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The Economics of Pride

The Economics of Pride

September 1, 2010 3:11 am2 comments

I had an interesting conversation today.  I was waiting for a friend to meet me in Wrigleyville, and not wanting to pay for a seat in a restaurant I sat down outside on a public ledge next to the sidewalk and started to answer some work emails.  I struck up a conversation with a man who was also taking a free respite from standing and asked him how he was doing, where he was from, etc etc.  I assumed–correctly, as it turned out–that he was one of the many beggars who hang around Wrigleyville at night asking for money.  He did ask me if I could “help him out” about 1/3 of the way into our conversation, but other than this brief interlude we had a pleasant interchange, mostly consisting of small talk about origins and the weather.

I did, however–and this was to confirm my suspicions about his circumstance, but also out of curiosity–ask him what he did for a living, and he told me that he drives a forklift and works in warehousing.  “But I got laid off this year,” he said, and proceeded to tell me about his layoff and how he has been out of work for a year.  This started a conversation about the economy, how it’s bad for a lot of people, and I’m sure he’ll be able to find work soon.  Then he said something interesting, but first background:

I had recently had a conversation with a friend about minimum wage, one of my favorite thought experiments in humanitarian socialism and economic progress.  I believe, like many economists and social theorists, that the benefits of minimum wage are not justified by the economic cost; that is to say, minimum wage creates a barrier to employment by people whose skill sets are unemployable at that high a wage.  Yes–for some (un)skill sets and abilities, minimum wage is too high, and employers will rather outsource those jobs to foreign countries at those skills’ worth than pay too much for them here at home.  The result is people who can’t get jobs because no one will pay them as high as minimum wage to work for them.  I think that in a free market of labor with freedom of contract and competition, all jobs have a price.  Employers may like to pay workers less and less, but if they do that they will lose those workers to competitors at some price point where their added value to the company outweighs their compensation.  It is the same reason employers pay people more and more for better and harder work–because they acknowledge and require better skills at higher levels.  Certainly most people with good paying jobs are not having their wages reduced to the minimum wage level arbitrarily, so why would employers of people currently at minimum wage reduce wages lower than the worth of those jobs without a legal barrier?  Anyway, the economic argument against minimum wage is sound and is worth reading, but it is besides the point.

The obvious counter argument to this economic reasoning, however, is the belief that a minimum wage is necessary for sustenance and it is inhuman to underpay people for jobs.  This belief is supported by a belief in social welfare and the idea that with a job, one should have a base level of security.  Both arguments are good, but I obviously lean to the side of helping the economy as an engine for individual growth.  It doesn’t matter, because no politician could or would get rid of minimum wage because it’s a fairly established policy and would be deeply unpopular to overturn.

This discussion I had with a friend about minimum wage ended up coming to a proposed thought experiment where I had no money and was put on the street with no friends or family to support me.  The proposed “zero start” idea was created to challenge me to think about what I would do in this situation, a situation that I (or most people) have never been in.  My answer, at the time, was I would walk into every McDonald’s I could find once a day asking for a job.  Since Maslow’s hierarchy requires that I have an income, McDonald’s–a notoriously low-paying and low-satisfaction employer–would be a good place to start.  I would definitely beg, but I would beg for a fishing pole, not a fish.

Back to my conversation with John, the man I met on the street, whose employment status was known but whose homelessness status was not (I never asked).  He told me, unprompted, that “I could go get a job at McDonald’s but who wants to work at McDonald’s?”  I found that interesting.  Here I am, two weeks ago thinking about the first thing I would do as a desperate, homeless and jobless individual, thinking that in my desperation I would beg for a job at McDonald’s until I got one, and here John is telling me that, despite his joblessness he would not get a job at McDonald’s.  Who wants to, after all?

My first thought was, how desperate is John?  I would assume that his level of desperation is not yet at the point where he is seeking every available job possible.  After all, if you are truly desperate, then you have to take what you can get, right?  Doesn’t this make basic, logical sense–survival is the most important thing?

But if John is not desperate, and can easily get a job somewhere if he wanted, why is he begging on the street?  What is his game?  Without a job, is he really making enough money begging to support himself?  Does he want to be a beggar, and is this a better option in his mind than working at McDonald’s?

Clearly John is someone well spoken, with a skill set and a very personable demeanor, who doesn’t want a particular job, so instead of working somewhere he doesn’t want to work (which is certainly his choice), he is on the street begging for money.  This made me think of several things.

One, is Pride an economic factor?  Is there some model that accounts for peoples’ unwillingness to take jobs that they can take, but are too proud to take?  There must be, because I know friends I graduated with who could take a job at any retail store or restaurant, but refuse to do so because their college degrees render such jobs beneath them, in their opinion.  There is also the argument that “If I take a job like that, someone else will be out of a job who really needs it,” which is sort of hypocritical and assumes that people desperately seek any job offered to them, which is exactly what they refuse to do (pride, pride, pride).  Also, jobs are not zero-sum: the more people in jobs, the better for the economy, and the more jobs that are created.  If anything, they should be saying “With my education and skills, I will do exceptional work at a job like that, and make my employer enough money that they can hire someone else.”

Two, is John somehow violating a fundamental principle by choosing not to work?  It is his choice not to work, of course, just like it is my friends’ choice not to take a work at the Gap.  He clearly is taking care of himself and is still eating properly, shaving and brushing his teeth (this I all observed).  So are my friends.  He probably has some savings to make his situation not desperate–so do my friends.  What makes him different?  The fact that he is begging on the street.

So this is the conclusion I came to, and please tell me if I’m wrong.  He’s not begging on the street because he needs to be, he’s begging because he wants to be.  I have a problem with this.  I have always had a problem with begging on the street, mostly because of the uncertainty of the beggar’s circumstances, and the belief that donating to homeless shelters and jobless centers is a lot more effective of an investment in homelessness and joblessness.  John has taken the lowest job on the totem pole–something that isn’t really even a job–and turned it into a job with two tiers: those who choose to work at that job, and those who have no choice.  What about the people who can’t get a job anywhere, and have to beg? What about truly destitute people with no options?  What is left for them?

It seems that in the economy, even beggars are competing with each other.  And beggars like John, because of pride, are preventing people from taking a job like that who actually need it.  The cycle continues, even down to the lowest rung on the ladder.


  • Hey Brian,

    Interesting story. I wonder if part of this is unemployment benefits. If he were to take the McDonald’s job, he would make probably something like $70-80 a day, but would lose his unemployment benefits. If he was a forklift operator, which is semi-skilled, let’s say he was earning $15/hour and is getting 33% unemployment benefits, which is a little less than standard, he’d be getting $40 a day, which he loses if he gets an above the table job. If begging earns him more than $40 a day, which it probably does, he’s making more money begging than he would at McDonalds, and has to do less work on a less rigid schedule.

  • Brian Mayer

    Looks like I’m about 2 months late responding which is totally my fault!

    That’s a good point. I don’t know what his situation is vis-a-vis unemployment benefits, but it stands to reason that if unemployment benefits were that efficient, then fewer people would work at McDonalds…a lot fewer. No?