Tag Archives: experiment

A Different Kind Of Florida Man

“Florida man” has become a comedy label, a phrase recognizing the ubiquity of stories about someone from the Sunshine State doing something idiotic or bizarre (but definitely funny).

Business Insider, however, recently had a different sort of “Florida man” story, and it’s worth pondering.

As businesses across the country advertise for workers, as “we are hiring” signs proliferate and every day brings complaints from businesses that tell us they are struggling to find employees, a Florida man decided to test their claims. He submitted at least two applications every day in September, taking care, as he told the magazine, to apply only for positions for which he was qualified.

Joey Holz had watched as business after business complained that the availability of government stimulus money was keeping workers at home and out of the job market. The complaint–and the attribution of the scarcity to government largesse–“was so ubiquitous that he joined a ‘No one wants to work’ Facebook group.”

He said he found it hard to believe that government money was keeping people out of the labor force, especially when the end of expanded federal unemployment benefits did not seem to trigger a surge in employment. The expanded benefits ended in September, but 26 states ended them early in June and July.

“If this extra money that everyone’s supposedly living off of stopped in June and it’s now September, obviously, that’s not what’s stopping them,” he said. Workers have said companies struggling to hire aren’t offering competitive pay and benefits.

So Holz, a former food-service worker and charter-boat crewman, decided to run an experiment.

Holz spent a month applying for jobs, mostly at businesses whose employers had been vocal about a lack of workers . He kept track of those applications in a spreadsheet. After submitting 28 applications, he had received exactly nine email responses, one follow-up phone call, and one interview. That interview was with a construction company that had advertised a full-time job focused on site cleanup paying $10 an hour.

But Holz said the construction company instead tried to offer Florida’s minimum wage of $8.65 to start, even though the wage was scheduled to increase to $10 an hour on September 30. He added that it wanted full-time availability, while scheduling only part time until Holz gained seniority.

None of the companies that bothered to respond were paying over $12 an hour.

On September 29, after submitting 58 applications, Holz posted to Twitter about his saga, saying, ” y’all aren’t desperate for workers, you just miss your slaves.” The post went viral.

Holz acknowledged that his results may not be representative of the larger labor challenges in the country, since his search was local and targeted the most vocal critics of stimulus spending.

Holz is actually employed, and he noted that–despite the media focus on businesses that say they are struggling to hire–his own boss had experienced no staffing issues during the pandemic.

“Nobody leaves those positions because he takes care of his people,” Holz said, referring to his boss.

There is a larger lesson to be learned from the experiment run by this particular “Florida man,” if employers are willing to learn it. Research by the Economic Policy Institute confirms that lesson.

The author of the linked article concedes that, in a large and complex labor market like that of the U.S., there will periodically be pockets of bona fide labor shortages. But the article goes on to confirm “Florida man’s” conclusion: a far more common reason for such shortages is the reluctance of employers to pay enough to attract workers. “Employers post their too-low wages, can’t find workers to fill jobs at that pay level, and claim they’re facing a labor shortage.” A more precise formulation would be “I can’t find the workers I need at the wages I want to pay.”

The EPI analysis also points out that

when restaurant owners can’t find workers to fill openings at wages that aren’t meaningfully higher than they were before the pandemic—even though the jobs are inherently more stressful and potentially dangerous because workers now have to deal with anti-maskers and ongoing health concerns—that’s not a labor shortage, that’s the market functioning. The wages for a harder, riskier job should be higher.

“Florida man” proved the point…

 

 

 

 

Watch This Experiment!

Germany has begun an intriguing experiment. For a period of three years, a  group of people will get €1,200 a month. (At today’s exchange rate, that’s $1,420.) The money is free; the only  requirement is that recipients answer researchers’ questions about what they’re doing with this unconditional income.

As German media has reported,

Officials from the Mein Grundeinkommen (My Basic Income) charity are convinced that an unconditional income for all citizens would solve many current problems. The assumption is that people get more creative and become freer and happier if they don’t constantly face the pressure to earn enough money to get by.

Whether this lives up to reality will be explored scientifically during the project. “We’ll analyze what people are doing during a period of guaranteed material security,” project chief Jürgen Schupp from the German Institute for Economic Research (DIW) told DW.

Among the questions he’ll look into are: Will the test persons spend all the money or will they save a certain amount? Will they stop working altogether or work less? Also, will they donate money to others?

The experiment will give his team all the answers it needs, says Schupp. Even changes in people’s stress levels can be identified with the help of hair samples, he argues.

During the primaries, Andrew Yang brought the issue into more prominence, but the debate about UBI–an unconditional basic income– has been going on for years. The debate centers on dramatically different predictions of what people will do when they don’t have to do anything. Will receipt of a basic income make people lazy, make them less  apt to work, less productive? Or is a UBI a tool to rationalize current  social  welfare systems (and not-so-incidentally, prepare for an era when automation has eliminated millions  of jobs)?

I  have been  intrigued by  what I see as the promise of a UBI.

What if the United States embraced a new social contract, beginning with the premise that all citizens are valued members of the American polity, and that (as the advertisement says) membership has its privileges? Contracts are by definition mutual undertakings, agreements in which both sides offer consideration. In my imagined “Brave New World,” government would create an environment within which humans could flourish, an environment within which members of the polity would be guaranteed a basic livelihood, a substantive education and an equal place at the civic table. In return, members (aka citizens) would pay their “dues:” taxes, a stint of public/civic service, and the consistent discharge of civic duties like voting and jury service.

With a UBI (in contrast to welfare) there would be no phase-out, no marriage penalties, no people falsifying information, no daunting (and expensive) bureaucracy.

Support for the concept hasn’t been limited to liberals and progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.” In 2016, Samuel Hammond of the libertarian Niskanen Center, noted the “ideal” key features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, raising worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines a complex web of bureaucracy, eliminating rent seeking and other sources of inefficiency.

Hammond’s point about worker bargaining power is especially important. In today’s economy, characterized by dramatically-diminished unions and the growth of “gig work,”  employee bargaining power has dramatically eroded. Wages  have been effectively stagnant for years, despite significant growth in productivity. In 2018, Pew Research reported that “today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago.

If the U.S. had a UBI and single-payer  health  insurance, workers would have the freedom to leave abusive employers, unsafe work conditions, and uncompetitive pay scales. A UBI wouldn’t level the playing field, but it would certainly reduce the tilt. It’s also worth noting that a UBI would have much the same positive effect on economic growth as a higher minimum wage. When poor people get money, they spend it, increasing demand.

Previous experiments and pilot projects have been encouraging;  receipt of a  guaranteed basic  income has not caused people  to stop working, and the money hasn’t  been used  for liquor and sin. Germany’s experiment looks to be larger than the others that have been reported, and it will be interesting to see its results.