At least 25 US states are ending their participation in the federal unemployment insurance program early. The states, most of which have Republican governors, argue that overly generous benefits are discouraging low-income workers from returning to their jobs, leading to labor shortages.
There’s not much evidence that unemployment checks—versus low wages and lingering health concerns—are driving the labor mismatch. But the governors’ assertion is also built on another dubious assumption: that given a choice, the poor would simply refuse to work.
It’s an argument with classist and racial undertones, and also lacks supporting evidence. In fact, a new economics paper suggests that work provides significant psychological benefits, and even those in the most destitute situations prefer it to a handout.
A study about the benefits of work
A team of researchers from Harvard, New York University, American University, and the World Bank conducted an ambitious experiment at refugee camps in Bangladesh among the Rohingya, a Muslim ethnic minority that fled persecution in neighboring Myanmar. The study results were published by the National Bureau of Economic Research as a working paper (pdf), meaning it hasn’t yet been peer reviewed.
To test whether work bestows benefits besides money, they divided 745 camp residents into three groups. One group was paid a wage of $5.30 a week to simply fill out a weekly survey, while another was paid the same to collect data about their fellow refugees, a job that occupied about 2.5 hours a day for eight weeks and that had penalties for errors. The last group was a control group and was paid much less for filling out the survey. (While the $5.30 payment seems slight, it was enough to be worth twice the refugees’ weekly food allowance.)
The refugees who were given work reported a much greater sense of well-being and satisfaction than those given the stipend. They were 9.5% more likely not to be depressed, 14% more likely to sleep peacefully at night, and 13% more likely to consider themselves “secure and stable” than their counterparts.
Further, when the Rohingya in the work group were asked if they would be willing to continue working an additional week, 97% expressed interest, and 73% said they would work for free. Even when that group was offered $2.50 to take a survey instead of working for free, they still preferred to work. The researchers conclude the non-financial benefits of work were worth even more than the $2.50 they could have earned without working.
Refugees in Bangladesh are, of course, very different from jobless Americans, and their motivations for working may be directly tied to their status as a displaced people and the nature of life in refugees camps. Still, it’s notable that when given a choice, some of the world’s poorest people—people who might be excused if they preferred to simply collect pay—preferred to work.