Researchers arrive at obvious answers but miss the point

By DAVID MOON, Moon Capital Management
February 4, 2001

The Public Policy Institute of California, funded with a grant from the Joyce Foundation, studied the effect of a booming economy on the employment of welfare recipients in four metropolitan areas: Los Angeles, Chicago, Cleveland and Milwaukee. Their conclusion? As the economy strengthens, welfare recipients are more likely to have jobs. This is news? Two serious academic researchers surveyed 750 employers, compiled statistics, evaluated data and published a paper to tell the world that as unemployment decreases, more people have jobs? Any day now, I expect the National Institute of Health to announce that as more thin people get fat, there are fewer skinny people.

The report warns, however, of a risk: employer demand for these almost-exclusively entry level positions will diminish significantly during an economic downturn. Talk about a "glass-is-half-empty" mentality! The study bases this conclusion on the observations that "hiring rates for welfare recipients were very sensitive to job vacancy rates." Makes sense to me; companies are more likely to hire people when they have open positions. Where do I sign up for a research grant?

The study discovered that certain groups have a more difficult time finding and keeping employment than others - specifically, high school dropouts and those with criminal records. Now there is a shocker.

The study concludes "that there is no better solution to welfare dependency than a good job, and there is no better road to a good job than a healthy, booming economy." Wrong. There is a better road to a good job and the report almost mentions it. The most effective strategy for getting and keeping a good job is to posses the skills needed by employers. The study does recognize the corollary ' the best way not to get a job is to lack the skills needed by employers. From the report: "High school dropouts also seem to be hired less frequently than high school graduates, perhaps because the cognitive and social skills demanded on the jobs filled by welfare recipients are often not trivial."

All jobs require certain skills, both intellectual and social; we kid ourselves when we claim otherwise. This is why a pattern of educational focus is critical to begin in a child's youth. This is also why anti-social behavior is more than just an adolescent discipline problem - it is an economic development problem. Every time society celebrates the actions of a thug or dismisses another broken home as irrelevant, we lower the bar of social and cognitive expectation for another generation of youth.

The decay of the urban family feeds directly into a lack of well-rounded social skills, not to mention its too-often impact on an educational foundation. Middle-America may easily dismiss the root causes of welfare and unemployment as "someone else's problem," but these are actually all of our problems. Not necessarily because of some "societal obligation" we owe our fellow man to help lift him up, although that notion is more than decent. The challenge of putting more welfare recipients to work is all of our problem because it is in everyone's self interest for more people to be productive participants in the economy. Employers will have access to more quality, skilled employees. Businesses will have more potential customers for their goods and services. The economy is stronger if we have more taxpayers and fewer tax-takers. The Public Policy Institute of California missed that point.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).

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