Welfare Can Pay More Than Your Average Job and You Are Worried About ACA or Obamacare?

Can we take a break from Healthcare for a minute?  I want to reexamine Welfare and then get back to Health Care because right now there is so much over reaching by Republicans in trying to downplay the success of  ACA that they are digging themselves a hole and will not be able to climb out it.  This is not an issue any Republican should be prepared to fall on their sword.  ACA or Obama care is here to stay.  Game Over! People are signing up for the program and based on the trajectory I see - by 2015 every Republican I know will have it.  Welfare, Unemployment, Medicare and Social Security are more pressing issues especially as it relates to the budget that have lost our attention.  Lets talk about Welfare in this blog and we will cover the rest later. 

The Cato Institute, a public policy research organization, released an updated 2013 study that welfare benefits in the United Stated pay more than the minimum wage job in 33 states. The same study showed that welfare pays more than $15 per hour in 13 states. Hawaii is the biggest welfare contributor with welfare recipients that earn $29.13 per hour or nearly $60,590 for a year’s salary.

Compared to the average middle class annual income of $50,000, it’s no wonder that many welfare recipients are staying home and not looking for a job.  Welfare benefits are also not taxable which means that the gross income is another 20 to 30% higher.  In more than ten states, welfare pays more than an entry-level salary of a teacher and the average starting salary of a secretary.

The article, entitled “Welfare: A Better Deal than Work”, was written by Michael D. Tanner of the Cato Institute, can be found at http://www.cato.org/publications/commentary/welfare-better-deal-work. The study reveals how much in welfare payments a single mother of two can actually get with 126 anti-poverty program offered by the federal government and additional benefit programs offered by the state, county and municipal governments. When all of these benefits are combined, they can easily add up to welfare paying better than work.

Although the figures and the study may be astonishingly true and need to be exposed, there are several factors that were not considered in the study. For one, not every welfare recipient receives all the benefits available from the different government programs. Secondly, many anti-poverty programs are time limited such as the Temporary Assistance for Needy Families (TANF).  Nevertheless, the alarming amount of welfare available is a disincentive to find entry-level work.

Why anyone should find work if they can receive welfare that equals or exceeds their salary is a legitimate question and rekindles the debate about welfare and the incentive to work.  In addition, policies that discourage work are not helping anyone, especially in the long run. Charles Murray, who published the book on the same subject, “Losing Ground: American Social Policy 1950-1980”, found out that despite that the government was spending trillions of dollars on anti-poverty programs, poverty was not improving – it was getting worse. The only way to avoid or get out of poverty is employment. Even a minimum wage job can bring a person out of poverty in the long run.

 In spite of the dysfunction in congress I am certain it is not the intent of congress to incentivize anyone to not work.  Nor do I believe that congress wants to undervalue the work of those who contribute to society in the work force.  But compensation is one of many ways we measure our value.  So is the government under valuing our soldiers, teachers, police officers and others who serve the country and put their lives on the line because they can pay welfare receipts more?  Of course not.  So what is the solution?  According to Reihan Salam as cited in Avik Roy, column on this issue in Forbes.com, "Sweden has a generous welfare state. But Sweden treats welfare benefits as taxable income. This gives even welfare beneficiaries an incentive to support efficient government, providing a welcome blur between makers and takers."  Is this a better way to address the problem?  I think so.   If income from welfare was taxable like income for work it would provide a better comparisons of the income from welfare verse work and may eventually reduce the disincentive to work.  We should do it.  What do you think?

http://www.forbes.com/sites/theapothecary/2013/09/02/on-labor-day-2013-welfare-pays-more-than-minimum-wage-work-in-35-states/