Think back to 100 years ago. Unemployment was practically unknown. Why? Because there was (and there still is) stuff to do and people to do it. So long as employers and employees could negotiate without a gigantic state interfering with them, everyone was happy. There was no income tax. There were no added benefits. There were no impositions on the right of association. People bounced from job to job, taking 100% of their earnings in the form of real money.
That was a great system while it lasted. It initially came about after the end of the feudal period and with the rise of the capitalist middle class. Average people actually made money for the first time in the history of the world, and it was pretty cool. There was no shortage of jobs.
That whole system came to an end during the Great Depression and World War II. It began when the government dared to decide who could and could not work and under what terms. This was the first step in what amounted to the nationalization of the labor pool. Kids could not work. No one could work apart from a government-dictated wage. The amount of time they could work would be regulated.
Then, in World War II, two additional changes came about. Taxes would be taken out of the paycheck by the government, and the taxpayer would get back later whatever the government didn’t keep. Millions of people began to think of the government as their benefactor. Wage controls then led some large companies to pay employees in benefits like health care, a practice that was later pushed more broadly.
This is not the way the free market works. Workers prefer to be paid with money, plain and simple. That’s because money is the most liquid good. It can be converted to anything else. It is what gives choice and personal empowerment.
Today, the government’s system is pretty well locked down and super sticky. The costs of bad hires are very high for employers, so they are super cautious. The clarity of the work contract is gone. The market is not being allowed to operate.
Adding to the problem is the issue of housing. Many of the millions of people who have dropped out also own homes they can’t sell at a profit, which means that they are not in a position to move. The house works as a kind of brake on personal progress.
This is a story of demoralization created not by a few government programs, but by hundreds, among which is the boom and bust cycle itself. The excluded workers are victims, and no less so because of their privilege of drinking unlimited amounts of soda at your expense.
Ending this problem is going to require doing far more than cutting food stamp allocations and cleaning up disability graft. It will require a complete dismantling of 100 years of attempts by government to do things to help American workers.