What’s the point of Work for the Dole?

Work for the Dole doesn’t work, says economist Jeff Borland. Citing a study he and Yi-Ping Tseng carried out using data from the late 1990s, he argues that it does nothing to create long-term employment opportunities and too little to build skills. But maybe Borland is missing the point. Maybe Work for the Dole isn’t meant to help participants find work.

An alternative rationale for Work for the Dole is to convince people who can find paid jobs to stop claiming unemployment payments. The theory is that there’s a group of people who are happy to remain on unemployment payments if it allows them time to do other things. Some may be busy as homemakers, some may own their own home or get support from family and others may have cash in hand work. For people with low levels of skill, poor health or other difficulties, staying on unemployment payments may be more attractive than a combination of low paid, insecure work and periodic job search — at least, that’s the theory.

For policymakers who buy into this theory, the challenge is how to tell the difference between people who genuinely can’t find work and those who could if they were less choosy and tried harder. Nineteenth century poor law reformers worried a lot about this problem. They had two solutions. The first was to have overseers carefully investigate applicants to discover which were genuine. The second was to insist that paupers must work in return for support or leave their homes and enter a workhouse. The second were sometimes called ‘repressive’ measures and according to 19th century commentator Thomas Fowle, they were generally less costly and more effective than investigation.

Today the policy community avoids terms like ‘repression’ and prefers to use the language of economics but the underlying rationale is the same. Here’s how the OECD explains the case for programs like Work for the Dole:

There can be a case for workfare if there is heterogeneity in the benefit caseload. Individual situations probably vary along a continuum, but the general argument applies when there are just two groups:

A. The unemployed who have a relatively high marginal utility of income (probably because they have little alternative source of income) but are unable to find work, i.e. those who are involuntarily unemployed.

B. The unemployed who have a relatively low marginal utility of income (they may have income from assets or other family members, or be engaged in legal domestic production or illegal undeclared work, etc.) and are “voluntarily” unemployed, i.e. they could find work, but for them the difference between the net wage and benefit levels is not large enough to cover the disutility of work.

Workfare requirements de facto eliminate the benefit option for group B which is voluntarily unemployed: its members will not enter workfare, since this has the same disutility as market work, but pays less. At the same time, workfare requirements maintain a minimum level of social protection for those who most need it, the individuals in group A. Workfare can increase social welfare through better targeting of benefits (targeting benefits where the marginal utility of income is highest) and increased output in the economy (output by group B members who enter work).

Governments that embrace this rationale may give up trying to make workfare participants more employable. Programs that develop work skills and help participants into work are likely to be expensive. In contrast, all a ‘repressive’ measure needs to do is be unpleasant and waste participants’ time. That’s likely to be cheaper. Of course the organisations that run workfare projects will almost certainly try to offer participants something better than this. But a cash-strapped government that’s given up on the employability goal probably won’t want to pay for quality.

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35 Responses to What’s the point of Work for the Dole?

  1. Sancho says:

    “Yi-Ping Tseng”. Probly terrist.

    • DR says:

      Sancho, since I happen to know Ms Tseng and since I assume you are not, in a fit of linguistic invention, making a connection between her name and a love of the earth (“terra”), shall I call you out for what you really are?

    • KIM says:

      OMG work for the dole dosnt help or get you shit im doing it omg , its ok when you see benefits and sell stuff as i work in a store, BUT COME THE FUCK ON

  2. Michael Summers says:

    I think there’s another motive behind work for the dole. By making it more humiliating, annoying, time consuming, hard, to be on the dole the government beefs up the intensity at which unemployed look for work. This means, even if jobs aren’t available, a more active unemployed workforce keen to find work, any work, helps keep the pressure on those who already have jobs.

    This, I believe, helps to disempower those who are employed and keeps them in line. It helps keep wages down and stifles advocates for more workers rights. Nobody on the factory floor is likely to be arguing for better pay and conditions if they know there’s a bevy of desperate unemployed knocking on the door. Not only do they know their bosses have nothing to lose by sacking them but if they were sacked they’d be out with the huddled masses vying for work in a diminishing jobs market.

    I don’t believe for a moment that it has anything to do with actually getting people off the dole, in fact I’m quietly confident that the government quite likes having a pool of unemployed. Imagine the power the workers would have if there were more jobs than workers? And really, there’s no reason why that couldn’t be the case, if you were to consider the whole stated aim behind programs like this then you have to assume this to be the case.

    But is it? Are there really empty factories out there wishing they had more staff? I suspect not really. The fact that we don’t have whole businesses shutting down simply because the staff don’t exist says to me that there seems to be an eerily coincidental equilibrium between available work and available workers.

    It’s so close, in fact, that the only thing I can imagine that prevents the pendulum swinging the other way is pure employment market forces. If there were too many jobs and not enough people then wages would have to go up, making it unprofitable to open that second factory etc. So it stands to reason, if my suspicions are accurate, that the unemployment rate generally and naturally reflects a level at which businesses feel they can best profit.

    So what does a business friendly government do if those same businesses say they’d like to make even more money? Well, they can’t increase the number of unemployed, not without a deliberate recession, but they can make the existing unemployed work even harder to find work that doesn’t exist. It would have almost the same benefits as an actual larger unemployed workforce without the unemployment rates going up and making the government look bad.

    Now, I know I’m starting to rant here, so please bear with me. There are other, more political reasons behind work for the dole of course. It pleases the cranky older conservatives to see the young layabouts being forced to do something. They can argue it shows they are the ones genuinely keen to get people off their butts and into the workforce. It helps local governments get little jobs here and there done for no serious outlay. Even if it doesn’t result in lower unemployment rates, and god forbid it would, the gov can say, ‘well lord knows we tried, we did everything other than beat them and they still won’t get a job’.

    As it happens, back in the bad old days of Howard, before the ominously worse days to come, it would seem, of Abbott. I was told to do work for the dole painting a wall for a small regional council. I told them to get stuffed or explain to me how, given my experience and credentials, they felt this could help and demanded they actually get me some proper job interviews. Surprisingly they accepted that ultimatum. I doubt an Abbott variant of the plan would allow that degree of flexibility.

    • Grumbles says:

      Workers should get better pay and conditions by trading something with their employer, the more value they add to the business, the more it costs to keep them. Companies are forced to reward good workers to keep them. Work for the dole is only a feasible scheme for weeding out the long term unemployed and if we are going to have an unemployment benefit there should be some kind of crediting system for working where, for example you have worked 2 years full time, you lose your job, you can claim the first 8 weeks without the ridiculous hurdles (still means test) like Centerlink interviews etc.

      Lower unemployment can be gained by lowering minimum wage and hence lowering the rung on the ladder that people can enter the workforce. These people can learn their jobs and value add to their employers and gain more money and benefits. If your employer could hire someone off the street to do your job as well as you, then you aren’t doing a very good job.

      As for insisting others find interviews for you? Why would someone highly skilled who can value add to a business be long term unemployed?

      • Sancho says:

        The first paragraph explains why the business lobby encourages high unemployment, so that workers have limited bargaining power and must accept the pay and conditions offered simply to keep a job.

        The second paragraph describes the American system, which has resulted in mass unemployment and homelessness, the hear-eradication of the middle class, and an army of working poor who are employed beyond full time hours but still can’t escape poverty.

        And the third paragraph? A simple Google search will turn up many stories from people in that exact situation.

  3. conrad says:

    “In contrast, all a ‘repressive’ measure needs to do is be unpleasant and waste participants’ time. That’s likely to be cheaper.”

    I guess it depends on what time-scale you are talking about. If you’re thinking about opportunity cost, then repressive measures not only cost actual money, but if they make it harder for people to find work (which appears to be the case), then presumably they also cause higher payments of benefits in the long term. That might be more costly than spending the money on training programs trying to actually help people that want help.

  4. Mensch says:

    “poor health or other difficulties, staying on unemployment payments may be more attractive than a combination of low paid, insecure work and periodic job search”

    I think more likely they can’t work, have been assessed as suitable for 15 hrs work a week by a new restrictive disability assessment criteria. Newstart recipients have to work, and mutual obligation requirements mean that they are foced to regularly undertake job clubs, job search, fortnightly interviews asking the same questions. Newstart and mutual obligatin is designed for able bodied healthy people

  5. derrida derider says:

    Borland and Tseng actually found the program reduced participant’s chances of finding a job, and hence declared it worse than useless. They attributed that to the time taken off job search though I think it more likely a product of further demoralisation and stigmatisation of participants.

    See, the theory is that these things won’t hurt the “genuinely” (ie involuntarily) unemployed but will deter the “crooks and bludgers”. Whatever the merits of the second assertion, the first was not true.

    Actually in the program designers’ minds it was more about crooks than bludgers – “this’ll weed out the buggers working full time or registered in six names” said one to me. And it is true that there was a small “Ashenfelter’s dip” – people due to go on to the program in the near future had a higher rate of exit from the dole (an effect Borland and Tseng, focusing on people who actually started on the program, could not observe).

  6. paul walter says:

    The Carousel of the Unworthy…last week asylum seekers, this week dolies..all to be put to the avenging sword: “Our Caped Crusader, Anthony, will protect us!”.
    No.
    The unemployed are being politicised, just like boat people.
    Soon those other “traitors”, rational thinkers, greenies, unmarried mothers, aborigines etc, will also find the Sword will makes no exceptions.
    Can it be anything but amoral, filthy politics?

  7. Helen says:

    B. The unemployed who have a relatively low marginal utility of income (they may have income from assets or other family members, or be engaged in legal domestic production or illegal undeclared work, etc.) and are “voluntarily” unemployed, i.e. they could find work, but for them the difference between the net wage and benefit levels is not large enough to cover the disutility of work.

    It seems to me there’s another group here which will only get larger over time – groups who are on a very low income (which may be cash in hand/sporadic) and really need a kind of social wage in order to attain a living wage. This is illustrated in the US story about walmart employees who are collecting food stamps.

    This is straight-out subsidisation of big business and the answer would be to make these companies hand over more of a proportion of their profits to wage earners.
    Where the money really isn’t much (e.g. small self-employed “makers”, people in the arts and the like) workfare will just, as others have pointed out, waste time. And the minority who could have broken through to bigger things, won’t.

  8. I used to be not trampis says:

    Anyone who has ever had the use of outplacement services knew work for the dole was a crock when it was first thought about for the reasons set out in the report.

  9. Tel says:

    I agree the government cannot be trusted to train unemployed people in some basic life skills and work ethics.

    Strangely though at least on outward appearance, we have a government who can be trusted with children, trusted to manage an education system, national curriculum, accreditation for skills and research grants.

    We have a government trusted with management of our medical system, hospitals, drugs, doctors, etc.

    We have a government trusted with a monopoly of lethal force via the police and the military.

    That same government cannot be trusted to do the rather simple job of teaching unemployed people to wake up on time, take a shower, put on a clean outfit, get onboard public transport and turn up somewhere and follow some instructions each and every day without fail. I know it is downright degrading to ask people to do this, you don’t have to explain to me just how degrading it is because I’ve been doing it week after week for years. The people stuffed up my armpits on a crowded train every morning know how degrading it is, I feel sorry for the bastards. I’d like to help those people get somewhere better in their lives… can’t think how, maybe something to do with economics.

    • Sancho says:

      Apart from the problematic logic in comparing governmental policy and funding actions with the choices of individuals to seek employment, what’s the message there? Which economic changes would encourage more Australians in to the workforce?

      • desipis says:

        Assuming the problem is one of ‘encouragement’ and ‘incentives’ might just make about as much sense as a policy premised on “the beatings will continue until morale improves”.

        It might be worth considering that those who are failing the most in our economically rationalist world, are those who are failing to act in an economically rationalist manner. Is it really a surprise that attempting to modify the behaviour of such people with economically rational ‘incentives’ doesn’t work all that well?

    • desipis says:

      I agree the government cannot be trusted to train unemployed people in some basic life skills and work ethics.

      I not sure its a matter of trust, so much as the task of training each generation in life skills and worth ethic to such a high degree of consistency that it eliminates long term unemployment is just a really really hard thing to do.

    • Julie Thomas says:

      Tel wtf?

      “That same government cannot be trusted to do the rather simple job of teaching unemployed people to wake up on time, take a shower, put on a clean outfit, get onboard public transport and turn up somewhere and follow some instructions each and every day without fail.”

      I wonder why you think that a Government should be doing these things? And are you really a hero for doing these things like having sad people in your armpit. Perhaps a better choice, given your current unhappiness would have been for you to just ‘drop out’ like some young people I know are doing, rather than continue to suffer the indignity of bus travel during peak hour.

      But then you say you want to help the other people to feel as you do? I don’t understand your reasoning. You seem unhappy with the current situation but don’t have a good understanding of any alternatives except to blame government.

      But isn’t this teaching of work skills what the society does, through the extended family and community? You seem to be suggesting that this is a job for the government but if the ‘attitude’ of the person is wrong – then no amount of training will alter that. Do you blame the govt for the wrong headed attitudes that the long term unemployed have?

      “I’d like to help those people get somewhere better in their lives… can’t think how, maybe something to do with economics.”

      I wonder where you would like these people to be.

      I have got somewhere by not competing with people like you and I feel I am already ‘somewhere better’ in my life and it has had nothing to do with economics. It has to do with society and finding a community where people value me for what I can do instead of criticising me for not being able to climb the ladder and get lots of money power and stuff.

      As Conrad and others have recognised the people who are not doing well – if you judge that those of us on welfare as marginalised or losers – have something ‘wrong’ with them. We are mostly people with those strange personalities, and weird upbringings – and you’ll get more of these if free schools are encouraged – that form us into people who don’t want to do what the normal people want to do.

      Aspergers do want to work, we just don’t want to do stupid work or work with neuro-typicals because they are not easy to understand and are, in fact very strange people. But it seems to me that it is the non-typical upbringings that ‘make’ aspergers into strange personalities. If we are raised in a functional household we can be very ‘normal’.

  10. paul frijters says:

    Don,

    agreed with much of this (my chapter 4 makes a near identical argument).

    The politics of this is not partisan though. Mutual obligation schemes here in Australia had the same element of harassment in it and similar ‘social work’ programs can be found throughout the West instigated by all sides of politics. I think it is thus fair to say that the maintenance of a work ethic via harassing the unemployed and an insistence on visual reciprocity on the part of the younger unemployed comes with bi-partisan and broad population support.

    The alternative is not clear cut. The training programs you call for are notoriously bad too at getting people into long-term good jobs. Indeed, whatever we do to the bottom of society has so far failed to rid us of a bottom of society.

    • conrad says:

      The alternative is to get rid of all of these politically motivated programs and non-politically motivated ones that don’t work (which not even the recipients want) and save the money. Thus, the alternative political position is to say “We saved XX million by getting rid of all of these useless things”. Surely this might catch on.

      • paul frijters says:

        Maintaining a work ethic is crucial to keep up tax receipts. Much like prison is not really about helping the inmates but about keeping those outside of prison scared of breaking the law, harassing the unemployed is less about helping the unemployed and more about keeping the rest happy with their choice to spend a lot of time in taxed activities, ie formal employment.
        Harassment of the unemployed is probably a relatively cheap way to keep up that work ethic. It may create angst and unhappiness, but it is cheap and that matters in politics.

        What other suggestion do you have to keep up that work ethic? Or do you, like DD, favour a society in which formal employment is not seen as an important societal goal for (nearly) everyone and we are hence all relaxed about the idea that a large proportion of our society opts out of the world of work and lives a life of leisure (which is what you are likely to get with a basic income)? There is a lot to be said for that position, but it is hard to enact that view in a world with countries competing on wealth. I think we are moving away from that view rather than moving towards it.

        • conrad says:

          I think paying people $270 a week (or whatever it is now for the dole) is really enough incentive for most people to get job. I also don’t think there is any evidence that, at least for young people, there is a culture of not wanting to work — it’s probably quite the opposite. Early retirement is another issue, where clearly the incentives are too strong given the data.

          Rather than think about these things in terms of incentives and so, you might like to just look at the characteristics of the long-term unemployed. Of those things the government is willing to measure, what you’ll find is people with low levels of education, people that don’t speak English, and so on (the outcomes for non-English speaking refugees from poor countries, for example, are especially poor). Of the things the government is not willing measure, what you’ll find is people with extremely poor verbal skills, people with strange personalities (e.g., aspergers and so on), people with unidentified mental problems (e.g., social anxiety) and so on.

          Given this, my position is that not much can be done about many of these people, and you too have noted that this is probably true based all that has gone before now with these groups. So if there is really nothing that can be done to help some of these people, and I think that’s the unfortunate truth, I don’t see the point of wasting money to do it. I also don’t think this detracts from having a culture where most people want to work for a good chunk of their life and nor do I think it detracts from the government offering decent training programs to people that think they might benefit from it.

          The main thing it detracts from is people’s sense that life is somehow fair to everyone, and the strange dream that anyone can get anywhere if only they try hard enough — but neither of these are even remotely true anyway.

        • paul frijters says:

          I agree with these sentiments and the basic observations, but you are really making the case for this kind of harassment: you say that almost no able bodies and mentally healthy people are longer term unemployed? I agree, but this can be seen as a sign that the deterrent is working beautifully at keeping all the abled bodies and healthy in line.

          Of course a lot of the work programs do take into account the (mental) health of the unemployed in question, their age, etc. There is hence an attempt to direct the harassment to those who look like they might actually be employable. You might call it a policy of ‘optimal harassment’ that caters for the need to maintain a work ethic but that minimizes the harassment needed to maintain it. (subject to the beliefs of the population about who is deserving and who should do ‘something back’, so the visuals also matter). Of course, with perfect measurement of employability one wouldn’t need these programs, only the threat of them.

        • conrad says:

          “I agree, but this can be seen as a sign that the deterrent is working beautifully at keeping all the abled bodies and healthy in line. ”

          I’m not sure there is any evidence that work for the dole in particular is working, or at least no evidence that there is any decent sized effect of it (although I admit it is very hard to isolate cultural changes). Given this, I think it is an expensive waste of time, and if you want to harass the unemployed and make their lives a misery then things like paying them an amount which they can barely subsist on is probably enough, and possibly saves you money too (or possibly not — there’s probably an equilibrium point where being too cruel causes other negative things).

  11. derrida derider says:

    “The alternative [to mutual obligation approaches] is not clear cut.” – Paul
    A Basic Income as a right of the citizen, Paul?

    Mind you, you’re right that the voting public believes in both the fetishisation of paid work and the punishment of nonconformists, which rules out getting a BI while we’re a democracy, but let’s not mix up the normative with the positive. The alternative is clearcut and well developed, just not in practice doable.

    • conrad says:

      That’s too extreme — I’m sure many people are happy for others to do as many strange things as they want if they’re not collecting benefits.

      Alternatively, it’s easy to see why people who don’t particularly love their jobs either don’t like paying others not to work when they can — as Tel puts it above “The people stuffed up my armpits on a crowded train every morning know how degrading it is” — and I agree with this — work sucks for many people, yet they still have to do it. This has nothing to do with a fetishism for paid work or dislike of non-conformity. I’m sure many people would see it as an issue of of fairness.

      I should say here that I personally think that many people who are unemployed are more or less unemployable under any circumstances, but if this is correct, then the issue is not one of paid work or conformity, it’s that people think too highly of many of those at the left end of the distribution.

  12. Chris Baulman says:

    “Paid work is in general positive”? In a climate change world on the edge of nuclear proliferation & facing terrorism because of deep injustices, that statement is very debateable. It depends on your definition of “work” which is currently being defined by commerce, industry & consumerism rather than by what is “positive”.

    We are all locked in to paid “work” primarily because one of the essentials for life (access to land for shelter & food) has been stolen by this “work” system & the only way we can survive in it is to do whatever “work” is offered in order to be able to pay the mortgage or the rent.

    Land, like air water & sunlight is a gift of nature. It is essential for life which this very same system says is a right. It’s a scam which serves the rich & channels wealth away from the poor who are enslaved by it.

    Restore the right of land access to those who have less access than is their right so they have a free choice about the positive work they will do.

  13. paul walter says:

    I’d rather wonder, in a country where the unskilled labour sector seems now saturated with offshore labour, how it is then acceptable to insult to injury by humiliating and persecuting the excluded local Labour?

  14. What percentage of the longer term unemployed are over 50?

  15. paul walter says:

    Yes John R Walker, all adds up to a sick joke…ageism plus Randian ideology is a toxic mix.

    Maybe it is time- belatedly- to view UB as (inadequate) compensation for the dislocations inflicted on harmless people by neoliberalist “reform” and globalisation?

    To an extent, I see the other viewpoint, the workplace isn’t unionised any more and often an unpleasant place for workers; I can see why there is resentment, but it is directed at the WRONG people, on the whole, most blatantly by divisive shockjocks, Murdoch tabloids and TDT style junk TV…

    If the one percent, the REAL cause of unemployment, want Austerity, let them finally lead by example instead of hoarding their corporate welfare filched from the people offshore while these do without.

    • paul frijters says:

      “If the one percent, the REAL cause of unemployment, want Austerity, let them finally lead by example instead of hoarding their corporate welfare filched from the people offshore while these do without.”

      coarsely put, but there is a good point here: the mobility of capital and profits across borders combined with beggar-thy-neighbour tax policies limit the degree to which governments can tax them. Sad, but true. This indeed forces governments into taxing wages rather than rents (remember the mining tax debacle? That really was the big attempt to steer away from taxing labour and small businesses). In turn, the reliance on taxed labour makes the work ethic as important as ever, which means it is not just disgruntled labourers who approve of harassment of the unemployed, big parts of the bureaucracy and the intellectuals are also in favour because they see the need to maintain the tax base and fear spiraling levels of joblessness. They cant do much about globalisation but they can influence local social norms around work.

      The big thing in the background indeed is this international competition for wealth and capital. It really is not see easy to see where the international race to the bottom in terms of taxing capital is going to leave the government services available to the lower skilled.

  16. Chris Baulman says:

    I really think all this agonising about people on the dole is a set up for a straw man. Our real problem today is not so much how many people are unemployed, but how many people are employed doing destructive things! I don’t just mean people working in the tobacco industry (and it’s supportive industries like advertising), or the gambling industry, porn, etc etc, or illegal industries. The idea that “paid work is in general positive” is too simplistic.

    In a climate change world on the edge of nuclear proliferation & facing terrorism because of deep injustices, that statement is very debateable. It depends on the definition of “work” and that is currently being totally defined by commerce, industry & consumerism. This can no longer be assumed to be valid work!

    Yet we are all locked in to taking any paid “work” primarily because one of the essentials for life (access to land for shelter & food) has been stolen by this “work” system & the only way we can survive in it is to do whatever “work” is offered in order to be able to pay the mortgage or the rent.

    Land, like air water & sunlight is a gift of nature. It is essential for life which this very same system says is a right. It’s a scam which serves the rich & channels wealth away from the poor who are enslaved by it.

    Restore the right of land access to those who have less access than is their right so they have a free choice about the positive work they will do. Indeed, restore the right of land access & people can be occupied building their own home, growing their own food, reducing their dependence upon welfare and opening up a sustainable pathway for the developing world to follow!

  17. paul walter says:

    Tending to servility, blonde one.
    But does the Eichmann Defence really work any more, when everyone knows msm is controlled by the likes of Murdoch and Gina No-heart.

  18. Sancho says:

    Here’s a somewhat relevant piece from Alex Pareene regarding labour and the basic income.

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