There Aren’t That Many Takers in America

by John Sides on September 27, 2012 · 32 comments

in Policy,Political Economy

This is a guest post from political scientist Nathan Kelly.  We’ve previously discussed his work here and here.

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Before saying that 47% of Americans don’t pay income taxes in his now familiar comments, Mitt Romney said this: “. . . there are 47% who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it.”

The taxation portion of the statement was not a standard part of the Republican message (Romney has since clarified that he just meant we need a stronger economy). But the discussion of dependence on government is at the heart of the Republican case against Democrats and is fully consistent with the “maker vs. taker” theme that often shows up in Republican campaign rhetoric. On this point, Romney was not off-message, likely making this part of the argument more central to the ongoing dynamics of the campaign. The Republican line is that there is a large group of takers in American society – Romney’s initial estimate was 47%. Here, I attempt to gain some empirical leverage on this question using information about work experience, receipt of government benefits, and demographics from 2011 Current Population Survey March Supplement microdata.

Creating a working definition of takers is tricky. A core conceptual problem is that making versus taking is a matter of degree. As John and Suzanne Mettler have pointed out, nearly all of us are takers to some extent. And nearly everyone contributes to government through taxes of some sort at the national, state, or local level. The balance between benefits and taxes might be the best indicator of making versus taking, but accurate data on tax payments at all levels of government are not readily available. In addition, when politicians talk about makers and takers, they speak in dichotomous terms. It’s not a sliding scale. Either you’re a maker or you’re a taker. Since the rhetoric is dichotomous, my strategy for identifying takers will be dichotomous as well.

So who should we count as a pure taker? As a starting point I think it’s fair to eliminate workers and those not receiving government benefits. Workers are not purely takers because they pay payroll and other taxes. In addition, workers are MAKING, earning income through their labor and therefore taking some responsibility for their own well-being. Non-beneficiaries are not taking from the government because they don’t receive benefits. So here’s an initial estimate, in which I’ve divided the 15-and-over population into three groups: workers, non-workers with no government benefits, and non-workers receiving benefits. Only the last group would fall under this definition of taker.

So we have an initial possibility of 24.7% takers. That’s a pretty big number. It’s not 47% but it’s an appreciable group of Americans. Are all these people really takers? Let’s drill down into that 24.7%. Why are those not working and receiving benefits not working? Why are they not makers?

Of the 24.7% of Americans who did not work and received government benefits in 2010, more than 70% are either disabled or retired. 7.7% are not working in order to care for home or family – not a group that family values conservatives typically malign. 12.8% are going to school, which likely indicates at least a degree of taking responsibility for oneself. So a large portion of those not working and receiving benefits – the potential takers under the broadest definition – would likely not be considered takers even by some of those promulgating the makers vs. takers argument.

However, some of the people who we are tempted to let off the hook might actually be more culpable than they appear at first blush. Some retirees may still be young and able to work. Some people caring for home or family might be part of a household in which nobody works, not a traditional stay at home mom or a child caring for an aging parent. So let’s re-create the initial chart and divide the non-working government beneficiaries into three categories: those who are non-working age, disabled, or attending school; those who are non-students, able-bodied, and working-age in households with no other earners; and everybody else. We’ll define working age as 18-65 in order to maximize our ability to find takers (prime working age is usually defined as 25-55). Excluding those living in households with other earners eliminates people who are at least part of a maker household. This last excluding factor is probably the most controversial, so I separate it from the others in order to see what difference it makes.

 


The bottom line here is that there aren’t that many takers in America. The most restrictive definition pegs the percentage of takers at 2.4%. If we’re willing to include people in households with at least one earner, that number increases to 5.2%. Lots of people, even quite rich people, receive government benefits in the United States, and that is a reasonable thing for true fiscal conservatives to be frustrated about. But these numbers simply don’t line up with the rhetoric of a massive class of lazy people taking advantage of the rest of us while eating solely at the trough of government.

Finally, it’s worth pointing out that these are really upper-bound estimates. Being a taker involves motives as well as work and benefit status. Takers, so the argument goes, feel no responsibility for themselves and believe that they are entitled “to you name it.” The CPS data don’t allow us to examine motives, but if we could, we would likely find even fewer takers.

{ 32 comments }

Zachary Alain September 27, 2012 at 6:41 pm

Nathan Kelly,

Ever since the 47% video surfaced, I have been wondering how best to estimate this. Like you, I thought of estimating net contribution up to taxes and certain benefits over lifetime. I also couldn’t figure out a way to do it. There are also parts of this which would be hopelessly arbitrary, especially when considering which benefits to include and how to go about estimating the value of certain benefits. So following Dean Baker, we might consider whole industries as takers based on the value of their patent protections.

“In addition, when politicians talk about makers and takers, they speak in dichotomous terms. It’s not a sliding scale. Either you’re a maker or you’re a taker. Since the rhetoric is dichotomous, my strategy for identifying takers will be dichotomous as well.”

With a fuzzy concept of takerness somewhat arbitrarily restricted to the adult population regardless of industry, a vague idea of `feeling entitled’, and lots of other completely baseless things, I would say that the United States is about 10-15% taker. A lot of that has to do with how people feel `entitled’. I feel entitled to healthcare in the sense that I regard healthcare as a basic right for those who live in societies that can afford to provide it. If someone felt entitled to healthcare in a non-universal sense, that would be more `takerish’. At the same time, I don’t think that many people would consider a feeling of entitlement to emergency care `takerish’.

Anybody hoping to substantiate policy based on such a concept is just being silly. If we’re worried about `entitlement’ feeling, there are other ways to assess that. (If the very poor are becoming`entitled’ due to their benefits, why do they give so much to charity? Why do they appear to be less selfish and more honest as based on simple experiments? Etc.)

Nathan Kelly September 27, 2012 at 7:29 pm

There’s not a whole lot to disagree with in your comment. I don’t think the makers vs. takers idea is a very useful concept for making policy either. I do think it’s useful to make an attempt to think about the conceptual definitions implicit in the rhetoric on this and place it under some empirical scrutiny. The concepts are fuzzy, no doubt, but it seems like we can get at least a modicum of empirical purchase on this. And, it seemed to me like the tax side of the 47% comment was getting a lot more analysis than the benefit side of the 47% comment, probably due to the ready availability of the Tax Policy Center analysis on who pays taxes.

Zachary Alain September 28, 2012 at 8:10 pm

I’ve just thought of another issue: when we’re talking about fractions of single-digit percentiles of the adult population, how can we account for things like undiagnosed mental illness?

Saheli Datta September 27, 2012 at 6:48 pm

How does the fact that retirees paid into the Medicare and Social Security system factor into this analysis?

Nathan Kelly September 27, 2012 at 7:34 pm

The fact that retirees paid into Medicare and Social Security (assuming they worked at some point in their lives) was a factor motivating me to drop the 65+ age group from the taker category. Even younger retirees could have paid into SS and Medicare, but I kept them in since they could still be working if they wanted to (I know this would not universally be the case) and if they are not working and receiving benefits they seem like good candidates for taker status (younger retirees are generally getting benefits other than SS and Medicare if they are beneficiaries).

Elizabeth Rigby September 27, 2012 at 9:59 pm

This is excellent!

Nathan Kelly September 28, 2012 at 9:08 am

Thanks, Elizabeth!

Michael Leo Owens September 27, 2012 at 11:57 pm

“The bottom line here is that there aren’t that many takers in America.” Maybe there are even less if we consider volunteerism as a contribution to “making,” and many alleged “takers” contribute to their communities well being by giving of their time. Just a thought. P.S. Hi, Nathan! Long time, buddy. MiLO

Nathan Kelly September 28, 2012 at 9:13 am

Hi Michael! Probably right. I don’t think there is information in the CPS on volunteerism, but I can take and look at see. If you know it’s there, let me know the variable name and I can play with it.

lindberg September 28, 2012 at 3:26 am

Interesting analysis. How do you reconcile your 2.4% number with the ~8% unemployment number?

Nathan Kelly September 28, 2012 at 8:58 am

That’s a really good question. The numbers are lower than 8% because a lot of those 8% are temporarily unemployed. We know there are lots of long-term unemployed in the current situation, more than usual in fact. But the data I analyzed suggest that many of those people are at least occasional workers. If they are sometimes working, they are at times paying payroll taxes and taking some responsibility for providing for themselves. That explains the numbers being lower than the unemployment rate.

mike shupp September 28, 2012 at 3:51 am

Uhh… I appreciate the effort you put into this, but I think you’re missing the point: Many many people dislike the whole idea of “transfer payments” AND the people who recieve transfer payments. They do not, in other words, appreciate being told that half the people in the benefit-receiving class are honorably retired former workers who aree noe getting social security payments. They want to be told that retired Americans live on their savings, pension plans, and IRAs. Retired Americans who depend on social security SHOULD BE DEAD! Also, people who rely on Medicare ought to go away and die. And anybody relying on Medicaid. They’re all Takers, and they’re at war with the decent hard working people who actually keep civilization going.

This might strike you as cruel and obnoxious, or ignorant. I’d not argue, but I suggest that “primitive” is a better label. We’re talking about a gut response here, not informed reflection. The people I have in mind see themselves as enlightened and rational. They’re made sensible choices that served them throughout their lives — mostly we’re talking about people in their 30′s or 40′s — and they see no reason to be penalized by the failures of so many elders. No real harm can be done by cutting off these fools from the government tit, after all — the old folks can just suck it in and make do like people who actually work for a living. There will be NO pain, just less waste.

Perhaps my perceptions are askew, but it strikes me there’s a lot of animosity out there in America, and political scientists ought to be thinking about how to cure things. Surveys and studies, primarily performed by liberals and moderates to inform other liberals and moderates, are not the sole step that need be taken — perhaps not even the first step.

Nathan Kelly September 28, 2012 at 9:06 am

I do not doubt that you are right that such attitudes are present in the American public. And I believe that the rhetoric of makers vs. takers is probably designed to target the very division that you articulate. I do, however, believe that some people, even those with fairly “primitive” viewpoints, will update their beliefs when confronted with information. I certainly understand the literature on opinion formation, which means I know that most people with such firm beliefs won’t update, either for lack of exposure to the information or for resistance to the information. But I have interacted with people (let’s say friends and family) who were pretty one-sided in their beliefs about people who receive government benefits, have been surprised to learn information like this, and have modified their attitudes at least a bit after being exposed to the information. This may just be an exercise for myself. I hope it isn’t, but even if it is, I at least learned something from going through the process of examining the data.

Kevin Madigan September 28, 2012 at 8:50 am

Mike Shupp is absolutely right. We have millions of people in this country who are ignorant of human history, have no conception of what the pre-20th century world was like for the non-aristocracy, and do not believe in the social contract. They are unmoved by this (very good) analysis, as they do not realize that OASDI and Medicare are social insurance programs, and they do not feel any responsibility whatsoever to anyone outside of their family and (very limited) community.

Nathan Kelly September 28, 2012 at 9:08 am

No doubt, but my belief is that we should keep slogging on nonetheless.

Kevin Madigan September 28, 2012 at 1:16 pm

I agree, Nathan. Else it won’t get better.

Lisa Graziano September 29, 2012 at 12:35 pm

Excellent article and discussion. One thing perpetually missing in these discussions is the real “taker” and “dependent” class. Thus, for example, Mr. Romney is the ultimate dependent taker, as are most extremely wealthy people who inherited their wealth, and maintained it through government handouts. So you have on the one hand person A who begins with nothing, works hard, earns a tiny, tiny income, pays taxes, perhaps takes out some loans like student loans, has to rely on the government for basic health needs, but works insanely long hours for what he/she has; and on the other hand, you have the Romneys of the country, who rely for the tiniest of every-day tasks on those like person A (chauffeurs, house-cleaners, nannys, gardeners, cooks, all sorts of servants, mainly Hispanic and Black, I imagine); such people couldn’t live without others taking care of them in the minutest ways. This is the Dependent class. And the tax breaks that such people get are, well, in the 10s of millions a year. Yet they turn around and scoff at “takers” for taking a child tax credit of a few thousand. In addition to the excellent analysis of workers and nonworkers and such above, perhaps the discussion should turn to the concept of starting point: where do people start out? We do not all start with the same advantages, the same chances, the same influence on government, the same fabulous family wealth to sustain us when our business ventures fail–or when we are laid off from a minimum-wage job.

Amos Kissel September 29, 2012 at 5:35 pm

It’s interesting to me that you didn’t include disabled people on the takers list. I can relate a lot to what Romney is saying about getting those people dependent on government to be more independent. I have been on social security disability(ssdi) and they have had a cap on my earnings if I want to keep receiving it. This is one problem with the system that actually stops me from being able to take other opportunity’s unless they would offset the loss of my ssdi. I am going to a university to earn a degree where this will be possible however; in one class I could have earned 15 dollars per class to take notes for another disabled classmate, also at my custodial job I have seniority so I should be able to transfer to better paying positions or get a raise but it would push me a little over this cap on my income. I hope Romney plans to get rid of the cap and put in a deductible. So instead of ssdi recipients only being able to earn 1000 a month outside ssdi, They would have a deductible for say every 10 dollars over 1000, they lose 5 from their ssdi. I sent a letter about this to my congressman but he never got back to me. I really like Romney’s attitude but I haven’t seen his plan yet.

ben September 30, 2012 at 12:44 pm

payroll taxes provide a future benefit

income taxes do not

apples and oranges

Shygetz September 30, 2012 at 3:24 pm

Income taxes don’t just disappear into the aether; they provide a variable and at least somewhat predictable benefit (military, roads, etc.), but they do provide a benefit to the payer. Payroll taxes provide social insurance coverage, which while more defined than the entire suite of Federal services, are also not a strictly defined benefit. Not as apples and oranges as you suggest.

ben September 30, 2012 at 5:21 pm

of course income taxes provide benefits to society. i wasn’t suggesting otherwise. what i was implying is that many people who enjoy those benefits (military, roads, etc.) don’t pay toward them. So the argument that payroll and income taxes are equivalent breaks down because you have two groups in society:

1) income tax payers who ALSO pay payroll taxes (enjoy benefits of both and pay both)
2) only payroll tax payers (enjoy both benefits but pay only toward one)

That’s what i’m driving at….

ben September 30, 2012 at 5:27 pm

maybe this wasn’t as clear as I meant it to be. Consider instead 2 citizens:

Bill and Bob

Bill’s income (after taking his standard deduction) isn’t “high enough” to result in him paying federal income taxes which support the roads, military, etc. benefits that you mentioned. Yes, of course Bill still pays payroll taxes (e.g. FICA) but Bill enjoys both the benefits that come from Medicare and Social Security later in his life, but he also gets protection from the military and enjoys roads (that he doesn’t pay for)

Bob pays both federal income taxes and his payroll taxes. He benefits from both, but he is paying (i.e. making) more than he is “taking” because he pays both types of taxes and receives both types of benefits contra Bob who doesn’t.

Bottom line: for one to prove there aren’t that many “takers” (which I concede is empirically possible) you have to show how much citizens receive relative to what they put into the system. I find it hard to believe that the “47 percent” (other than senior citizens who once did pay income taxes) aren’t taking MORE relative to the 53 percent once you factor in how much they paid in.

Grover Gardner September 30, 2012 at 5:51 pm

If Bill drives, he pays gas taxes, in which case he is helping to pay for roads, no? And he also probably pays sales taxes and local taxes, thereby supporting schools, local infrastructure and public transportation.

ben September 30, 2012 at 5:58 pm

of course, but i wasn’t the one using the “income taxes pay for roads” argument. for my argument to be wrong, you’d have to take the position that federal income taxes don’t pay for some things alone. i mean, what i’m driving at is that some people are paying more taxes (and not in terms of percentage in terms of different types of taxes: federal income, sales, payroll) than others. bill and bob BOTH pay sales taxes, payroll taxes, etc. BUT only BOB pays federal income taxes so Bob is still more of a “maker” than a “taker” because he is being hit on more taxes than Bill.

Eric Keller September 30, 2012 at 4:26 pm

This is an amazing analysis! An excellent counterpoint to those who insist there are a high percentage of takers in the U.S. that are dragging down the rest. Thanks for a clear, consise analysis.

liberal September 30, 2012 at 9:15 pm

Yawn. The biggest takers are people who own land, to the tune of 10–20% of GDP. Anyone writing post-Ricardo who doesn’t understand this doesn’t understand economics; and even Adam Smith, writing pre-Ricardo, appears to have gotten the gist of it.

itsjustmyopinion September 30, 2012 at 9:27 pm

Wonderful article – thank you for all the work into this issue…and way to stay credible and intelligent in any comment response – you are the kind of fact distributor we need more of in this country.

Nancy Irving October 1, 2012 at 5:32 am

Slightly off-topic, but did anyone else notice that seats at the dinner where Romney made his famous “47 percent” remark went for $50,000 apiece, more than the annual income of most of the people who pay no federal income tax?

(And P.S. I wonder if he thinks the money was worth it?)

Carol Orticari October 1, 2012 at 3:35 pm

Thanks to everyone. You see, we can have discussions even when we disagree, we can still search for the meaning. Even if you don’t own property but rent, a portion of your rent pays property taxes which in a myriad of ways benefits society at large.

Nancy, I would imagine no=either Mitt or the attendees are worrying about the 50 k being worth it. Imagine they don’t even feel privileged. They relish their entitlements, I suppose.

I have M.S. and take nothing, pay for my own health care, will retire over the next 2 years and collect ssi, however my ssi is seriously cut into because as a CT teacher, retired early, I am hit by the WEP, critical limiting my income. I have saved and planned well and I am not worried about my future, I am, however, worried about America’s. It seems many people are filled with a great dislike and distaste for people in need. Yet, there are many countries who care for their citizens and it strikes me odd that while I continue to donate to our local Food Bank 1/4 ly in excess of 1600 yearly, the very wealthy seems to castigate those in real need.

Again, thank you all and please continue to post.

Nancy Irving October 2, 2012 at 6:32 am

Carol, what I meant was, whether Romney now considers the money he raised at the dinner to be worth the possibly fatal hit his campaign has taken by the publicizing of his “47 percent” remarks.

LeonaG October 3, 2012 at 9:09 am

“Makers vs takers” panders to those who have a need to feel superior to others. Pretty sick if you ask me.

I’d suggest that anyone who’s working isn’t a taker, even if they’re low income. I have a lot of trouble thinking of the following usually low-income people as “takers” simply because they may not pay income tax; can we as a society do without them? The folks who: Sweep the floors and empty the trash; prepare your food in the hospital, and deliver it; change your sheets in the nursing home and launder them; work at daycare centers (for infants and elderly); cashiers everywhere; restaurant workers; shelf stockers. Those are just a few examples. Gee, maybe wage/income isn’t a very good indicator of one’s worth to society? Ya think?

To suggest, as neocons often do, that if you have a low-wage job you should work 2 jobs or more to be able to eat, have shelter and clothing, get to and from work, and see a doctor or dentist when necessary is both ludicrous and cruel in the richest country in the world. People should be able to LIVE if they’re working. I’ve been unhappy for years that we have enabled a too-low minimum wage to continue through our taxpayer subsidy (through food stamps, for example), but that’s a topic for another day.

I say, let’s do without all these so-called “takers” (using the neocon definition). It would become evident very quickly that at least the working contingent of “takers” are a necessary part of our society, and maybe it would cause some of the neocon bullies to wake the eff up. I can dream, can’t I?

amy October 15, 2012 at 11:30 am

My own jadedness of takers comes from personal experience….too many neighborhood kids driving expensive cars (you should see the hs parkinglot)…acquaintances on assistance from govt, family, and church going on vacations, planning home upgrades and elective surgeries, and the all too common phrase “I am going to buy this because I ‘deserve’ it. ” It would be very hard to use statistics to ferret out these attitudes but it’s there, and it makes me less inclined to be helpful. If I can trust that my offerings will be honored, I will give all day long. until then, I will continue to work, save, give only to those I trust, and insist the government reduce its demands on my hard and honest earned funds.

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