Mara is a mixer hand in the flour-tortilla plant I own outside Hobbs, New Mexico. Flour dust has her coughing through the first hour of every shift, and the $0.0027 I keep by refusing her a $30 respirator is the cleanest number in the quarter. She asked me to buy it. I put the request under Optional Equipment, which is the department where $30 goes to become nothing.
Let me teach you the useful word: optional. It makes the decision sound like hospitality rather than arithmetic. The honest phrase is: I would rather keep the money than give Mara a respirator. I prefer optional because the honest phrase makes a dinner table uncomfortable, and I won’t have your soup cooling while you search for a moral position.
You funded the check that will help her breathe. You also bought the tortillas. They’re the same hand. John Fund wrote in National Review this week that 53% of American counties now derive a quarter or more of personal income from government transfers, and he is reading the receipt. He counts the check. He omits the employer standing at the other end. A 2020 GAO study found Walmart among the top employers of Medicaid and SNAP recipients in 11 of 15 states studied. My bakery is smaller. It is also more efficient. The bakery ends at the oven door. Mara’s breathing belongs to the public. You fund both halves, and you think you’ve made one purchase.
$0.0027 per loaf. I keep it. That is the exchange rate in my ledger between the respirator I decline and the cough I export. Mara’s cough is not a cost center. Medicaid is. The product remains cheap. The worker remains useful until she isn’t.
The principle has a name. I have taught it at Warden University for 30 years, and the textbook is mine. Call it the Maintenance Transfer Principle: keep the yield, place the upkeep on the public ledger, and call the distance freedom. The old master fed the body because he owned it. The modern employer discovered that the state would feed, medicate, and house the body while the employer retained the yield. Only the maintenance ledger changed addresses.
Mara is one receipt. Let me show you whose hand I’m closing the file into.
Tasha is a name on the closure list I run in McKinley County, New Mexico. The state pays me $4,500 every time I close her file — placed in a job, or terminated for non-cooperation. Either outcome pays me the same. She’s required to log 30 participation hours a week: 28 hours of online modules I built in 2021 and haven’t updated, and one 90-minute group session at a folding-table office I rent from the county for $1,200 a month. The modules cost me $0.27 per recipient to deliver. The facilitator costs $16 an hour. Total cost of Tasha’s “training” is about $14 a week. The state reimburses me $32. The spread is $18 a week, or $936 a year, per active recipient. Multiply that by 12,400 recipients and the margin on the modules alone is $11.6 million. I had it audited last week. The audit is mine.
Read this next line the way you’d read a contract that hands you the knife: I’m paid whether she gets a job or loses the benefit.
When I place a recipient, I place her into one of three staffing agencies I also own, which lease her back to warehouses and food-processing plants in the same county. Her placement wage is $12 an hour — $1.50 above New Mexico’s state minimum and $3.00 below what the same warehouses pay the workers they hire directly. Her take-home at 32 hours a week is $1,536 a month. Her rent is $895. After rent, $641. Her old TANF plus SNAP plus Medicaid came to $1,213 a month in value. After placement, her cash is higher by $323 — but her Medicaid is suspended for 60 days during the transition, and her childcare subsidy lapses on day 31. The state saves $873 in TANF. I receive $4,500 in placement fees. Her net household income, after the Medicaid gap and the childcare lapse, falls by about $214 a month.
She’s cured. That’s the cure — $214 a month of household income gone, 2 months without insurance for her children, and the childcare that was the only thing standing between her and the 30 hours a week the program demands. The state offers a childcare subsidy to working recipients — but the subsidy doesn’t apply to the participation hours, only to the placement job after it begins. The threshold hasn’t moved since 2019. I haven’t asked the state to raise it. The state hasn’t asked me. The conversation wouldn’t improve my fee schedule.
Widen the frame. Tasha is one receipt. I run this program in 3 states. Annual revenue: $54 million. Annual cost — case managers, modules, facilitators, office rent, the closure fees I pay to my own placement agencies — $11 million. Annual net: $43 million. The state thinks it’s buying rehabilitation. I’m selling exits. The closure rate is 73%. The recidivism rate among my placements — the number that would tell you whether the cure took — is in the state’s annual report. I haven’t gone looking for it. The annual report is filed by my former students. I’m, by the idiom the contract reserves for outcomes, well within the deliverables.
You want to know how this scales. Listen carefully — this is the lesson.
I’m not unusual; I’m a curriculum. I’ve been the Dean of Instruction at Warden University’s College of Business and Economics for 30 years, and I’ve spent that time grading men into the arithmetic Mara and Tasha are examples of. The textbook is mine. The cases are mine. The placement agencies that feed the program are staffed by my former students. Two of them run the case-management team. One of them is the program officer at the state agency who signed my last re-bid — he took my seminar in 2014 and got the highest mark I’ve given in the last decade. The auditors who certify my compliance are my former students. The state legislator who introduced the five-year renewal provision took my seminar in 2017. The workforce policy apparatus is 14% mine by headcount of staff who took my seminar, and 100% mine by method. The best student in last spring’s plant-finance seminar removed a respirator program from a model plant and presented the resulting reduction in public-assistance claims under Employee Engagement. I gave him the only A in the room. He now sets the wage band on the job you complain about over dinner. He doesn’t know your name. You don’t know his. That is a healthy curriculum.
The Scripture is plain, and the plainness of it is what makes it useful.
“And if a man smite his servant, or his maid, with a rod, and he die under his hand; he shall be surely punished. Notwithstanding, if he endure a day or two, he shall not be punished: for he is his money.”
— Exodus 21:20–21 (KJV)
The verse distinguishes a body that stops immediately from a body that can still yield for another day or two. I use the same distinction with a $30 respirator. A day of Mara’s labor is revenue before it is evidence. The wheezing that continues after the day is not a moral event. It is a transfer category. The state is welcome to its concern; I retain the clean-air savings. He is his money. So is she.
I’m not new. I’m the oldest arrangement there is, wearing this decade’s vocabulary. The workhouse was the same program under a different statute — the same differential between the cost of keeping a body and the fee for closing the file. The county poor farm was the same program with a per-resident daily rate the keeper received. The 1834 English workhouse test was the case-closure definition my contract specifies: a body was “settled” when she was no longer eligible for relief, regardless of what came after. The rubric is older than the program. The program is older than me. I’m the latest in a continuous line of contractors paid by the same state, under a different statute, to close the same file.
Step back with me, because this is the part worth learning. Every time the tortilla gets cheaper, the pool of people who can comfortably buy it gets smaller. Every time Tasha’s placement wage holds at $12 while the inflation rate compounds, the population that can afford my tortillas, or my warehouse boxes, or my ex-students’ next product, gets thinner. The wages I export the maintenance onto are the wages I will need to sell to. I’ve never traced the overlap. My sales team calls it an accounting problem for another quarter. The line is sold out. Today’s payroll came in 11.2% under budget. The quarterly number is the best it has ever been, and I am, on the whole, content.
The poor you have always with you. I have them on my payroll. Mara returns to the mixer. The respirator is still absent. I’ve kept $0.0027 on every loaf today. The check that will help her breathe won’t buy the equipment. It will pay for the asthma I declined to prevent. Tasha’s file is still in my queue. The line cannot stop.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.