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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dumpster's picture

Buy america

keep more of your income

grab a macdonalds and some frys

Payable on Death's picture

The take-away is that the tipping point has been reached. Those who live off the government are a majority. The conservative meme of liberty to work for your own benefit is not attractive. It is threatening. Gaaaame... ooooooover...

I am Jobe's picture

Amerika is still perfecting welfare. Give it a few more years.


Troublehoff's picture

I've just been out tonight - have been speaking to a friend - very tallented guy, knows dot net framework, jquery inside out and has been building quality websites and web tools for over two decades. I'd not class him as an idiot but he got into some debt just after leaving uni and has never been debt free since, working 16 hour days for the last ten years, still living with his parents, writing glossy promo websities for big brands that i cannot really name at the mo while some people live, with several children and no job, in government funded 'council houses' in inner london with rents averaging 2-3 thousand per month, paying taxpayer money to the landed elites, who are probably etonites/bankers/politicos, or just people who accumilated wealth in this low interest rate system that never allows speculators to lose because 'we need growth'- and he doesn't make the connection - i get more angry every day at this shit


I spend most days writing algoritms and webtools to anylise marketing data so that comercial enterpriseses can more efficiently target and sell to the consumer, which i admit is a job, working for 'the man' - i agree that nobody owes me a living, yet it boils my blood when i see council paid employees and union workers doing simple jobs with pensions that i can dream of, striking and collecting wages similar to mine, assuming they are indispensible cogs of society - let the fragmented, none union comercial workers strike, or withdraw their labour and see how quickly society falls apart! let the engineers, scientists and brains of productive corporations stop working - and see where we are - i'll go out and collect the bins or drive the trains - i'm sure i can do it with very fucking little training and collect a similar wage - fuck them


my advice to them is, if they're unhappy in their current roles, quit, find another job and stop complaining, or do the job at the rate companies are willing to pay them until they aquire a more desirable skill - and the bankers can go fuck themselves


its about time the government started spending money into existince and the bankers gravy train stoped - a country permanently in debt paying interest at a rate above what the centeral banks loan money to the selected few large banks is the true defintion of fascism  - society is sickening, and even seemingly inteligent people are taking it in the arse without asking questions - the low brow are bought off and the middle classes have sleep walked into slavery while the elites take the cream, 

fuck this


gutfeeling's picture

"...the low brow are bought off and the middle classes have sleep walked into slavery while the elites take the cream".

This perfectly sums up the situation.

I was amazed to read somewhere that the average public servant salary in the US was something like 50% more than in the private sector, and that is before the incredibly generous retirement benefits are taken into account. We have the same situation here in Australia, but I thought it was because we've had mostly leftist political parties in charge of state and federal governments for most of the last 60 years. The stuff that the public servants get is incredible, PLUS there are so many of them. We even have people being paid their full wage for years on end (even up to 5 years or more) while their public service department finds them a job because their old job became obsolete!!! Incredible this stuff goes on while people are struggling to pay basic bills on their ever-decreasing (in real terms) salaries. But in the USA, the so-called land of the free and place where people are meant to succeed on their own merits? I was shocked to hear this statistic.

Aurora Ex Machina's picture

Be sure to be fine-tuned about this: There are VC based banking outfits who are very much into helping the economy, and people.


PFI - now that's a huge New Labour scandal just about to break. Ex-Labour ministers creaming off £12 mil in fees ring a bell? Government really isn't your friend here, mon ami.

Troublehoff's picture

Yes, no problem there mon ami. 


Comercial enterprises and banking institutions should and can be the backbone of the ecomomy. But currently, when I see goldman turning massive profits, and their star boardroom emplooyees taking the reigns of central banks, i figure something is a little wrong.

we shouldn't have central fucking banks or central fucking anythings

and yes, PFI, is just another debt-based taxpayer arse-rape


why the government should ever need to 'borrow' money is beyond me. It should come out of peoples wages or be declared and spent into existence so we all have an idea of what the fuck is going on


the obsfucation is beyond belief - and their are too many Q7 driving civil servants and BMW driving cops


i hear they've found water on mercury - perhaps we can fuck off there - it may be a little hot but surely, the obsticles to success cannot be much greater than what we're fighting against now

Aurora Ex Machina's picture

Scratch that (2 years+ I bow to you).


The revolving door of Government <-> High level Board is well documented.


The bottom line is that the % of GDP due to Finance [City of London] in the UK is massive, and has only grown since the 1980's. As others have pointed out - if it goes, the UK is in trouble. Couple that with local councils who are mindless and self-serving, "Better Business Bureaus" who handed out EU cash to their friends [true story: a 'rival' (i.e. same area, exactly same model) business of mine got ~£750k fully dual grant from them and when I looked over their presentation, there was a claim that "no competing business was within 50 miles". I pointed out we were less than 30 miles away, and the idiot wasn't even intelligent enough to defend it or take the logical route of splitting it before the courts screwed the other business. Not my fault, but I'm pretty sure the other business was a little irked with the guy who'd not done his homework as the EU removed the grant and demanded repayment] and a generally lacking educational output...


Hmm. Sorry to say: the UK is rather in a mire.

I am Jobe's picture

Should have titled this as Bend Over Amerikan workers. Scoialism Rocks

Sextus Empiricus's picture

There is a reason I dropped out of grad school, gave up my lavish graduate assistantship (well, lavish for a poor guy like me), and have now settled for trying to turn this beast around.

No matter how much I could make, I would only be doing what someone else wants me to do.  I would not be teaching courses the way I want, but only the way the state permits me to.  And the money I make would be totally devalued bit by bit until it was worth virtually nothing.  The loans were too much, the payback too little.

Go Galt, change the world at the grassroots level.  I could have chosen the screen name "Sisyphus", but I didn't for obvious reasons.

Sparkey's picture

Yes that is obvious, still you do display a certain courage, and you do have the skill of critical thought,,, Poor Sisyphus, I've heard that he slipped on a rock, a case of carelessness bred by over confidence and boredom?, nothing had ever happened differently, why should it be different now? Yet, that time it was different, as told to me; the rock rolled over him crushing his skull, the lesson for us is, Don't take anything for granted, that is when the outcome will be unexpected!

QQQBall's picture

Wealth redistribution is not "Funding" it is stealing

SmackDaddy's picture

Yo economist motherfucker, talk all the shit you want, but you dont contribute any more to the real economy than these welfare assholes...

tenpanhandle's picture

FU crackdaddy.  my efforts in mineral exploration have brought into U.S. millions of outside (cdn, aus, gb etc) dollars that have paid the salaries and benies to the govt worker and welfare hogs as well as bankster trash.

Which are you?

you don't know shit.

SmackDaddy's picture

You too are enabled by the system.  Make no mistake about it...

tenpanhandle's picture

How, because it allows me to breathe?

disabledvet's picture

hopefully we don't need gainful employment in order to breathe. that would CLEARLY be a step backward and i would protest this. hopefully before i stopped breathing...maybe even...with my last breath. at which point i would say ... "tell them i said something...

dognamedabu's picture

Buy some carbon credits for yourself just in case.

Payable on Death's picture

I don't concede your point. But, if it were true, how does it justify the statistics presented here--so many living at the expense of others?

Regardless, the real tragedy is that the help, is not help. The help offered by liberals who wrap themsevles in a mantle of caring actually harms the recipients. 80 years after the New Deal and 50 years after the Great Society, we know that liberal help is a failure. We know this because liberals keep asking for more. The harm caused by dependency upon liberal help is so pervasive, so obvious that one can only conclude that liberals don't really care. Instead, they have chosen to create dependency in order to gain power (votes) and money.

Terminus C's picture

Americans really need to learn the definition of liberal.

Your misuse of it makes you sound fucking retarded.

Payable on Death's picture

I know the difference between classical liberalism and what American lefties call themselves (before they became ashamed and went back to progressive).

Umh's picture

True, but it's hard not to use a word the way almost everyone else does. Most of use don't really use a dictionary to pick which words to use; we follow the common usage. That being said the Democrats have squated on the word liberal for years. This squating has shifted the common usage of the word. Today liberal is synonymous with socialist in the common vernacular.

Sextus Empiricus's picture

The economy is fine.  Just take the pill.

Yen Cross's picture

Jobe I understand your rant. London is a giant "peep show"... Cameras every where, and tolls are absurd!

  Thank God for the(educated) trollies that know their way around London. It's expensive and nutty in that city!

evolutionx's picture


A deluge of an unprecedented magnitude is both inevitable and imminent. The consequences of the economic and political mismanagement will have a devastating impact on the world for a very long time. And the consequences will touch most corners of the world in so many different areas; economic, financial, social, political and geopolitical.


JR's picture

This is the plantation. Everybody would have plantation money and a plantation ID card and mess hall privileges, a warm bunk and daily instructions on work crew assignments.

Why is it so difficult for people to see that a managed economy is a managed nation and a managed nation has a manager: an owner, an overseer, a dictator, a Simon Legree.

We are being channeled into Carroll Quigley’s banker utopia.

The ultimate insult is to call this a recovery, to actually pretend we have some kind of economic program, when this banker-controlled government is destroying the lives and fortunes and liberty of individual Americans.

Revolution is bubbling under the surface in America.

And to think that these Congressmen will do anything to get these jobs –will move Heaven and earth to ride around in limos sporting marcelled hair – just to cheat and be manipulated by the international bankers.

ebworthen's picture

And if the government tries to cut the subsidies and entitlements they will be left with 40% unemployment and people in the streets.

The gravy at the bottom and the top will continue until every last middle class citizen has been pushed down or up and all that is left are the Pharaohs and the Slaves.

Vendetta's picture

"left with 40% unemployment and people in the streets".  Have already seen it and continue to see it.  There is a 1.5 mile stretch of road leading to the freeway I take home from my rental place and every single corner had people begging on it all the way to the freeway.  This is in a major city "doing well" in a relative sense.

woggie's picture

the beast is on the gobble
and all that matters is we're all headed for it's belly

A Middle Child of History's picture

I did not see your screed on a few of these comment sections. You are slacking, asshole.

Yen Cross's picture

 There is some justice. J.R. and Ebworthen getting it done!  The dog gone "central banks" should take notice!

Henry Hub's picture

Supply side economists believe that the poor are not working and being productive because we are paying them too much and the rich are not working and being productive because we are not paying them enough. As is reflected in this article.

Unlawful Justice's picture

Working for wages turns everybody into conformist and cowards.

gutfeeling's picture

We have the same situation in Australia. In Australia are far, far better off on welfare (free house, free dental, free transport, fortnightly salary, discounted car registration, probably free electricity and water for all I know) than you are earning a low wage and paying your own way. We have a situation where, if you have a taxpayer-funded house for your family (let's say two adults two kids), when those kids grow up and move out of home, you do NOT have to give up that house - because it's your "family home". What? A regular person does not have this option if they are no longer able to afford their house! The taxpayer-funded house can ALSO be passed on to your children, "because it's their family home". WTF. We also have a situation where the taxpayer (I'm sick of being told it's "the government") pays individuals $5000 when they have a baby - I am NOT joking. Little wonder then that it's the people on welfare who are having all the children. The regular workers are having 0 or 1 children while they attempt to pay normal ever-increasing power, water and food bills and try to pay off a house over their lifetime, which in itelf is becoming increasingly difficult even with two adults working full time even without children.

We've fallen a long way and still getting shafted more all the time. Meanwhile the bankers are still permitted to literally print money every day of the week.

Yen Cross's picture

So am I. It's raining Roos and Snappers up here/ Sydney is socked in!  I'm loving it!

TWSceptic's picture

By the time the great Kenyan leader is done with his second term those charts will look good. All I can think of is how bullish this is for gold & silver.

knukles's picture

What truly confounds me is how many reasonably well off folks who've got their heads up their ideological anuses think that everything is getting better and better....

Yen Cross's picture

Me to/ I was taught to donate.  I see a lot of taking going on!

  More people locked up, and more crime/ Who forgot the "Pledge of Allegiance"?

Vendetta's picture

Indeed.  I hear and see those very people every single day.  In general those folks seem to have never have been laid off or had their jobs outsourced in the last 15 years or more and tend to still believe their living 'the dream' but on the other hand I also know people who haven't been laid off or out of work in 30 plus years who are well aware that everything is fucked up and are truly frightened by seriousness of the state of the economy.

Stuck on Zero's picture

For about 25% of the cost of welfare and administration the U.S. could simply subsidize labor.  The U.S. would simply pay for the first $7.00 of all paychecks.  Minimum wage labor would then become almost free for employers.  The cost of labor in the U.S. would become competitive with 3rd world countries and useful work would be obtained where none is had now.


Umh's picture

Some people do more than $7 per hour in damages; think about it?

Stuck on Zero's picture

So true.  But they are all in Washington DC.


Umh's picture

No shit people. I thought everyone knew that people who could not for whatever reason make 200K just coasted since the incentive was vaporized to make a little more than you can get from breathing.

Stuck on Zero's picture

Welfare Moms?  What about welfare Dads.  Ooops.  Wait.  There is no welfare for Dads.  Men are scum.


Cathartes Aura's picture

usually I'd just scroll past your oft-repeated line - it's yer lucky day.

"welfare" is paid to the parent with the child/ren - just because many fathers choose to hide out in Idaho and avoid childcare payments, staying "under the radar" rather than give a penny to their spawn's upkeep, doesn't mean .gov wouldn't love to contribute to the Daddy's nest too, should he ever decide to land.

Using statewide computer records, Roth studied what factors affected case outcomes of 740 families in eight Florida counties who received Aid to Families with Dependent Children benefits shortly before the program was eliminated as part of the 1996 Federal Welfare Reform Act.

In her study, there were 1,124 men and 141 women who were absent parents. When the absent parent had other children with another partner, the family in her sample was 18 percent less likely to get off welfare at six months after the beginning of the study, she said.

“We need to look at the type of man who has many children by many women,” she said. “This may be a predatory male who is not taking responsibility for his own behavior.”

it's ole Johnny Appleseed you want to take yer gripes up with - he could get gov monies if he'd just show up.


Troublehoff's picture

unfortunately, with the current fractional reserve system, if central banks don't employ loose monetary policy, we will disapear into a deflationary vortex because the workers cannot get any more productive - how can this be right? Surely at some point, people will cease to find ways to become more efficient, when both parents are working full time, and red tape and taxes become overbearing, what the fuck do people expect, when the corporations selling caffeine to these slaves pay fuck all in taxes because they're based off shore, while the people lucky enough to have pensions are invested in, and complain about the very same coorporations becuase they have no understanding of the system - debt slavery and monetary fudges should not be the fucking solution to this


the solution to this should be rich, porsche driving, speculators taking a fucking haircut, losing their houses. The Donald trumps of this world being liable to their creditors, without being able to start new, limited liablitiy enterprises, and people with savings actually seeing a downturn in inflation - people with pensions, not seeing their pensions inflated by POMO, but actually realising a loss - and assuming we have a monetary system where money doesn't vaporize like matter hitting antimatter, we'd reach an equalibrium where people might actually be able to work less hours in jobs that are more valuable to society because the financial sector would no longer be able to churn a profiit from loose monetary policy (rich slickers raping the productivity of your average bricklayer, welder, architecht), where people were not forced to speculate, as ther alternative would see their savings erroded 


I agree, we need a tiny amount of inflation, to stop people hoarding cash - how about the government spends money into existence and taxes to target inflation at 0.5% and at NO FUCKING POINT does a commercial bank loan money to people via fractional reserve bullshit - if a bank loans money, it should be money that the customer placed into an investor account which is liable to losses as well as gains - if somebody wants to insure that shit, great, but there are no fucking governments or central banks backing up the insurers 

newengland's picture

Freak Gordon Brown, pet of private banks who sold off Britain's gold at rock bottom prices and admitted that he doesn't understand economics after Britain got rid of him; Labour darling Brown with a degree in Labour (Stalinist) Party history, the thief who rarely appears in public unless it is to whine in Parliament about his own personal vendettas. He avidly serves the globalist agenda, a one world order dystopia.


A short rope and long drop would be too good for him, the filth who betrayed labour.

Troublehoff's picture

i drop him into the same ctegory as Krugman. A person who has no logical foundation to his arguments, spewing dogma, and empowered by other idiots, and the financial elites


somebody who appears, on the surface, to have the best interests of the populous at heart. very dangerous, an advocate of centralistaion of power


fuck him

Troublehoff's picture

really, i should stop posting on this site after drinking half a bottle of whiskey


tylers, i promise to add quality to your site with more cogent post,in future - apologies for sloppy spelling/grammar

newengland's picture


Keep calm (and whiskey) and carry on. 

Ace posts from you.