Are Poor People Lazy? Examining Poverty & Work Ethic

Are poor people lazy? What did the Covid-19 experience teach us about poverty and work ethic?

When politicians try to figure out why people become poor and stay poor, they often point to a lack of work ethic. Social scientist Matthew Desmond pushes back on this idea, pointing to data gathered during and after the Covid-19 pandemic.

Continue reading to learn what Desmond discovered.

Are Poor People Lazy?

Desmond observes that politicians often associate poverty with a perceived lack of work ethic. Are they right? Are poor people lazy? Desmond finds this argument lacking. He notes that, during the Covid-19 pandemic, the CARES Act (which, among other provisions, provided direct cash assistance and expanded unemployment insurance to families living in poverty) demonstrably alleviated poverty rates during the time those benefits were being distributed. He writes that some politicians saw the cash transfers as a negative, believing it disincentivized people from seeking employment if it was more lucrative to stay home and collect government checks. According to Desmond, this is a manifestation of an ideology that the poor must be kept miserable and starving—so they’ll be motivated to work.

(Shortform note: Many economists argue that deficit-financed cash transfer programs—like those in the CARES Act—actually boost employment and economic growth, rather than hinder it. It happens through a dynamic called the “multiplier effect”: When people spend the extra money they receive from the government, businesses experience increased demand for their products and services. As a result, they hire more employees and increase production to meet this rising demand. This, in turn, boosts household income and encourages even more consumer spending. The cycle continues, creating a ripple effect throughout the economy, increasing output, employment, and economic growth.)

If it were true, however, that the benefits from the CARES Act were discouraging work, then we’d expect to see an increase in the employment rate once the benefits expired. But, as Desmond notes, this isn’t at all what happened. The expiration of benefits brought no appreciable increase in the employment rate—unsurprising, since during the pandemic, people likely stayed home from work for other reasons (such as to care for children during school shutdowns or out of fear of getting infected).

The Post-Covid Great Resignation

Desmond isn’t the only one to point to the phenomenon of people being far more willing to quit their jobs during and after the Covid-19 pandemic. Indeed, the pandemic sparked a massive voluntary resignation from the workforce—described by economists as the “Great Resignation” or the “Big Quit.” The impact of this was a significant labor shortage that boosted the wages of those workers who were willing and able to remain in the workforce.

Over 38 million people quit their jobs in 2021, citing a desire for greater work-life balance, less potential exposure to the coronavirus, and higher pay. One historian argues that shocks to the labor supply—and the social unrest that ensues—have consistently followed deadly pandemics as the working class seeks to use its increased bargaining power to assert greater control over the economy.

Covid-19 proved to be no exception, as wages soared in previously low-wage sectors of the economy, with the accommodation and food services sector seeing wage hikes of over 18% since the start of the pandemic. However, in 2023, this trend showed some signs of abating, as the rate at which workers voluntarily quit their jobs dropped significantly. Moreover, wage growth slowed, especially in low-paying service jobs, and employers reported that hiring and retaining workers had become easier. This decline in quitting raised questions about whether the gains made by workers during the Great Resignation will persist or if employers will regain the upper hand, particularly if the economy faces a recession.

Are Poor People Lazy? Examining Poverty & Work Ethic