Imagine you are stranded on an island. There is no food, water, or wood. Just sand. To your luck, a ship passes by and notices you. The ship’s captain says to you “I will take you with me, but only after you scrub the decks and cook some meals for me and my crew”.
I would say that most of us would oblige, in fact would be happy to. Indeed, we would be insane not to. I’ll even take this further and say many of us would volunteer to work on the ship as a show of gratitude for our life being saved. However, the question that can be asked from this thought experiment is: Are you free to reject the captain’s request? I would argue that you are not. If you say no, the captain will not rescue you and you will be condemned to certain death. The captain is surely aware of this, so his request for you to clean the decks and cook the food is coercive.
Now consider another situation. You are stranded on the same island and 100 ships come to your rescue. However, all require you to do some kind of labour for them. One will require you cook, another will require you to clean, and so on. Therefore, you can choose which ship to be rescued by. Is this situation any less coercive than the first? I claim no. You are still obliged to do labour in exchange for your life to be saved. The fact that there is one or a hundred options is irrelevant in respect to that the labour you are doing is coercive.
Prior to the welfare state, life under capitalism was analogous to this situation. Under capitalism, the only way we can attain money for what we require to survive (food, clothing, shelter, healthcare, and so on) is by creating profit out of property that we own or by selling our labour working for someone. Being stranded on the island represents members of the working class: people who don’t own any property that can generate profit and can only make money by selling their labour. The ship captain represents business owners who hire workers. During times before the welfare state, the choice truly was to work or starve.
Post welfare state, although the work/starve dilemma may not be completely analogous (although in many countries welfare is only conditional after evidence has been provided that the individual is regularly seeking employment, therefore working for money remains coercive), the coercive nature exists in varying degrees. For example, low-skilled/unskilled labour have less negotiating power in their employment than the professional and managerial classes. This is something employers are typically aware of, so will be in a position to exploit the situation.
Returning to the situation at the island, imagine the 100 ships and their captains have come to your rescue. However, you have been on the island for days. You are dehydrated, weak, and starving. You can barely stand. This would highly impact the labour you would be able to provide to the captains. All of the captains, aware of your situation, leave since they know you would be unable to do the labour they desire from you.
The question we can ask from this is: Do the captains have a moral obligation to rescue you even though they cannot get any labour out of you? I say that the captain does have a moral duty to rescue you, even though you cannot provide any labour in exchange.
This amendment of the thought experiment is helpful when we consider the existence of the welfare state. In most countries the number of jobs available are outnumbered by those who are unemployed and underemployed. And this is even before considering jobs that are accessible to those who are unemployed. So, there will always be those who cannot get the money for food and shelter by selling their labour. Welfare is funded through taxation. Hence, taking money from those who have it to those who need it is similar to demanding that the captain rescue you without demanding any labour from you.
Some may point out that those who are workers also pay for welfare through also paying taxes. Which is correct. However, another amendment to the thought experiment can also demonstrate this being morally acceptable.
This time both you and another person are stranded on the same island in the same situation. However, you are the one who is weak and starving whilst the other person is strong and nourished (say they only recently became stranded whilst you have been there longer). The captain is willing to take the other person, since they are able to do the labour. But is it morally permissible for the captain to leave you behind? Not only would I assume you would say it is not, I would say you say it if you were the other person. I certainly would attempt to persuade the captain to take the weaker person as well.
If the captain did take both of you, you would both benefit from being rescued even though only one of you contributed to the labour demanded from the captain. To complain that both gain the benefits of being rescued whilst only one provided labour would seem bizarre at best and cruel at worst. Nonetheless, this is analogous to someone complaining that some of their tax dollars goes to providing welfare, since the narrative is that welfare comes from money you worked for.
This is why contemporary demonization of welfare recipients contributes to the coercive nature of labour. The choice of working or starving has transitioned to working or being on welfare. But to be on welfare is to be seen as a scourge of society. A burden on the taxpayer. A parasite. And so on. The stigmatization operates as a social coercion to accept any conditions if no others are available. This is also assumed legally when I previously mentioned that it is sometimes conditional on seeking work.
The only way the coercive nature of labour can be removed is when there are conditions where the dilemma of ‘work or starve’ or ‘work or be a parasite’ no longer exists. Proposals for a Universal Basic Income (UBI) are examples of attempts to address the coercive nature of labour. This is because the theory of UBI is that everyone will have their basic needs met without needing to work. Also, since everyone gets a UBI, this addresses the demonization of welfare recipients since workers also get the UBI.
I remain agnostic on the merits of UBI, but the strongest arguments I believe comes from Phillipe Van Parjis. See here: https://bostonreview.net/archives/BR25.5/vanparijs.html. Nonetheless, understanding the intrinsic nature of labour being coercive can assist in also understanding how this can lead to exploitation.