Katherine Newman on Low-wage Workers
Mar 8 2010

Katherine Newman, Professor of Sociology at Princeton University, talks with EconTalk host Russ Roberts about Newman's case studies of fast-food workers in Harlem. Newman discusses the evolution of their careers and fortunes over time along with their dreams and successes and failures. The conversation concludes with lessons for public policy in aiding low-wage workers.

Charles Platt on Working at Wal-Mart
Charles Platt, author and journalist, talks with EconTalk host Russ Roberts what it was like to apply for a job at Wal-Mart, get one, and work there. He discusses the hiring process, the training process, and the degree of autonomy...
Casey Mulligan on Redistribution, Unemployment, and the Labor Market
Casey Mulligan of the University of Chicago and the author of The Redistribution Recession, talks with EconTalk host Russ Roberts about the ideas in the book. Mulligan argues that increases in the benefits available to unemployed workers explains the depth...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


Mar 8 2010 at 10:24am

I am taking a labour economics course at the moment, so I found this podcast very interesting.

For me, the most illuminating idea from this episode was during the discussion on weak and strong ties. I had read about this theory before, but Robert’s comparison to portfolio theory made me understand this idea better than I ever did before. Thanks!

Mark Witczak
Mar 8 2010 at 11:36am

This was an eye opening podcast. I’ve been listening to your podcasts for sometime now, but this one I think had a deep personal effect on me.

For years I’ve been reading books on networking and attending industry and social events to “network.” I’ve never had much luck converting the effort into value. I’ve got an engineering degree and an MBA. Now that I’m unemployed and frustrated with a 6 month job search, I’m wondering what I’m doing wrong.

No one has ever told me that weak-ties are more important than strong ones. And strong ties will not get you work. I’ve been pursuing opportunities all wrong. Hopefully, now I can correct course and turn my luck around.

Thank you.

Mar 8 2010 at 12:07pm

Listened to this podcast during my commute work today and ended up wishing it was longer. I know that some previous podcasts have exceeded the 60 minute mark – I wish this one had been longer.

This was deeply fascinating by any measure – please do look into this kind of topic; mobility, poverty, labor trends and so forth further in the future. As much as I find big picture economic ideas to be stimulating, it was refreshing to look at the micro-economic life of individuals who are struggling and how they live that life.

I wonder if the observations here – that about 1/3 of the group studied managing to escape poverty – would obtain in the period 2005-2010 or even 2008-2010. I found it particularly interesting to see how social, non-financial supports were important (e.g. a parent or other person teaching a person a trade, getting free childcare from relatives, getting free room & board in order to study vocational skills or engage in college study). Beyond having more money, this is a big advantage that many in the middle class and above enjoy; strong family and community support to engage in study and so forth.

Mar 8 2010 at 2:00pm

I’m about halfway through the podcast, but wanted to share this post that I saw on Calculated Risk today that shows unemployment rates by education level back to the early nineties.

Mar 8 2010 at 5:55pm

I agree with the above writers that this podcast was insightful. What I took away from it:

She seemed to make the argument that restricting credit to the poor was actually not a bad idea. That of course seems odd, as Russ pointed out, but she also said that the poor were very wary of loans because they obviously see the damage unpaid loans can cause. That’s an interesting point because it goes against the argument that they are unaware of the consequences so we should be their parents and restrict check cashing services. I don’t buy her argument that the poor don’t understand how much something costs – I agree with Russ that if true, it is not a uniquely poor attribute.

Financial Aid – it is generous, especially for the very poor. I was the recipient of a lot of it and am very thankful. So what are the hurdles to the poor using it? Is it that they are attending schools that don’t quite qualify (trade schools?). Or is it that their grades are not good enough out of high school? It sounds like from her discussion that the poor were not seeking liberal arts education, for which financial aid is good, but instead professional schools, which perhaps don’t quite have the same financial aid programs? If so, why? I know there are numerous job-training programs, so are these not effective at hitting who needs them?

I am curious also if the poor are frustrated at the high union salaries, or instead like them because they have a shot at a nice city job. Similarly, I am wondering how they see government regulations restricting entry – do they see it as a big problem as I do, or do they not really care and operate an illegal food cart anyway?

Mar 8 2010 at 7:50pm

This is back to the econtalk I listen for.

Cheers Russ.

Mar 8 2010 at 8:01pm

That comment wasn’t very valuable. I’ll add to it.

A Hayekian, classical liberal economist’s view on ‘normal’ economic questions: financial crisis, money, trade growth, etc. is something you can find in different places. A lot of it was extremely interesting and insightful, but it can be something you can get anywhere.

On the other hand, a smart economist and a smart sociologist discussing unemployment is fertile ground. It’s hard to get this type of content.

Mar 9 2010 at 7:19pm

A stimulating conversation, based on some illuminating research (the longtitudinal kind that takes so much effort we just don’t do enough of it).

On the micro-credit idea, I wonder if your listeners are aware of the Australian Government’s system of ‘income-contingent’ self-education loans. It started in the 1980s as a deferred-payment mechanism for university tuition fees, and later expanded to a broader system of loans for students.
More info at link –

The debts are indexed to CPI (which is concessional) and repayment is handled through the income tax system, with debtors paying a few extra percentage points on top of thier tax rate (depending on how high their income is) until paid off. If income is low, then repayment is zero for those years. There are also incentives to make additional lump-sum payments to pay the debt off faster.

This means that the taxpayer – not the student – bears some of the ‘market risk’ (the risk that student finishs thier studies in a deep recession, and can’t get a good job). Of course, some borrowers never get a job, or move overseas to work (only Aust residents pay Aust income tax). But this turns out to be rare, since the Tax Office has a long memory, and most Australians come home eventually.

For a discussion of history, theory and performance of the policies, see –
[Note that the system was extended to include Vocational Education after the article was written]

Hope this is helpful (and hope I got the facts straight),

Jeremy, Canberra, Australia

Ray Gardner
Mar 10 2010 at 12:28am

I enjoyed the podcast very much.

Russ might be struggling with his own confirmation bias, but she doesn’t seem to be struggling at all; she has given herself over to it completely.

I started to rehearse the logical contradictions that follow from her presentation, but changed my mind. It was a good podcast, and I don’t want to be overly negative.

It would be interesting if she would listen to this podcast with a little more candor than she displayed during the interview itself.

Ralph Buchanan
Mar 10 2010 at 8:12am

I worked with prisoners in my previous job with Vocational Rehabilitation. I was always amazed by the abilities and intelligence of most. There is a lot of ingenuity. The poor/uneducated aren’t dumb – in fact they have more common sense than most graduate students. I was also amazed by how much money changes hands in the underground economy. I see it everywhere, even by those working in other paid labor: there are clothes, DVDs, any number of services available, and yes, drugs – which pays the best. But illegal money can only be spent – a bank account is too visible. I was also told that the way to get away with illegal activity is to continue to hold a real job so you can camouflage some of the illegal income.
Obviously, as you noted, education makes a huge difference in income, but more important, I think, is the FAMILY that assists and encourages, and that stable family is precisely what is almost nonexistent in the permanent dependent class. Family is a source of assistance that would otherwise require payment(child care, health care, food & board). Family is just as important for these as for McArdle in her podcast. This is just the flip side of the same coin. The rules are the same, but the circumstances are different.
Thanks Russ – I always eagerly await Monday podcasts!

Mar 11 2010 at 9:27am

Great podcast Russ, that was a home run! Really interesting and but also sort of uplifting, a reaffirmation of basic things like the importance of economic growth & rational choice behavior but also the essential goodness of human beings.

Mar 11 2010 at 11:36am

Thanks for producing this podcast, an enjoyable experience. I look forward to further productions. Where sociology and economics merge for an interesting study.

Mar 11 2010 at 1:25pm

Great podcast. My favorite part was when Russ asked if she agreed that her study highlighted the importance of growth, and Ms. Newman said (essentially) ‘Yes! This shows we could do almost anything if we had full employment’. So many ironies there.

Ms. Newman seemed to believe that the period she studied was unique in terms of social mobility. It may be, but I wonder how much social mobility goes on in our economy in ‘average’ times, and how much is going on now. My guess is that even in really bad times (which it seems do tend to impact less skilled workers more) the level of mobility isn’t 0. It’s an empirical question, but I suspect that Ms. Newman might be overweighting the degree to which her time period was unique.

Aaron Parker
Mar 11 2010 at 9:27pm

I actually had a question about the 11/30/09 Podocast “Boettke on Elinor Ostrom, Vincent Ostrom, and the Bloomington School”. Sorry for missing the comment window, but some of us take time to get through all of these great podcasts!

This all seems to work well for local resources that can only be accessed by a small group of people, but how does it work for universal or global resources like oceans, the atmosphere, or the overcrowding of satellites and space junk in low earth orbit? It seems less likely to apply to these larger resources. How do we manage those without a top-down approach to regulation?


Mar 12 2010 at 6:02pm

The company that I work for has a paid college intern program. Many interns are from background described in this podcast. My experience with them is also as described in this podcast. We pay intern a few dollars more than minimum wage and no benefits. Still, they are significant earners in their households. If we hire them on graduating, their entry level starting salary is often more than the combined income of their entire household.

Some families are encouraging and some are not. I often hear from interns that they have to navigate work and college issues on their own. Their families lack experience with the professional office behavior and etiquette that I learned at my father’s knee. We, as co-workers, adopt them and do try to teach them such things.

Peter Wogan
Mar 13 2010 at 9:31pm

I agree–another great podcast.

I was especially glad to see Russ and Ray Gardner keep the question of bias on the table. Mr. Gardner, your comment piqued my curiosity, so I have to ask: What kind of confirmation bias did you detect in Dr. Newman’s comments? I really wonder what you and/or others thought about this.

I could see this going a couple different ways. For example, in stressing the successes of the “high flyers,” Newman was apparently going AGAINST her own biases. From what I can tell, her previous books have all emphasized the suffering of these “near-poor” folks, how they get a raw deal and can barely get by. In fact, that view is standard in anthropology and sociology (she has her degree in anthro, but now teaches in a socio dept), and it fits with the overall sympathies of those disciplines (e.g. for a crude measure, studies routinely show that anthropologists and sociologists vote 30-1 Democrat to Republican, as opposed to about 3-1 for economists). So for her to admit that some poor people in Harlem are actually upwardly mobile–that seems to run against the grain of all her previous research and training. In fact, she seems to be iconoclastic in this regard, rather than confirming her own biases, no? Or are you thinking of the way that she kept emphasizing the uniqueness of the late 90s, thereby downplaying these “success stories”? Or other comments she made?

I’m going to read Dr. Newman’s books when I have more time, but wanted to pose this question before the comment window closed (like Aaron Parker, I often can’t make it in time).

john berg
Mar 15 2010 at 2:24am

What hasn’t been expressed earlier in other comments is the sentiment of the Progessive movement with it’s suggestions of “compassion” and “social justice” and its wish for “social engineering.” There’s an extraordinary orientation to Ivy League schools and Leftism.

John Berg

American Hero
Mar 16 2010 at 12:28am

What she said was that in the 8 year period, 1/3 of the poor were much better off and another 1/3 “not poor at all.” That’s 2/3 success rate in escaping grinding poverty. That’s not too bad considering if there was a government program that claimed to fix poverty for 2/3 of the participants it would be a smashing success.

Remember that next time someone says “you think we should do nothing” to help the poor? My answer is yes, I suggest “do nothing” to “help the poor” because I actually want to help the poor. And if “doing nothing” helps the poor best, I’m all for it.

Jim Gatti
Mar 17 2010 at 11:11am

Does anyone know whether Newman ever identified and analyzed the characteristics that differentiated the “high fliers” from the “middle group” from the “low riders?” Given the rates of illegitimate birth and single parent households among the lower income groups, there is an a priori supicion that differences in those rates and or the presence of an extended family to help cope with the consequences may explain a lot about the ability to become upwardly mobile.

Mar 23 2010 at 3:48pm

Just catching up to my listening.

The most interesting part of this podcast came near the end when the discussion of “black market” economies (or barter economies) came up. I found that to be very illuminating and hope to see a full podcast on the issue of barter in modern, monetarized economies. To me, it just seemed like such an innovative way to deal with tough circumstances and renews my faith in the entrepreneurial spirit of everyday people. I can only hope more bartering goes on.

Mar 30 2010 at 3:55pm

Great episode; I learned quite a bit. How might a hypothetical cashless society affect the working poor, those who make their livings working on cars, for example?

Comments are closed.


About this week's guest:

About ideas and people mentioned in this podcast:Books:


      • Welfare, by Thomas MaCurdy and Jeffrey M. Jones. Concise Encyclopedia of Economics.
      • Unemployment, by Lawrence H. Summers. Concise Encyclopedia of Economics.
      • Labor Unions, by Morgan O. Reynolds. Concise Encyclopedia of Economics.

Podcasts and Blogs:



Podcast Episode Highlights
0:36Intro. [Recording date: February 24, 2010.] Fieldwork and the sample. In the middle of the 1990s got interested in the lives of the working poor--so much of the research in the field on poverty focused on those who were part of the welfare system, which has never been popular even among those who are on welfare. Feeling was that sociologists and economists as well had ignored the large number of poor people in the United States that work for a living. Living on upper West Side of New York, on the edge of Harlem, evident that people in Harlem were going to work in large numbers. Statistical examination of central Harlem showed that at least 2/3 of the households in Harlem had at least one worker in them; but still very poor. Who are these people? what is the role of poverty in poverty? Studied a sample of people who worked for a large and to-be-unnamed fast food chain, service sector in Harlem. Followed 200 some odd people who had jobs there and another 100 who had applied for those jobs and failed to get them. First book, No Shame in My Game, made use of survey data, interviews, and very detailed studies that took more than a year to gather the data for--a handful of people emblematic of the study. Representative of people in the low-wage sector, primarily in the fast-food industry. By the time finished with book, welfare reform bill had passed in 1996; question of what would happen over the long run to the nation's working poor more vivid in people's minds. What happens to people in this kind of labor market over time animated the next book, Chutes and Ladders. Wanted to know if you entered the labor market in a job like this, was it true that it would be a dead end, or were there mobility possibilities? Could go down, too. Don't see a lot of 60-year old cashiers, so probably don't stay there forever. Stay there longer in Harlem than on Long Island. Labor turnover in high unemployment areas is much slower than in healthier labor markets. Second question: what would it mean if you had thousands and thousands of people coming off the welfare rolls coming into that market? Would the people working there to begin with be hurt by this flood of new entrants to the labor market? Second question similar to what people worry about with immigration, new, ongoing, or continuing group of what appears to be competitors--what's the impact? This is a related issue.
6:04Book is very poignant, nice mix of narrative with fact. Try to summarize--though each person's different, charm and power of case study. Contrary to expectations at the time, most of the people in the study did very well. About 1/3 no longer poor at the time of the final followup, eight years after research began. Period intersected time of strongest labor market since WWII--late 1990s and right up to about 2001, record low unemployment, high growth, low inflation. Perfect weather, as opposed to the perfect storm. Almost uniquely good time; kind not only to those at the top end but for people at the bottom. Suggested that some of the dominant language of the time--that these people were damaged, didn't know how to seize opportunity, intended for the low wage labor market was incorrect. Purpose of first book was to describe the pathways. One pathway was when labor markets tightened, the firms they were in began to grow. Growing even in inner city neighborhoods. Fast food agencies were expanding, creating new shops, pulling employees off the floor and promoting them into managers as the firms grow. In a high-growth industry, opportunities open up even at the bottom. Even if those are short job chains, which is characteristic of service sector employment, if there are new establishments opening up there will be much more opportunity than there would otherwise be. Short job chains? Not very many rungs on the ladder above your head. Service sector industries tend to not have a lot of promotion possibilities relative to other industries; but if there are many establishments opening up, managers needed to monitor the labor force. That was one route to mobility. Another route--education or training--the route most economists rely on. Interesting: the range of skills, institutions they attended. Economists often think high school, college, graduate school; but there is a lot more educational opportunity out there for people with low skills. Example: one young man worked for the fast food firm for 3-4 years at least, during which time he attended a trade school where he got a certificate in refrigeration and air conditioning. Quite costly--around $3500 to get that credential. Once he got it, he could earn four times the hourly rate he'd been earning before. How did he afford it? Those workers fortunate enough to live in households where someone else could take care of a cost of living--roof, food--were creating a financial aid system out of their earnings. He lived with his aunt and uncle, who didn't charge him room and board; he could take all the money he earned and put it toward this certificate. The day he finished was the day he quit his fast food job; went to job fairs--field team did with him--and picked up job in refrigeration. Human capital route; firm expansion. Some of the workers were not actually doing better, but the composition of their households changed, so the mobility of their families was more positive than in the past. Can happen when workers marry, or when children get old enough to enter the labor force, when the ratio of workers to non-workers in the household changes.
12:48Quote, F. Scott Fitzgerald [not Hemingway]--the rich are different--they have more money. On the surface, fact; having a lot more money has a lot of implications. The poor are different--they have less money. Huge part of their problem; but compounded by family issues, drugs, cultural challenges, racism--panoply of challenges and hurdles in book. Examples: One young woman in study had a son about 2 years old; didn't earn enough money to pay for childcare. Earning about $.25 more than the minimum wage at the time. Only way she could stay in the labor market was to get her mother, who had been on welfare for decades, to watch the child. She was able to get her mother to do that; mother expected to be paid something to do this, but a lot less than outside childcare would have been. Could stay in the labor market and create a steady work biography that is important to employers. Who will help you and who will not help you really make a difference in a low-wage economy. The woman ends up using her grandmother as a babysitter--who is cheaper. Moving around, looking for the best deals within her family circumstances. Other families have no money changing hands; other folks working literally 24 hours a day--8 hours on, 8 hours looking after someone else's child, 8 hours sleeping, and everybody transferring themselves around those requirements on a 24-hour basis. If you didn't have people who will help you, impossible for you to stay in the labor market. People who step out look very checkered to the next employer. Steadiness depends a lot on your family circumstances. One of the workers doesn't step out of the labor market a lot, but moves a lot from job to job, partly because he has trouble staying employed--anger issues, messes up--but always able to find another job, till end of story ending up with a radical move. If you are only on each job for 3 months, it doesn't look good. Talking about Jamal (not real name), who is an African American, about age 23 when first met. Had always worked since age 13, but didn't keep jobs for very long; had a temper; didn't like being put at the bottom; but almost never without a job. Defining characteristic of the working poor--rarely unemployed but didn't always have jobs or work patterns that were very stable. In the late 1990s when doing this study, it was quite possible for someone like Jamal to job hop. Much harder now. Economic conditions surrounding a job seeker or job holder make a different. In some parts of the country, Massachusetts for example, unemployment was down to around 2%--so low that employers were lining up at prisons, trying to get men coming out of prison on training courses when they were inside and hiring them as soon as they got out.
19:09Right now very high unemployment relative to the 1990s, or even relative to the 1980s when things improved after a bad recession. Mild recession in early 1990s, mild one in 2001, and a bad one now. Right now the unemployment rate is very close to 10%--9.7% at this taping in February 2010. A lot of people believe that's understated because people have given up--you have to answer the question to be counted as unemployed. Pattern within that high unemployment rate--varies tremendously by education--and income, but that may be misleading. Education: if you have less than a high school diploma your unemployment rate is much higher than if you have an advanced degree. Sure that was true in 1996 or 1998. Even though the labor market was booming, growth; but among people who had little education, wasn't the unemployment rate--the measured unemployment rate--still fairly high? In book: Even in these good times, employers turn down 12 out of 13 candidates for the fictionally named Burger Barn. That figure comes from the period before the boom, the beginning of this study. In the beginning of this study, 1992-1994, unemployment was very high, particularly in Harlem--18% measured unemployment. By 1997-1998, record low unemployment rates, even for Harlem. Don't disagree that unemployment rates higher for lower education groups--always been the case even when very lower unemployment. There were people who would be regarded by employers at bad bets; but at this time even people coming out of jail were looked at, partly because the alternatives were moving up the ladder. Best of all possible worlds was being looked at. When started the followup, only looking at what would happen with regard to welfare reform. Nobody knew there would be an economic renaissance. Just landed on top of study. Interesting that study happened during a period of prosperity, though, because it reveals the limitations of a cultural argument that says the reason why people don't do well is because they are not motivated, uninterested, poorer skills, no experience, etc. They don't understand the work culture. That can't explain how it can be the case that almost overnight unemployment falls through rock bottom and you start to see young black males, who are usually the cultural end of the caboose--the cultural argument doesn't work very well to explain how such a dramatic change could happen almost overnight. Poignance of stories--Fitzerald/Hemingway thing. Presumably there are people who are worse off than the working poor, perhaps even worse off because they don't have the cultural savvy. Certainly are. Can't claim any expertise in this book about those who were out of work or looking for work. But, the proportion out of the labor force was so tiny, not worth wasting the paper to write a book. The groups that really do matter as social scientists or policy analysts, are people who are or have been part of the labor force, and that is about 98% of the adults in the country. For those who didn't do well--study half-empty/half-full--there were certainly people who did not do well. Three groups. High flyers: people who did very well, did better than they or Newman ever expected. Some making $50,000-$70,000 a year because they got that certificate or switched job to FedEx. Fourth route to upper mobility was to find a unionized job. Very important to these workers. Some found public sector jobs that were unionized, city or local labor force that was really the holy grail for many of them--civil service job. Others found jobs in unionized jobs or in shops that were competing with unionized shops for labor and had fairly good wages and benefits packages. But unions are declining steadily since about 1950 as a percentage of the labor force. Unions were important--critical for those who found those jobs, but going the way of the dinosaurs. Not common in 1997 either. Don't know which way causation runs in that story. How many--roughly--high flyers were in those union jobs? About a third. So, high flyers, then middle group: people who had made headway, ahead of inflation, but not much. Secure but not really secure. Better off, would have said they were better off; moved from fast food into retail, had jobs that were less dirty, less despised, more prestigious. But if they were doing better, it was probably because they married or found a partner. Had to be something else going on in their household because their wages didn't shift that much. Didn't fall behind, but weren't earning that much more; wouldn't be able to make a huge difference by themselves in their material standard of living. Then there was a group at the bottom that really was in trouble. Skidding along the bottom, often with depression issues, alcohol problems, often derailed by illness--health insurance issue becomes very poignant for them. Often derailed not by health for themselves but by someone who needed to be taken care of--a kid, a parent. Very fragile situation with regard to access to health care. In and out, in and out, in and out. Don't want to talk a lot about the high flyers--no one expected that.
29:25Role of information. Some of the people are extremely savvy about how to take advantage opportunities in the welfare system. Medicaid extremely helpful to the poor. Did the folks who didn't take advantage of those opportunities not know about or not qualify for government aid? Second question: The guy who found the refrigeration opportunity--the people who don't to that, is it because they couldn't get the $3500 or because they didn't have time or the opportunity to find out about those opportunities? Good questions--a little of each. Being savvy is partly about having skills in gaining information and having networks to exercise those skills with. People vary in the quality and range of their networks. Mainstay in Sociology: weak ties really important. Strong ties--people you know very well, who occupy a niche in the world similar to your own--versus weak ties--more diverse, range outside of your social niche and have information you don't already know. Sociologist Mark Granovetter at Stanford: studied job search behavior and noticed those who have extensive weak ties did better than those who had mainly strong ties. His explanation: information travels better in weak networks if you can activate them. Like a portfolio--you need some diversity. Found that there were people in the study who had the kind of ties Granovetter was talking about, positioned in different industries in theory. But in practice, the ability to get someone to do something for you is very uneven. Sandra Smith, Berkeley, book: Lone Pursuit: what causes social parties to activate on behalf of their job-searching friends? Was grad student at the time. Workers are very doubtful or dubious about recommending someone for job openings unless they have enormous confidence. If they think that person is going to embarrass them or reflect poorly on them, or do a bad job and ruin the recommendation of the recommender, they won't do anything for them. Universal phenomenon. But it has a lot of profound consequences if your only options for job-finding run through networks; there isn't going to be anything else--no job bulletin that will help you or a career day on your campus. Uniquely reliant on your social network. Same thing applies to something like Medicaid. There are people who are very good at finding out information from their fellows; and Medicaid information tends to travel along these lines. One fellow in story, pregnant several times; got really sick during pregnancy, hadn't seen a doctor at all; finally her aunt pulled her aside and said "Listen, honey--you are going down to the Medicaid office right now because you need to go to a doctor." Combination of not knowing, not wanting to think about it, not wanting to be stigmatized that had led her to not do this on her own steam. In the end she did because she was so afraid of losing the baby and they were able to help her. Partly your aunt takes you aside and tells you how your mother in law knows something you don't know. Insertion of a network in between. Getting a certificate--lack of money or information--usually both. Money is a huge barrier. Huge barrier for going back to school. Surprised at how much more education the sample had received in the 8-year period studied--well over half beyond school age at the point of beginning the study. They got GEDs at a high rate; got college degrees even though it took them a long time. Couldn't go full time--went part time and work, or drop out of school and work; but they really wanted to be in school. Created their own financial aid system. If you take 15 years to finish your degree, you will reap benefits that really make a difference for every year; but lack of a diploma affects you for a very long time.
37:26Turn to issue that runs through the book: Edmund Phelps podcast: nature of work in America, satisfaction we have from our jobs. In this time period, in the last 25 years in general, huge increase in knowledge workers, people using their minds in interesting ways. Opposite end: people punching in with pictures of a hamburger on it. Closest to Charlie Chaplin in "Modern Times." Not very stimulating. But even in that environment, talk about the nature of work--people talk about the pleasures and things they learn. We don't just care about the amount of money make--obviously it matters a lot, and at the low end you want to make a lot more rather than less, but one of the themes of the conversations is the role of pride, satisfaction, prestige. How important is that to the people you talk to? People talked about being autonomous on the job, make their own decisions instead of being constantly micromanaged, criticized by their boss. Being a worker--any kind of worker--is valued by society. Alternative is to be totally outside the status system in our society, to be completely devalued. No occupational identity end of social universe. Below them--and they know plenty below them--those people are despised. Above them, plenty of people who have jobs above them. Suspended between these two categories. Superior to those out of the labor force. Resent that they take their income and support a welfare system, including those in their own families watching over their children. Look up the system; they will not be a teacher or lawyer. Tense limbo between those two extremes. Just being in the labor force matters. Pride in having a job. At same time, cover over uniforms on hot day; commute incredibly long hours to take a job because they don't want to be seen working in this kind of job. Weird kind of pride mixed with embarrassment when you work at the bottom of the labor force. And one of the things about this kind of job is that you are heavily surveilled. Don't have a lot of autonomy. Nonetheless, people do take a lot of pleasure in the fellowship of the workplace; though sometimes horrible personality clashes of course. A lot of the people would socialize off the job with the people they were working with. Drawing away from the people in their neighborhoods. Instead spending almost all of their time with fellow workers. Argued in No Shame and My Game that that is an important element: glue into work world, away from the streets.
43:30Distinction in book: people on welfare, who are draining cash, sometimes directly from the working poor; and people--underground economy, drug dealers, making a lot of money. Tension between that job--it is a job! just not on the books--and the fear people had of it because of association with whole set of pathologies. Most of these folks have siblings or neighbors in the drug trade. Basic view: This is scary; It exposes everyone around you to tremendous risk; Stay away. Don't know what the sociologists have studied and published about the drug trade--that the drug trade doesn't actually make very good money. They do think it's flashy. It is flashy for a tiny number of people. For most people in the drug trade, it's risky, it's dangerous, and you don't make much money. You die young. You die young or you are below the minimum wage. They mainly didn't know that. They mainly thought: This is too scary I don't want you coming around. But these folks do come around. Truth. Important to know those people--the people you really have to fear are strangers. Strangers have no obligations to you. But someone you've known all your life, even if they are doing drugs and you are not, will be more respectful of your safety. People in other parts of the informal economy are a different story. People move in and out of the fast food jobs they hold later on--unregulated, informal sector of unlicensed, skilled work. Examples? One young man taken under the wing by his dad, who taught him how to do electrical work, plumbing. Handyman stuff. In Harlem, you don't call a unionized plumber to fix your leaky sink! It's expensive. Whole cadre of people doing work off the books, but not illegal. Not licensed. Cash business; and some barter; but mainly a cash economy, but not a licensed one. A lot of men do car repair the same way. Repair work basically out their home. Fix radios. Shadow economy, but not illegal in the sense of the drug trade. In the formal sector, they would regard those folks as working. They have real jobs. Just not paying taxes. Often providing more than you can do and providing satisfying work. Very skilled. But in order to do that, someone has to train you. Will your Dad train you? Certificate like the refrigeration guy, or will someone show you how it's done?
48:17Ideas from the book; bias. Social issues: short run problems, long run problems; short run solutions, long run solutions. Bottom up versus top down: agree or disagree, confirmation bias. Three policy conclusions: Importance of growth for the economy as a whole. Good years, American economy growing, great moderation, mid-1980s or so, good policy goal. Number two: making our schools better. Our school system is not very good, how to make better. Number three: access to capital credit: the guy who wants access to $3500 doesn't always have an uncle who can make that happen. Maybe not a bad idea like in Africa, Asia, for people to have access to small loans to be administered in some creative way, perhaps not by the banking system. All important points. First growth. Study took place in period when economy was growing so fast. Study at any other time wouldn't likely have found the kind of mobility. Really very little we could not do if we have full employment. Jobs critical for every aspect of life. Nobody seems to know how to do that right now. About schools: an amendment. These people know that school is important. They are putting effort into going back to school. They don't come from good schools. If they had the resources to go to good schools, they would, but they don't. Money matters here. Access to credit matters as much as access to financial aid. The faster you complete, the faster you reap the benefits. The quality of schools matters; but most of the people came out of some of the worst high schools in New York City. They still managed. If we wanted everyone to turn into a rocket scientist--but what they needed most of all were teachers who respected them, teachers who treated them like adults because they most often feel like adults before middle class students do, and often hold them to high standards; people who take them seriously; and taking them seriously. Mary Brinton from Harvard--run away from dangerous zone schools, street violence, in between their home and their school make it hard for them to go to school. Selection bias. Their original motivation isn't school quality--they just don't want to be knifed in the hallway. How is it that we permit and turn a blind eye to students? Safety, stability, and financing all of these things matter. In terms of access to capital and credit. Book: The Missing Class. People who use credit cards are usually not at the very bottom--usually one rung up. Not so good for them. The near poor--upwardly mobile; economy got better, or find themselves better. They find themselves working in better jobs and suddenly think they don't want to find themselves sitting on a couch with holes any more. But their wages aren't actually high enough to permit that, not on cash. Start using credit; get into terrible debt. Can permit them to stay in school, but tend to be averse to loans. A lot of economists trying to figure out why, but they tend to be averse to loans; afraid they won't be able to pay it back. Good thing to worry about. But they tend to drop out of school instead. Credit figures in their lives as credit cards. Don't understand how much it is costing them. Bankruptcy laws have changed in ways it makes the costs much greater.
58:32Interviewed hundreds of people, used graduate students. You must have gotten to know these people. Book so rich! Do you stay in touch? Stayed in touch for 8 years. Panel study for income dynamics. After 8 years, have to finish sometimes. A couple of occasions, catching up on some things. Other things.

More EconTalk Episodes