Snowstorms and Unemployment
Posted on February 16, 2014 by Robert Ringer
Isn’t is remarkable that vote-hungry politicians continue their never-ending extensions of unemployment benefits, even though these benefits, like minimum-wage laws, actually cause unemployment?
The fact is that when many people say they can’t find a job, what they really mean is they can’t find the job they want, at the wage they want, under the working conditions they want. Which means that high unemployment is, to a great extent, a result of workers simply refusing to accept low-paying jobs, preferring instead to have taxpayers support them.
Worse, when the government “creates a job,” it simply overpays someone to do work for which there is little or no demand in the marketplace. And since the government has no resources of its own, the money to pay the person who performs the job must come from newly printed dollars, borrowing, or taxing productive workers.
I thought about all this a great deal over the past week as snowstorms blasted the Middle Atlantic States and East Coast, because it gave me the opportunity to observe the free market at work on a micro scale. One of the things that many people don’t grasp is that the marketplace consists not only of goods and services, but labor as well. The free market is, in fact, a big hodgepodge of these three commodities mixed in with the unique wants, needs, desires, personalities, and financial situations of each consumer.
When the first big snowfall hit, my wife spotted a fellow with a snow blower removing the snow from our neighbor’s driveway. I was picturing being socked in for a week or more, so I represented a strong demand for someone willing to do the hard labor of removing snow from my driveway.
I asked the guy if he would shovel our driveway and, if so, how much he would charge. He quoted us $100, which seemed kind of high, but I wasn’t about to let him slip away. He had the supply, and the demand on my end was high. So, a hundred bucks it was.
No government involvement, no regulations, no price controls — a clean and simple free-market transaction. I made sure to get his telephone number, figuring I would call him the next time we had a major snowfall.
Sure enough, a week later, an even bigger snowstorm hit. I called the fellow who had shoveled our driveway for $100, but got no answer, so I left word to have him call me. He never returned my call, which I suspected was because the snowstorms had created a high demand for his services.
Then, lo and behold, a kid came to our door and said that his dad had a snow blower and would remove the snow from our driveway for $20. I couldn’t believe it. Without government regulation to thwart him, here was a man who was undercutting the first snow-removal guy by 80 percent. Can anything be more beautiful than watching the free market in action? Again, I got his telephone number after he finished shoveling our driveway.
Unfortunately, we got yet another blast of snow a few days later. I called my $20 guy again, figuring that because of the depth of the snow, he might decide to raise his price to $40 or $50. But I never found out, because his voice mail answered. I left word, but, again, no return call.
Staring at two feet of snow in my driveway, I was getting a bit concerned. Then, out of the blue, a lady came to my door and said that her husband had a snow plow and she wanted to know if I would like him to remove the snow from our driveway. Price: $65.
I quickly wondered to myself if I should I take a pass on this opportunity and try again to connect with my $20 guy. But then the thought occurred to me that he might be too busy with other customers to ever get back to me. Or what if he’s discovered that his price was way under the market and has since raised it to $75?
Like any consumer, I pieced all of these factors together in my mind, then added in the biggest factor of all — that the solution to my problem was right in front of me. No delay, no gamble, no stress — $65 it was.
The free-market aspect of my snow-shoveling experiences is obvious. But what I found even more interesting is that a handful of people chose to go out in the snow and cold, freeze their butts off, and work themselves to the point of exhaustion for a couple thousand dollars a day, while 99.99 percent of those who say they can’t find a job chose to sit home and do … whatever.
If compassionate politicians are really serious about lowering unemployment, good first and second steps would be to eliminate unemployment benefits and abolish minimum-wage laws. Follow that with slashing the corporate tax rate to 10 percent (for starters), and unemployment would very quickly become an anachronism.
The free market really does work. It’s just not the way politicians with a personal agenda would like it to work.
that's true to some point, Robert if you worked in the state of Illinois where we have more people out of work than are working. Yes we have jobs in our city but they are 90% of them part time like at fast food resturants and you will never make over a certain amount of money, that is why thay are striking at McDonalds, My best friend lost his job, and he talked just like you guess what it took him over a 11/2 to find a decent 40 hour job. Now, he doesn't talk like you. You can't feed a family much less yourself on part time work, with no potenetiakl of more hours or even higher pay. When people retire at wher I work they replace them with part timers, and they figure they can now get 2 people for the price of one, and they know that they won't last more than a year or two it save them vacation pay, increase in pay, and I haven't even begun to talk about the effects nof Obama care will have on the employees. As you well know this market isn't Free..it's government manuplated.
The only thing politicians are compassionate about is buying votes with entitlements.
HOW CAN YOU ARGUE WITH THE OBVIOUS? And, obviously, this essay is perfectly on target. Our major problem is one most people fear exposing — that there are a lot of dumb people out there and many of them are voting. RAM
Robert – I agree with you on all counts. At the very least, those who are on unemployment should be required to be out there looking for a job. As for minimum wage… how will our young people ever learn to work if it becomes too expensive to hire trainees? If people want to earn more, they need to work at making themselves more valuable to the marketplace – not sit and demand more money for doing less work.
And then, if government would stop interfering by over-taxing and over-regulating businesses, more jobs would be available.
Government is the problem, not the solution.
A lot of the unemployed don't take action for any kind of work and as a result they have become complacent. So now it has become a way of life they seem to enjoy. They now get prepared for disability insurance when the unemployment insurance runs out. Back in the day people had pride in taking handouts. For me it's a lot easier to work than stand in all the lines and filling out applications for entitlements at which some just plan out lie.
Can you really blame a guy for not wanting to take a $100-per-week job, when he can keep taking $200-per-week to continue looking for something better? I consider the politicians and those controlling the government responsible, because it's understandably difficult to think about the bigger picture (and where that $200 is coming from) when your primary concern is feeding your family or paying rent.
I agree that politicians are the problem. Restrict the government's duties to defending the Constitution and everyone would be better off through the free market. And, yes, there would be increasing income equality, but who cares? I don't care what you make. I only care what I make. The evil is envy.
To paint such a broad brush on everyone who collects unemployment insurance is ignorant and foolish. And suggesting that eliminating the minimum wage would create more jobs… sure it would… More jobs where people make $1/hour and thus have to rely even more on government subsidies and handouts! You want citizens to stop living off taxpayer dollars? Force businesses to pay a living wage. End of story.
"A living wage"…such a great-sounding expression, but do you know what it means?
How much does a single HS student living with his parents need to live?
How about a single mom with two kids?
Or a man trying to support his wife, three kids and his aging parents?
All 3 of those people may be working at the same job. How much is a "living wage" for that job?
The proper wage must be based on the value of the work performed – not based on the needs of the worker.
Wow. Living wage? Really? Here’s a tip. Go read Economic in One Lesson. Then come back with a comment. You do realize that by lowering employment costs you wind up lowering the costs of goods and services right? All companies have to make their products affordable so they can’t charge more than the market will bear. So your scenario of people making less, having less, is nonsense. If for some reason wages globally lowered, you’d still have prices fall as companies repriced things so that people could afford them. But then again there’s the little economic concept you don’t seem to understand called supply and demand.
Kristen, with your words "force businesses to…." Shows you have never run or own a business. Government "forcing business" to do things is what interferes with the free market and artificially increases prices.
Kristen — what would that number be? $40,000 per year? $80,000? Hell, why not demand that every job have a minimum wage of $150,000 per year? One of the many problems with that is that the business would have to jack up its prices so as to pay the "living wage" and thereby the living wage would no longer be sufficient…..
Even in the bid and ask arena of the free market – a beautiful thing indeed – there are "wolves, i.e., politicians, lawyers etc., lurking about in order to ruin a good thing. Beware my friends and vive la libertad!
In part I can agree Robert, but coming from the other side of the pond I do have an alternate view.
In the UK we have the welfare state with working benefits paid to people on low wages. This means that business owners can get away with paying low wages with the state making up the money to a barely living wage. In my mind in this case it's the business owner who is on benefits..his business is basically bust because he needs a state subsidy to be able to employ workers! Interested in your view…
If the government didn't pay welfare benefits, it would not be "subsidizing" businesses. My view is always the same: The free market is infallible, because people get what they deserve through the law of supply and demand. What they want is irrelevant. As for those who cannot help themselves, that's what charity is for. Charity is a noble concept. Redistributing wealth is immoral.
I agree. Charity and compassion should not be in the sole realm of the government, they are in the realm of the individual.
Government "welfare" is a canard. There is no such thing. There is only government vote buying.
When I was a kid, there were lots of factory jobs in Cleveland. My dad worked in a clothing factory. It was hard work but he made enough–working 5.5 days a week to buy us a small house, clothe us, etc.
Eventually, owners of garment factories moved many of them to the south where they could get cheaper labor. The guys in Cleveland wanted to work, but the work was gone. Later still, the owners of the factories moved the work to Mexico and Asia–even though the guys in the south were willing to work.
Please comment on how the system works well for people who are not lazy and who are willing to work–a system whereby owners can–and will–move their factories if there is a larger profit to be made, regardless of the quality of the product and the impact on America. To my mind, the system works….but not for the workers.
And before you condemn me as a lazy welfare whore, I've worked all of my adult life–nearly 50 years–sometimes as a paid employee, sometimes for myself as a small business owner. I love to work. At 70, I probably work 50 hours a week because I find my work more interesting than most non-work activities.
I am no fan of lazy people. But I don't understand the claim that the free market system works for the benefit of everyone who is willing to work.
As for the idea that government is the problem: There wouldn't be an Internet without the government. There wouldn't be an efficient highway system without the government. There wouldn't be many of our medicines without government-financed research. Yes, government causes problems–for example, the wars in Iraq and Asia. I can't recall. Have you criticized government for its military adventures? If yes, I'm with you there.
You don't sound lazy to me at all. In fact, I admire you for wanting to work at 70. But the free market works for workers as well employers. It is a fact that there are millions of jobs available, but Americans are spoiled and refuse to take jobs that don't pay a "fair wage." If entrepreneurs had the same attitude, nothing would ever be created and there would be no jobs at any wage. What is needed is for people to be educated on the free market. Yes, "Economics in One Lesson" is a good place to start.
As to wars, we're pretty much on the same page. I'm against all wars that don't result from foreign aggression against the U.S.
There would not be this or that without the government – how many times have we heard that one. Take the roads for instance – I guess we would have the auto manufacturers making tons of cars but nobody would know how to build a road, what takes more skill-the road or the car? All you need is the ability to think a little and see what can be done without the force of the state.
Unfortunately, the free trade, right to work rhetoric plays right into the hands of the wolves who have gamed the system in every way imaginable; it isn't their families who are hurting for money. People like libertarian talk in theory, in reality the crap culture that is being promoted by the rhetoric of "freedom" has played over and over again and has resulted in more sharpies gaming the system. The corporations and large self-employed businesses know how to maintain their monopolies, the smaller businesses will never be able to compete with them and be in "compliance" a dirty word used by the government henchmen to keep the working class down.
I am 100% against corporate welfare and special regulations that favor any businesses.
Yes!!! Supply; demand; value-for-value exchange; no interference. Capitalism at it's best.
For all of those that lost a job and are still waiting for a "living wage," go read "Who Moved My Cheese." Do you think all the milkmen are still looking for jobs? Or how about the telephone operator?
MIT recently came out with a study that half of all our current jobs will be obsolete in the next 20 years due to technology.
This great country was built on the foundation of if you see a need, start a business to fill it. Most Americans want to be told what to do versus taking the initiative of starting something of their own. And when the few do step forward and start something, they want to be the overnight success. Unrealistic expectations of life in general and would rather receive a handout that face a possible failure.
There's one more dirty little secret about extending unemployment benefits, and that is that today's employers are more likely to interview someone who is looking for a job if he or she is already employed than they are to interview someone who has been "laid off" for two or three years. I've spoken to a lot of entrepreneurs during the past few years – almost to a person, their perception of the man or woman who willingly stays on handouts is that they probably shouldn't be in the workforce to begin with. They are seen as either having limited initiative or work ethic, or they have problems with interpersonal skills that make them unattractive to employers. Unfair perhaps, but it's reality nonetheless. Bottom line is that the longer people are allowed to stay unemployed, the less likely they are ever to be hired again – anywhere.
Very interesting and logical insight.
But true. Employers zero in on gaps of unemployed time on resumes.
Great post Robert, thank you!
You even work on Sundays, good!
In general, I agree with your points about the free-market.
I have two other points related to your comments:
First, it is unfortunate that the first two folks who did your driveway were too busy to be courteous enough to return your call. At the very least, they could have said that they were too busy and that they appreciated your business. Lack of courtesy seems to be rampant.
And, the more cynical side of me thinks that perhaps the folks who did your snow the first two times felt that they had made enough money for the time being and saw no reason to go out and make some more. I have seen this sort of thing when people have collected their unemployment and work just enough extra on the side to give them what they needed in an immediate sense.
I will choose to give them the benefit of the doubt, congratulate them on their industriousness and send them a book on common business practice and etiquette.
You nailed it!
"Compassionate politicians." Well I never.
I am 78 years old. My father was a factory worker in Detroit. By high school age, it seemed to me that factories used people up for as low pay as they could get away with, and then threw them away when they were used up. Didn't seem fair. Bu, what could a poorly educated worker do? Scrap by, get old, then die. The American Way!
What can a poorly educated worker do? Get educated or start a business using the talents he/she has. That's the American Way.
RE: "Which means that high unemployment is, to a great extent, a result of workers simply refusing to accept low-paying jobs, preferring instead to have taxpayers support them."
I so have to laugh at this type of commentary. Let's see YOU accept a job that pays LESS than your unemployment, which is approximately 50% of a persons wage AND they have to pay income tax on it. What an idiotic thing to say.
Also, " preferring instead to have taxpayers support them." Do you NOT understand the concept of an "insurance"? Employers pay into this insurance for the express reason to fund unemployment. Perhaps you ought to really understand the system before you make such assertions? Here, see if this helps:
"Unemployment Insurance (UI) is a federal-state program jointly financed through Federal and state employer payroll taxes (federal/state UI tax). Generally, employers must pay both state and Federal unemployment taxes if: (1) they pay wages to employees totaling $1,500, or more, in any quarter of a calendar year; or, (2) they had at least one employee during any day of a week during 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive. However, some state laws differ from the Federal law and employers should contact their state workforce agencies to learn the exact requirements."
You just proved his point. You're advocating staying on unemployment instead of working. And as far as your "unemployment insurance" goes, do you really think for one moment that the government doesn't pilfer those funds just like they pilfered the Social Security Trust Fund and everything else? It always ends up falling on the working taxpayer. The government can only print or borrow money and keep interest rates low to manage its debts for so long. Then they raise taxes.
You said "Unemployment Insurance (UI) is a federal-state program jointly financed through Federal and state employer payroll taxes (federal/state UI tax)" in response to the remark that taxpayers fund unemployment. Well, isn't the company who pays the "payroll taxes" to fund unemployment a "taxpayer"? Where does that money to pay those taxes come from? From the cost a business charges for their product or service.
One year I paid 73% of my total business income in taxes (including license fees (taxes), gasoline taxes, property taxes, employment taxes, sales taxes, etc.) If a business was not so burdened by taxes, they could afford to grow their business and be able to hire more employees, produce more product or services, which in turn will allow them to grow their business and hire more employees…. etc.
Has the thought crossed your mind to invest in a snowblower of your own?
If you pay someone $65 to clear your driveway 10 times a year that is $650. You can purchase a snowblower at Sears for $500. It would pay for itself within the first year.
Yesterday I passed a bum begging outside a market. He was waving his "homeless vet" cardboard sign while talking on his cell phone. I can't affort a cell phone.
Maybe he knows Obama personally?