Go to work

When I was a kid, my Mamaw drove an old, white Ford LTD. We lived right next to my grandparents and shared a gravel driveway. I watched her drive that car to work at the factory in town five, six, and often seven days a week. As she pulled her car onto the road, you could see a bumper sticker on the back that said, “Go to work, millions on welfare are depending on you!”

The irony is that we were poor. Even still, and despite the sarcastic tone of the bumper sticker, Mamaw was generous. Too generous, probably. She would give anyone anything if they asked. She gave me and my family what we needed to get by. Yet, the bumper sticker meant something. She recognized that she was working, and that many others weren’t working but those who worked and those who didn’t seemed to live the same way. She wasn’t angry about it, but she noticed.

In his recent book, The Myth of American Inequality, former U.S. Senator and economist, Phil Gramm, explains what Mamaw saw and what she was trying to say with her bumper sticker.

Gramm points out that the U.S. government uses Census Bureau data to calculate the poverty rate in America. Based on this data the government reports that the upper quintile of U.S. households earns sixteen times more than the bottom quintile. Sounds bad, right? Except, the Census data these calculations are based on fails to account for some important factors.

First, the Census data does not count what the government calls “transfer payments” as income. In short, these are welfare benefits—food stamps, childcare credits, Medicaid, housing subsidies, the earned income tax credit, and more. This amounts to, on average, approximately $45,000 per year in “income” to the bottom quintile individuals. When you count the transfer payments, the poverty rate drops from a reported 12.3% to 2.5%. Just 2.5% of Americans are in poverty under the Federal Government’s definition of poverty if you count transfer payments. And why wouldn’t you?

The other thing the Census data fails to count is taxes paid. The top quintile of income earners lose 35.2% of their income to taxes. A large chunk of this gets redistributed to the bottom quintile.

It turns out, when you count transfer payments and taxes paid, the income inequality between the top quintile and the bottom quintile drops from a reported sixteen-fold difference to a four-fold difference. You can still argue that a four-fold difference is too much, but it is a far cry from a sixteen-fold difference, and it is at least an honest number.    

This data helps to accurately compare the top and bottom, which is important. It demonstrates that income inequality in American is at best grossly overstated. In addition to the top and bottom quintiles, though, there a lot of people in the middle. Mamaw was one of these people, the middle 21% to 60% of income earners. They work, but don’t make much.

When you factor in transfer payments and taxes paid, the bottom 60% of all Americans have about the same “income.” The only difference is, the middle group mostly works, and the bottom group mostly doesn’t. Only 36% of the bottom quintile works. Now, some of the bottom quintile people can’t work for various reasons, but the majority can work and choose not to. As Phil Gramm writes in the book regarding the war on poverty, “If the objective was to eliminate want, we succeeded, but we did so at the price of idleness.”

Within that idleness lies another difference between people that work and people that don’t. I have worked in the justice system for the last twenty years. I have frequently heard the argument that the source of people’s problems is poverty. Poverty causes drug abuse and domestic violence and property crimes, they say. The people making this argument do not define how poverty does this. Rather, it’s an amorphous “cause,” and the causal linkage is never articulated. This has always felt intellectually lazy to me, and just doesn’t jibe with my personal experience.

That’s because poverty is not the problem. Phil Gramm shows in his book that there is almost no poverty, and that 60% of Americans have basically the same resources. Instead, the problem is what people choose to do rather than work. Idle hands are the devil’s workshop, as they say. It is largely the people who have abandoned work and the values and habits connected to it that commit crime. And the government has made not working a logical option.    

These two things, then, are what makes people like my Mamaw put bumper stickers on their cars: (1) working people are not better off financially than the people they see around them not working; and (2) government policies that disincentivize work erode the values that working people are trying to pass on to their children and grandchildren.

People like Mamaw know from experience what Phil Gramm’s data proves. She knew she could draw welfare and have the same income courtesy of the government. She worked because there is dignity and purpose in work. She worked because she hoped the kid watching her pull that LTD out of the driveway every morning might see the value in it. That he might internalize the work ethic and rise above his station in life. That he might reject the poor choices born of idleness. That he might someday, in her wildest dreams, become a lawyer and a judge.  

The saying on Mamaw’s bumper sticker is as true today as it was back then. Millions on welfare are depending on you, rightfully or not. I think if she could go back, though, knowing what we know now about the myth of American inequality, she would change the bumper sticker. She would make it say simply, “Go to work.”