Russ o’er @ EconTalk interviewed Katherine Newman, a professor of sociology at Princeton University. The conversation centered on her research involving case studies of fast food workers in Harlem. She talked about some of the circumstances shaping those workers’ decisions to enter into a particular career. Newman authored two books: Chutes and Ladders, and No Shame in My Game. In those books, she sought to describe the low-skilled workers at a Harlem fast food restaurant. She sampled 200 fast food workers and another 100 who failed to get jobs over a period of years. She collected this data at the time welfare reform passed back in 96. She depicted what happens to these folks in that labor market over a period of time, a repeated cross-sectional design with panel data. She also described the impact on the labor market when thousands of people came off the welfare rolls. An informative interview worth some time, IMO.

This raised questions about a common economic theory, namely, that unemployment benefits encourage laziness, a moral hazard argument. If that’s true, and it may be, then why does the following pattern emerge. In the period, 92-94, Harlem had high unemployment (18%). In the 97-98 period, the data suggests that Harlem had a record low unemployment rate. In other words, if doling out unemployment benefits to folks in Harlem created laziness, then why does the data seem to indicate those same folks decided to enter the workforce at a record pace?

Barry over at The Big Picture asks the similar question beautifully.

How [do] you explain the epidemic laziness that apparently afflicts Americans exactly a business cycle peaks, which is then somehow miraculously cured at business cycle troughs?

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