in the majority of cases to determine exactly who did what. A hospital employee leaving a clamp in was not the point of discussion, manufacturing was.

Your further excursion into theoreticals entirely failed to address the point. I asked for one example of a manufacturing employee being sued due the production of a faulty part. It is very often possible to determine exactly how and why a given widget failed, and if it was the fault of a production person to know exactly who they were.

I hope I havent given one of you legal cocksuckers any ideas, but your assertion that you can't tell who did what is not reality. In some cases you cannot, but in very many you most certainly can.

GMadScientist's picture

Employee tampers with bottles of Tylenol say.

Central Bankster's picture

I thought that happened and they sued the company, not the employee?

nmewn's picture

Malicious intent. With the object to cause harm.

LTER and his new defense counsel are trying to conflate many different circumstances and words into one all encompassing legal theorem. The fact of the matter remains and my initial point stands, that the corporation is there to protect the individual from personal financial loss.

The employee is protected by the corporations insurance policies, provided he follows the standards set down for his/her employment. LTER's defense counsel has just confirmed that. We all assume the makers of Tylenol did not instruct the employee to tamper with their bottles, of course.  As an employee I don't carry a rider on my personal policy protecting the corporation who employs me. I also said an employee can be sued but as a practical matter the lawyer is looking for deeper pockets and his own compensation, which lies with the corporation and its insurance, thus levels of protection from financial loss for the individual.

But on to this conflation of words and their meanings, as I said, wrong doing does not equal accident...I even provided the definition of wrong doing. Then another term/word is introduced...negligence. Negligence does not imply intent to harm. Its just simply a deficiency in the expected level of performance or due diligence.

The upshot to all of this is, LTER's blind hatred of corporations has him using words with no utility to what was brought up...personal financial liability while in the employ of a corporation. The existence of it is a net positive to the individual, legally and financially.

GMadScientist's picture

And the peons tend to be negative net worth.

Angus McHugepenis's picture

As far as I know, it's never been done yet. I can't state a case where a cop has been sued personally for obvious violations in his/her duty. Does that make it impossible? Hardly. Like anything that you play with in the arena of the PTB, you better have deep pockets and a lot of time on your hands. Or you could simply stop playing in their arena. I stopped 12 years ago. I'll bet anything you still pay taxes and accept your sheephood on a daily basis.

Anyone can be sued PERSONALLY. Sheep just don't understand that. They think they are powerless. Learn how to use THEIR alleged authority AGAINST them. Frankly, it's a waste of time. I've got better things to do with my life than sue people or fret over multi-thousands of pages of tax code, etc.

There are a few truly brave souls who seriously challenge TPTB. Google a fellow by the name of Dean Clifford. Watch his vids and the shit he's gone through. He makes Winston Shrout look like a pussy.

Angus McHugepenis's picture

Police are corporate employees. Why are rogue cops not being sued individually for their wrongdoing?

Terminus C's picture

In actual fact, the only "fair" tax is a trasaction tax.  x% of ALL trasactions (buy/sell).  What that percentage is... I don't know but it would not have to be very high... I think it may put a stop to HFT as well.

smiler03's picture

 "Why a Tobin tax won't work".

I haven't put a link because it would be one of hundreds.

GernB's picture

You seem to miss one critical point. Large corporations cant enrich squatt without consumers, because without consumers there is no money. It is consumers who decide whether the product of those wokers labor is worth what labor is paid, it is consumers who pay if that labor costs too much, it is consumers and laborers who pay the price when labor is priced out of the market, and it is consumers who pay corporate tax hikes. There is no other magic fountain from which money can come.

adventuretime's picture

General Motors disagrees.

LetThemEatRand's picture

You just brilliantly made my argument for why the pure free market doesn't work as a viable system.

FeralSerf's picture

". . . corporations pass EVERY tax levied on to their customers (you & me)."

This is absolute fucking nonsense.  I was a corporate officer for nearly 20 years and we did not  "pass EVERY tax levied on to their customers".  We charged our customers as much as we thought we could get away with without our customers going to our competitors.   If that wasn't enough to pay the bills and stay in business, then oh fucking well -- too bad.  If that was enough to give ourselves big bonuses, then it was happy foot time.

disabledvet's picture

"money too must be dear." hence the power of a gold standard..."it makes money dear...without making it non-existent." unlike say...our current variant...more "grab and go" indeed. "the best way to rob a bank is to own one"! maybe all we're suppose to complain about here is that they never said they were sorry for blowing up their banks? it's not like Congress ever asked them to apologize. You know..."what do you have to say to the American people before we inflate this bitch of an economy to hell and tax the snot out of them fine Goldman Saxon sir?" ... "uh...I'm sorry?" ... "Okay...thank you for that Mr. Big Shot Financial Guy. Now here's your trillion dollars. What do we have next on the agenda Mr. Chairman? War on the totality of Islam? EXXXXCELLENT! Who wants to go first?"

Oldwood's picture

If all like businesses pay the same tax then those costs will be passed on as a cost of production. If a competitor can sell for lesser cost it would be due to other factors. Consumers will pay the lowest cost, not the highest, so any like expenses will go to the consumer. Do you think that the cost of crude does not influence the cost of gas or is it simply a coincidence that the two are linked. Sure, a business will charge as much as they can but will always be limited by their competition. Some corporations have successfully avoided taxation in order to become competitve to foreign competitors but their exemptions allow them to also have advantage to their US competitors. If your thesis were true, corporate profits would be unlimited as they could charge virtually anything they wanted, and also there would be no corporate failures. Taxes are an expense and will contribute to consumer costs. As a business person, if my taxes were reduced to zero i would eventually be forced to lower my prices because in a free market one of my competitors eventually would. It's what we like to refer to as the free market, or used to anyway.

nmewn's picture

Whoop, this was directed at me.

You Feral, are a another dumbass "corporate officer"...this is getting interesting now. In what corporation did you serve in? Is it still a profitable going concern?

I'm thinking

BurningFuld's picture

Feral is absolutely correct in how successful business works. The better you are at defining the exact maximum amount you can extract from your customers the better you do. You do not have time to run through all your minor costs and try to pin them back to your pricing I mean are you kidding. Selling shit is an absolute art form. The better the artist you are the better you do. There is just so much involved in, volume,'s all fluid all the time.

nmewn's picture

He is correct when he says the object of any business is to maximize profit.

But that isn't the quote he chose to nit pick...which was...

Mine: ". . . corporations pass EVERY tax levied on to their customers (you & me)."

His: "This is absolute fucking nonsense."

And your defense of his...

"You do not have time to run through all your minor costs and try to pin them back to your pricing I mean are you kidding."

US federal and state corporate taxes are some of the highest in the world. This is not a "minor cost".

FeralSerf's picture

No it wasn't  It was a wafer fab operation.  It's a cyclical industry with large capital costs.  This is not the time to be in that industry.

nmewn's picture

Thanks for circling back around to this.

Feral, I really don't care what your former position was or how much you earned. Really I don't, it could have been a dollar a day or a billion dollars a day.

Corporate taxes is a cost NOT borne by executives or employees. It's a pass through tax on to the consumer/customer. You didn't pay it, the corporation did, thus saving you (as an executive/employee) buying power in the compensation the corporation paid to you for your service.

Too high and it makes the products produced become unaffordable.

To my way of thinking there shouldn't even be a corporate tax or an income tax. There should only be a point of sale federal tax. They have "hidden taxes" everywhere along the production chain now amounting to a VAT in everything except calling it that. It would be more transparent to see the tax at point of sale...but transparency is the last thing they want.

Umh's picture

It seems to me that you just said you either pass the tax onto the consumer or go out of business. You are just nitpicking about also being able to pass on more than the tax amount.

CaptainObvious's picture

Have you learned NOTHING in your time here?!  No, it would not be a start.  It would be the end.  Exhibit A:  France bumped its tax rate on millionaires to 75%, and immediately France was emptied of millionaires.  Exhibit B:  Commiefornia bumped its corporate tax and made the burden of regulations intolerable, so businesses slipped over the borders to Arizona, Nevada, and Texas.  The fat cats, as you call them, always have an escape pod gassed up and ready.  And the morons who write tax codes can never seem to understand that.

Yen Cross's picture

 It's not that/ it's Litigious " turncoat"  douchebag Lawyers, that are so poor they will sell thier Grand Mothers soul for a profit!

  Look up retarded in the Dictionary/ and J.D  aka Barrister is next to the definition!

   So now the global "Ambulance Chasing" cartel is on my ass/  Some lawyers- in certain fields are worth keeping<>

ebworthen's picture

The litigious excesses in the U.S. cannot be overstated.

More attorneys per capita than any place in the world and we still have N.D.A.A., KELO vs. City of New London, and Jon Corzine roaming free.

Too many lawyers and lawsuits are one of the reasons so much employment has been shipped overseas.

The gas container company "Blitz" was put out of business over people suing them for not realizing that gas in a gas can may actually burn and hurt someone.