Why Incentives Matter


One of the most powerful lessons I’ve taken away from all the reading, studying, arguing and debating I’ve done over the past 4 years of my “political awareness” has been that of incentives.  And how much they matter.  And until you can admit that people are driven by incentives, in general mind you, you will never be able to understand how laws and regulations shape our world.

Consider:

(AP) ONEONTA, Ala. – Potato farmer Keith Smith saw most of his immigrant workers leave after Alabama’s tough immigration law took effect, so he hired Americans. It hasn’t worked out: Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by midafternoon. Some quit after a single day.

Now listen, Alabama has an unemployment rate of 9.8%.

Nearly 1 in 10 Alabamians are out of work.  More I’m sure, if you count the folks who’ve given up.  And the numbers are worse if you add up those folks who are underemployed.  Yet farmers can’t keep help.

Too be sure, the value proposition is a tough one:

 It’s hot, the hours are long, the pay isn’t enough and it’s just plain hard.

At his farm, field workers get $2 for every 25-pound box of tomatoes they fill.

A crew of 25 Americans recently picked 200 boxes — giving them each $24 for the day.

That’s $3 an hour.  Hardly worth downsides of the job.

Finally, and here is the kicker, the government makes it too easy to say “no” to jobs:

It may make sense for some to sit on the couch. Unemployment benefits provide up to $265 a week while a minimum wage job, at $7.25 an hour for 40 hours, brings in $290.

Who in their right mind would choose to work back-breaking jobs in order to make an effective $25 a week?

No one.

There are jobs out there all right, just that we make it too easy to say no to ’em.

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