Saturday, December 28, 2013

The Poor Are Lazy... or are they?

In today's extremely politically divided world it is often difficult to understand how different economic policies can affect ordinary people. The comment in the title is normally asked, or rather, told in a very rhetorical fashion around dinner tables. There isn't any concrete way of responding to that sort of statement, and I suppose that's the beauty of stating it. However, there is the benefit of historical evidence, as well as contemporary statistics to help stir the conversation.

The use of social safety nets, particularly SNAP and unemployment insurance, follow the pattern of the unemployment rate. The recent financial crisis of 2008 caused the United States unemployment rate to sky rocket. In 2007 the rate had a low of 4.4%. That means there were about 6.5-7 million people unemployed. At its peak in 2010, the recession unemployment rate reached 10%, something that had not been witnessed since the early 1980s. That means that there were close to 15 million people unemployed. An increase of 8 million people into unemployment.

The amount of money the U.S. spent on unemployment benefits in 2007 was close to 40 billion dollars. By the end of 2009 after the recession had taken hold, that almost quadrupled to 140 billion dollars. SNAP followed the same pattern. The number of SNAP recipients in 2007 was about 27 million people. Currently the number has started to decrease, but about 47 million people receive benefits.

As you can see the recession forced people into these extremely important safety nets. With no other options millions of people fell into these nets... they didn't jump gleefully into poverty. So are the poor lazy? The evidence does not support such.

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