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InsiderOnline Blog: August 2013

Welfare Can Still Be a Hurdle to Work

In spite of the 1996 welfare reform, it’s still possible in many states for an unemployed person to obtain more in government benefits than he could earn from a typical entry-level job. Michael Tanner and Charles Hughes calculated the value of cash and in-kind benefits that a household could receive in total from the 72 federal poverty programs and various state poverty programs. They then compared those benefits to the take home pay (income net of taxes paid and tax benefits such as the earned income tax credit) of various occupations and income levels. They found:

[I]n 13 states, welfare pays more than $15 per hour. The most gener­ous benefit package was in Hawaii, although that may be distorted by the state’s high cost of living. The second highest level of benefits was in the Dis­trict of Columbia, followed by Massa­chusetts.

In 11 states, welfare pays more than the average pre-tax first year wage for a teacher. In 39 states it pays more than the starting wage for a secretary. And, in the 3 most generous states a person on wel­fare can take home more money than an entry-level computer programmer. […]

[W]elfare pays more than a minimum-wage job in 33 states […] . [“The Work Versus Welfare Trade-Off: 2013,” by Michael Tanner and Charles Hughes, The Cato Institute, August 19]

In theory, federal welfare reform imposed work requirements on participants in the federal Temporary Assistance for Needy Families program. Tanner and Hughes point out, however, that those provisions can be skirted depending on how states define “work”; further, the Obama administration now gives some states even more latitude to relax the requirements if they increase “employment exits” by 20 percent.  As Robert Rector has pointed out, that’s a meaningless yardstick for judging a welfare system at any point in time, but especially so following a recession when employment exits can be expected to increase no matter what the welfare bureaucracy does. [“Ending Work for Welfare: Bogus Measures of Success,” by Robert Rector, The Heritage Foundation, August 24, 2012]

Posted on 08/22/13 06:19 PM by Alex Adrianson

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