Who Should Pay? Egalitarianism, Luck, and Redistributive Policies

Published on by Brynne VanHettinga Category: Inequality, Meritocracy, Public Policy

Recent studies of egalitarian ethics have attempted to resolve the conflict between redistributive egalitarianism and personal responsibility.  That is, how much of where one ends up in life depends on individual effort or merit as opposed to random luck should make a difference in how much of the surplus should be returned to help support the collective welfare.  In essence, this theory makes a distinction between rewards or losses that are “deserved” and those that are not.

Even the most egalitarian among us can probably agree that someone who works 60 hours a week should earn more than someone who only works 30 hours.  Most everyone can also likely agree that someone with a higher level of skills and training should earn more than someone without this for the same time increment of work.  Many agree that equality of opportunity (which the law should require) does not mean the same as equality of outcome.  Indeed, even if everyone in a society had the same income they would not be the same in how they spent or invested it, or even how satisfied they might be with it.  Others make the argument that so long as the lowest members of society are afforded a basic level of subsistence, any levels of inequality above this is acceptable.  However, the question is often one of how much more is too much, or can any person’s work be “worth” hundreds of times more than another’s, given a finite range of human abilities and only 24 hours in the day.

Egalitarian theory has attempted to address the issue of luck and risk, and proposes that there is an ethical distinction between risk that is rationally chosen and voluntarily assumed as opposed to risk that is more random.  This dichotomy was first proposed by Ronald Dworkin and is represented by the concept of brute luck and option luck.  Brute luck is the unchosen, random variety.  Option luck, on the other hand, is the outcome of a risk that is chosen, presumably on the basis of some probabilistic determination, and the person who chooses the risk can either accept or decline it.

On some level, this argument seems to make sense:  people should “pay” for losses incurred by voluntary risks, but society should cover those that are the result of unpredictable misfortune. Conversely, those who benefit from a calculated risk should be able to keep the fruits of their good fortune, but not so for those who benefit from a windfall. The problem with the choice-of-risk analysis assumes that the choice itself is voluntary.  For example, under this analysis, the “choice” to forego health or property insurance means that the individual should fully bear the risks of loss from unexpected illness or property damage.  However, especially for lower income individuals, the “choice” of purchasing insurance may involve trade-offs with basic subsistence such as food, medicine, or housing.  In such cases, what appears to be a “choice” may really be no choice at all.

Denise Huggins and Catherine Coghlan devised a study in which students of criminal justice studies played a game of monopoly, where they had occasion to select either an illegal or a legal “opportunity card”.  At the beginning of the game, unlike regular monopoly, where everyone starts with an equal number of assets, the students were allocated assets in accordance with the five income quintiles as determined by the latest census data.  Not surprisingly, students from the lowest quintiles were more likely to select illegal opportunity cards, which tended to have the greatest payoffs but also carried the greatest risk.  The purpose of the study was to encourage the (mostly) middle and upper class students to better understand how social structures impact decisions to engage in criminal behavior.  From the standpoint of luck egalitarianism, even the element of choice in risk-taking (what choices are realistically available and the degree of financial desperation) can be affected by one’s position in the social hierarchy.

As with most questions of distributional policy, there are positions that represent polar opposites.  On one extreme are the “you create your own reality/make your own luck” advocates who believe almost every outcome is self-generated on some level. In his book, The Luck Factor, Professor Richard Wiseman has analyzed factors that differentiate “lucky” and “unlucky” people and concludes that one can maximize their chances of “luckiness” by being open to new experience, listening to one’s intuition, persevering in hard times, and having optimistic expectations.  On the other extreme is Nicholas Barry, a luck egalitarian and political lecturer at La Trobe University in Western Australia.  Professor Barry suggests  that it would be logistically impossible to collect sufficient detail about the basis of personal decision, the degree of “choice,” and the impact on outcomes, as well as potential violations of individual privacy, and so the better practice is to “adopt a presumption in favor of equality of outcome.”

I do not claim to have the answer to any of this.  However, I do believe the luck egalitarians have a point in that some of what happens to people is as much a result of where they started out in life and the impact of social structures on their choices as it is their individual behavior.  I also agree that parsing out which is the cause and which is the effect is highly complex even in the case of a single individual, let alone to determine this on an aggregate level.  From a policy perspective, we should probably focus attention on the extremes of the income distribution and leave inequalities in the middle well enough alone.  As a developed society, our compassion should not allow people to perish, especially if they are unable to work because of illness or disability (regardless of whether it is their own fault or not), or are working at below-subsistence wages (even though other work is theoretically available). On the other end, people should reap the rewards of their own effort, but at some point those rewards are compounded by social structures where they reach levels that are way outside the bounds of any individual’s marginal productivity. Indeed, the luck egalitarians have done us a favor in that policy should perhaps concern itself with how political, economic, and social structures (as opposed to individual behaviors) create unnatural inequalities rather than arguing about after-the-fact redistribution.

Is The Job Market Working For Us?

Published on by Brynne VanHettinga Category: Job Market, Underemployment

Many of us may remember something we learned in either introductory psychology or management classes called “the hierarchy of needs,” or Maslow’s Pyramid.  Abraham Maslow (1908 – 1970) was an American psychologist who proposed that human motivation operated along a continuum of need fulfillment. Maslow’s model is frequently depicted as a pyramid, where the lower order needs must be fulfilled (at least to a minimal degree) before one advances to the higher-level needs.  At the lowest end are the physical needs of basic survival–air, water, food, and shelter. Once these needs are secured, the next level is the degree to which one feels safe in maintaining them, that is, security where one does not have to live in a state of hyper-vigilance to outside threats and constant worry about tomorrow. Once these lower needs are met, one moves up to the psycho-social needs of belongingness and friendship, followed by the need for achievement and expression in which one earns respect for oneself as well as the respect of others. The highest level Maslow terms self-actualization, in which one realizes his or her highest moral, intellectual, psychological  and spiritual development.

Maslow's Hierarchy.png

However, progress through the hierarchy is more complex and not necessary linear and sequential, and individuals may be working on several levels simultaneously. One example is someone working for a non-profit who is fully engaged with work in an organization whose mission corresponds directly with the individual’s personal values, but the pay barely covers subsistence.  In this example, the job is fulfilling higher level needs but is shortchanging lower level ones.  An example at the opposite end of the spectrum is the typical law associate at a large prestigious law firm, who is paid a six-figure salary but barely has time for a life outside of work, and the work itself may be little more than high-level drudgery.

The media is replete with stories about how we are now living in a so-called “knowledge economy.”  The assumption is that we have moved beyond a subsistence economy and even beyond a “production” economy, where the new sources of wealth are information and the ability to manage it. It is indeed true that information plays a much greater role in our economy than it ever has in the past, however this brave new world has not necessarily resulted in a corresponding increase in human actualization.

In the rest of this article, I will examine the extent to which the modern American job market fulfills the needs of workers in a Maslow-type analysis.  The four specific areas that will be examined are physical needs, security, social ties, and meaningfulness.  At the end of the article, you will have the option to participate in a short (10-question) survey about whether the job market is working for you or not.

Physical Needs

Unlike some third world countries, Americans do not experience the inconvenience of stepping over homeless people and squatters begging for food as we walk down most urban streets. Many view the homeless as outliers of society—persons who have mental health issues or criminal records that prevent them from finding a job.  However, a 2009 study by the National Coalition for the Homeless found that 44% of homeless are people with jobs.  Another study by the Bureau of Labor Statistics finds that 3 million workers, or 3.9% of the hourly workforce, earn the federal minimum wage of $7.25 per hour—a salary that pays (for a 50-week, 40-hr per week job) only $14,500–before any deductions for FICA, federal and state income taxes.  Is this enough to cover the basic necessities for survival?  You do the math.

Low wages do not only impact the persons receiving them, but they cost all of us. The University of California Berkeley Labor Center calculates that some 56% of combined state and federal public assistance goes to working families. In essence, low wage work costs taxpayers nearly $153 billion per year, as workers and families turn to federal and state income supplement programs just to make ends meet.  Although the majority of these workers are employed in fast food jobs or as home and child care workers, this group also includes some highly educated workers.  The educated impoverished are comprised mainly of an increasing number of part-time adjunct college professors with post-graduate degrees, who earn $20-$25,000 per year with no benefits or security.

It is one thing to have enough for today, but do people have enough to meet their needs if something goes wrong, such as job loss, illness or accident, or even an unplanned car repair?  A survey conducted by the Federal Reserve earlier this year (2016) revealed that 46% of those surveyed could not cover a $400 emergency expense, but would instead have to put in on credit, borrow from family or friends, or pay it off over time.  Although the study did not specify how many of these people had jobs, based on the incomes reported, it can be inferred that most of them were employed somewhere.

Security

Job security is harder to quantify than income and cost of living. A 1997 Bureau of Labor Statistics report suggests that measures of job contingency and median job tenure can serve as proxies for job security.  This does not bode well in an era of downsizing and layoffs, increasing part-time and contingent employment, increasing turnover and decreasing tenure in any one job, and longer periods of involuntary unemployment between jobs.  Measurement problems are compounded by the fact that job insecurity has both an objective (a layoff or merger has been announced, or the company has declared bankruptcy) and subjective (worker’s anxiety-based anticipation of job loss and difficulties in securing comparable employment) components.  A group of researchers in Europe reviewed the academic literature on job insecurity in 2006—before the Great Recession—and found that “the issue of insecure working conditions” greatly increased during the 1980s and 1990s.  The authors reference stress theory and suggest that uncertainty and ambiguity about how to counteract even a perceived threat of job loss leads to increased stress.

An August 2014 Gallup survey on job security suggests that workers perceived job security mirrors job market conditions generally. Workers’ sense of security plunged following the dot com recession (2001-2002) and then again in 2007-2009.  In 2014, the survey found that 58% of workers were satisfied with their job security—up from 50% during the Great Recession.  The survey also found that major sources of dissatisfaction continue to be job stress, pay, and benefits like health insurance and retirement. Although the news appears to be good (at least things are improving), it still suggests that a high level of insecurity remains in the working population

Social Ties

The strength of social ties, or so-called social capital, has been found to be an important factor in physical and mental health, as well as economic well-being.  Many are familiar with Robert Putnam’s 2000 bestseller Bowling Alone on the state of social capital in the United States.  For many working Americans, jobs can impact social capital in both positive and negative ways.  A job provides a sort of ready-made community, even if it is a somewhat artificial one. Anyone who is looking for work is almost always exhorted on the necessity of “networking.” Conversely, too much time spent at work may prevent the development of relationships outside of work, and possibly have negative impacts on relationships at home. Social capital, like financial capital and human capital, requires investment of personal resources, most specifically investments of time.  However, modern post-industrial societies are characterized by a paradox of involuntary part-time and overwork:  The majority of Americans work over 40 hours per week, with 21% working 50-59 hours and 18% working more than 60 hours.  Putnam’s research suggests that up to 10% of decline in American social capital is due to financial anxiety and a “changing workplace,” and another 10% is due to urban sprawl and length of work commutes.

Another feature of American life that impacts the development of social capital is that we are frequent movers. According to the U.S. Census Bureau, about 12% of the U.S. population (or 1 in 9) moves for work every year—a rate that has remained relatively stable between 2008 and 2014.  The Pew Research Center looked at American mobility patterns between 2007 and 2008—more or less in the middle of the Great Recession. The most frequent reason for a move was “job or business” at 44%, with “good place to raise children” and “family ties” coming in second and third respectively at 36% and 35%.

In a post-Great recession report, the U.S. Census examined reasons for moving based on the 2013 Current Population Survey data. In this survey, the most frequently cited reasons for moving were housing-related (48%), family-related (30.3%), and job-related (19.4%).  It can be inferred from the data that there was a noticeable drop in job-related moves in a post-Great recession economy.  Both studies also corroborated that job movers tend to be mostly male, college graduates or post-graduates, and higher income.

An interesting development has been in the number of people emigrating out of the United States entirely. Although Americans are least likely among citizens of other nations to leave their own country to find work, a 2014 study by the Boston Consulting Group and The Network found that 35% of Americans say they would move out of the country for a job, and this number was even higher (59%) for millennials.  Sometime in 2008, the one millionth American moved to Mexico.  In the past, this population consisted mainly of retirees and persons evading a troubled history, but now increasingly is comprised of workers in search of jobs that allow them to achieve a better work-life balance and raise families.

Although there seems to be no study directly on this point (at least that I have been able to locate), one can certainly speculate about how constant relocation in search of work—especially if it is now global– may leave one socially rootless. While this may be an acceptable price to pay for career advancement, what happens to the rootless individual who loses the job?  The obvious antidote to finding oneself in this situation is to maintain a strong and geographically dispersed social network. But how many of the people working those 50+ hours per week have the time or the energy to do so?

Meaningfulness

The concept of meaningfulness is probably the most nebulous when applied to the world of work. It is more usually a term of religious reference and the search to find one’s “calling” in life. This concept is based on making some connection between one’s work and a higher purpose, especially activity that is beneficial to society at large. In the world of work, meaningfulness is usually discussed in terms of employee engagement. Many of us may think engagement requires either higher-level skilled work (such as medicine or law) or religious and “helping” professions, but theoretically most any job can be engaging if the job-holder has a high level of discretion (autonomy), the ability to achieve some type of mastery (agency), and a philosophical compatibility with the organizational mission.

Employee engagement has become a hot topic recently because it has been correlated with improved bottom lines. The Gallup organization has done a number of studies on employee engagement and has divided employees into “engaged,” “not engaged,” and “actively disengaged.”  In the U.S., less than one third of employees are engaged, a rate that has been stubbornly persistent.  Gallup suggests that employers may not be making the necessary investments to boost engagement, choosing instead to conduct a survey and then doing nothing to follow up—which only exacerbates distrust (and hence disengagement). A darker theory is that bolstering engagement often requires empowering employees, and giving up power is something that many employers simply don’t want to do.

So…is the job market working for you?  If you would like to add your voice to this discussion, you may link to the survey below.  There are 10 questions, which should take anywhere from 3-10 minutes (depending on length of commentary) to complete.

Click Here to Take Survey

What the Patchwork Nation Means for Politics and Policy

Published on by Brynne VanHettinga Category: Patchwork Nation, Public Policy, Voting Behavior

In a previous post, we looked at the research of Dante Chinni and James Gimpel, who have identified twelve distinct community types in the United States, and correlated these communities with voting preferences. These communities are scattered throughout the country and—with the possible exception of Mormons and Evangelicals– generally do not conform neatly to state or regional geographic areas. The question then arises as to whether or not the U.S.A. is too politically and culturally diverse to be governed efficiently as a single nation.

patchwork-nation

The researchers did find one unifying theme in all twelve communities. This was the feeling that things were somehow “different” in a post-Great Recession world. That is, one generally could not make predictions of the future based on past patterns, and expectations had to be adjusted downward. However, some of the downward trends had been going on for decades, even if not much attention was paid to them at the time. Between 1972 and 2007, worker productivity grew by 90% while wages declined by 11 percent. As the authors describe it, “The dominoes that began falling during the recession had been lined up for some time.”

The researchers then analyzed correlations between religious attendance, religious denomination, and voting patterns. To a certain extent there is a religious correlation with the red/blue divide, but this is not absolute. High church attendance was found in stereotypically “red” and rural Mormon Outposts, Tractor Country, and Evangelical Epicenters, but also in Emptying Nests and Immigrant communities. The researchers suggest that these differences can be attributed to both the homogeneity of religious membership (high in Evangelical and Mormon communities) as well as the integration of church into local culture and “the views from the pews.” Ironically, when asked about whether churches should stay out of politics, Mormons agreed with this at the highest rate (55%), followed by the more atheistic/agnostic Monied Burbs (52%). The researchers propose that the so-called “separation of church and state” goes both ways—that is, it serves to keep churches from being “infected” by worldly concerns as much as it does to keep religion out of politics.

The next analysis was the relationship between voting patterns and “cultural” factors. There was a “pretty decent correlation between voting patterns in the 2008 presidential election and gun-shop-to-bookstore” ratio. But the stereotypical relationship between guns and Republicans and books and Democrats is also not absolute. Democratic-leaning Industrial Metropolis communities had both fewer gun stores and fewer bookstores, while the Republican-leaning Tractor County—which, not surprisingly had the most gun stores—also had the fourth most bookstores.

Social media users tended to be negatively correlated with age and positively correlated with income. So, in places like Emptying Nests, which have both higher than average age and income, social media usage was low. But in Minority Central, where average age is younger but incomes are lower, social media usage is also low. The oldest communities (Tractor Country, Emptying Nests and Service Workers) use social media the least, while the younger Campus & Careers and Military Bastions use social media the most, followed by Boom Towns and Monied Burbs.

Private companies have much more detailed data about consumer preferences than political or public interest research organizations, which they use to make decisions about store locations. Retail stores such as Walmart and Starbucks will only make an appearance if the demographics are “right” according to corporate market research. While there is some argument that retail chains have homogenized national culture, the Patchwork Nation model makes the argument that the locations of certain stores—or the number of them—in certain communities tends to reinforce cultural differences. “You are what you buy” might be more accurately stated as “you are what you CAN buy.”

The researchers then constructed a “hardship index” which further parsed out community differences. This index was based on county-level data about unemployment rates, gas prices, changes in gas prices, changes in the percentage of household spending for gas and car maintenance, home foreclosures, and changes in home foreclosures, which were then converted to a single “hardship” score. Although Service Worker Centers and Tractor Country both have high majorities of white people, are less densely populated, and share incomes below the national average, Service Worker Centers consistently had the highest hardship index (followed by Minority communities), while hardship in Tractor Country was in second-lowest place—behind the Monied Burbs. The authors attribute this to two things: the low rate of debt in Tractor Country as well as their primary reliance on agriculture. That is, they enjoy a relatively self-contained economy, where the prosperity of Service Centers depends on the prosperity of the broader economy.

The researchers then propose that their “Patchwork Nation” framework provides an explanation for political polarization. This goes beyond the standard Republicans vs. Democrats, but suggests that actual policy proposals may appear to be either helpful or harmful, depending on the idiosyncracies of local economies. For example, extension of the 2008 home-buyers tax credit was welcome in areas like Boom Towns, who were hit hard by the housing market collapse, but viewed as an unnecessary waste by persons in areas where housing prices had stabilized and were even rising. The problem is that policy at the national level is based on aggregated data—that is, “averages” that miss the mark for many of the localized micro-economies.

Is America truly one nation or many? The researchers suggest that American communities may actually have been more different and “localized” before the days of instant communication and mass media. At the same time, society overall was simpler, so in spite of greater regional differences in some things (e.g., spoken accents, choice of entertainment, food availability, etc.), patterns of everyday life were not necessarily that much different. Today’s trends of “niche” or self-selective media offerings that are algorithmically tailored to specific preferences may aggravate cultural and political differences. However, the researchers also argue that the Civil Rights movement would not have been possible without a national media. Moreover, “not every difference in media consumption is about worldview,” as we have seen that use of technology is influenced as much by age and income.

patchwork-flagOne potentially unifying theme is Americans’ distrust of concentrated power. The percentage of persons who agreed with the statement, “The federal government should run ONLY those things that cannot be run at the local level” ranged from 26% (Industrial Metropolis) to 41% (Tractor Country), with an average of 31.6%.  The percentage of persons who agreed with the statement “There is too much power concentrated in the hands of a few big companies” ranged from 32% (Military Bastions) to 40% (Minority Central), with a slightly higher average of 34.4%. Thus it appears that local control and devolution of “power to the people” are important issues for approximately one-third of people in all of the diverse community types. So, perhaps the one thing that unites us all as Americans is the distrust of centralized power and top-down decision-making—regardless of whether this power is political or economic. This might be where the hope of a unified country can be found.