Welfare pays more than working… literally

The Cato Institute has released a study comparing the value of government welfare programs and working a minimum wage job.  This is what they found.

  • In 18 states, the total value of welfare benefits has declined in inflation adjusted terms since 1995. However, this is due to the changing composition of what we included in the package of benefits (largely reflecting a reduction in the number of people on welfare who receive public housing assistance) rather than a real decline in the value of components.
  • Despite this decline, welfare currently pays more than a minimum wage job in 35 states, even after accounting for the Earned Income Tax Credit.
  • Because of increases in the Earned Income Tax Credit (EITC) and the creation of the Child Tax Credit (CTC), as well as the adoption of state-level equivalents of the EITC, it is possible for an individual leaving welfare to take a job paying slightly less than welfare without a loss of income in 39 states. However, that difference is small and not likely to offset the value of leisure.
  • In another 12 states, an individual leaving welfare for a job paying the same amount as welfare would see a decline in actual income.
  • In 33 states, the equivalent wage value of welfare has increased since 1995. The state seeing the largest increase, by a large margin, was Vermont. Other states with significant increases include Hawaii and New Hampshire, as well as the District of Columbia.
  • In fact, in 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.

Below is the actual monetary value of total welfare benefits if a family were to receive the full benefit payout of every program for the top 15 highest paying States.

welfare table 1

Next is what what a family would receive from a full payout of every program as though it were a salary before taxes.

welfare table 2

Next is the hourly wage equivalent if the family received the full payout of every program.

welfare table 3

How do welfare benefits compare with the State’s median salary if they received the full benefit payout of every program?

welfare table 4

Of course being eligible for some benefits reduces the amount one might receive for another.  Cato explains, “In computing the total value of the benefits package that our hypothetical family receives, it is necessary to adjust those benefits to reflect the fact that receipt of one type of benefit may reduce the amount received under another program. After making all the necessary calculations, the results are summarized in Table 14.”

welfare table 5

If, however, we consider only the three programs virtually every family who receives welfare is enrolled in, TANF (the primary cash welfare program), SNAP (food stamps), and Medicaid, in 8 States recipients make more than minimum wage.

Which political party is in charge of the top 10 States? In each category 9/10 States are run by Democrats.  Apparently in many States it pays to vote for a living.

state govs 2013

Comments

  1. This was entirely predictable. The Left and the Right knew it would happen, which is why the Left pushed for it and the Right opposed it.

  2. I’ve been saying this for years; it pays more to be on welfare, so why get a job?

  3. Jeff Kraus says:

    A method to reduce the number of people on welfare is to prevent the birth of children whose parents are on welfare. Birth control and abortion should be required for parents receiving welfare. When the parents earn enough to support themselves then they can have children.

  4. Jefferey is a socialist swine that embraces nihilism. You cannot have a serious conversation with him. He’s even worse than Peter Singer, for crying out loud.

  5. Jeffrey Kraus says:

    The eugenics movement had good goals but not enough knowledge for proper implementation. The current welfare system supports the survival and reproduction of those with low income and intelligence. Income and intelligence are related and the current eugenic policy of welfare is leading to lower population intelligence. To improve income and intelligence society should discourage those of low income and intelligence from having children. See http://www.halfsigma.com/sociobiology/ for more on the relationship between genetics and income.

    If we don’t adopt eugenic policies to increase intelligence our society will be replaced by those that do, see http://helian.net/blog/2013/01/20/china/the-worry-of-chinese-eugenics/

    Socialism is a method for the distribution of ownership of the means of production, see http://en.wikipedia.org/wiki/Socialism for more. Why do you dislike public corporations?

  6. Jeffery,

    It is alarmingly apparent that you are the single most ignorant individual to visit this blog in a long while. To suggest that the eugenics movement was in any sense laudable (“good goals”) is patently absurd, unless you’re a fan of neo-Nazism.

    If income and intelligence are linked in the way you’re suggesting, then you must be third-world poor, my friend. Have you a hut at least?

  7. Jeffrey Kraus says:

    The idea of the blank slate, that all humans are created equally, has been thoroughly discredited. Read Blank Slate by Steven Pinker. Intelligence, education, income and criminality are all strongly influenced by genetics. To make improvements in these areas we need to alter relative rates of reproduction by voluntary financial incentives such as paying those of low intelligence not to have children.

    • Equal in ability is not the same as equal in ontology. Would you like the government administering aptitude and strength tests to determine your benefits and punishmensts?

  8. Jeffrey Kraus says:

    What do you mean by equal in ontology? Human nature is determined by genetics and while all humans are very similar they are not equal. Human abilities are based on nature and nurture.

    Which benefits and punishments do you have in mind?

  9. Jeffrey Kraus says:

    We are all similar but not equal. Human nature is genetics and since we are not all clones we are not equal. We are human beings because of our genes not some immaterial human essence.

    Aptitude tests for education would provide more resources for those with higher intelligence as the return for society is better. We curently spend too much money educating intellectually disabled children who won’t earn enough income to make the invesment worthwhile.

    The death penalty would be based on the behavior of the individual which is influenced by their genes.

  10. Jeffrey Kraus says:

    What is humanness? We may be all humans today in a nominal sense but we are in no way equal otherwise. If you look back in time when did we become human? Since genetic change in time is gradual there is no sharp dividing line that determines human.

  11. Jeffrey Kraus says:

    That is a tautology, a person is a human if they are a human. Humans are organisms with a certain set of genes and parents.

    Providing contraception and abortions to those on welfare will save the public money.

  12. Jeffrey Kraus says:

    If you mean 5-year olds and teenagers on welfare, the yes killing them might save money. Or might cost money if they become productive adults. But they are persons and killing them is not moral.

    Legalization of abortions reduced the crime rate, see http://en.wikipedia.org/wiki/Legalized_abortion_and_crime_effect and having Medicaid pay for abortions would lower the crime rate even more, see https://www.aclu.org/blog/reproductive-freedom-womens-rights/25-percent-would-if-they-could because the children of low income parents are more likely to become criminals.

  13. Yes, abortions reduce crime. So would killing all black people. Might be a downside to that, though. Like most pro-abortion arguments, yours ignores the humanity of the unborn. They are human beings from fertilization with inherent worth. Killing them because they are likely to be poor, or criminals, or “just” unwanted, or whatever, is immoral.

    I hope Jeffrey spreads his views far and wide. He is debating gold for pro-lifers. You wouldn’t even have to respond. Just let him talk and watch middle ground people step away from him.

  14. The idea of being created equal is a matter of law. The law must regard each of us as equal despite our financial state, our race or ethnicity or religious affiliation. None of these is to be held against us when facing legalities. It has nothing to do with one person having the same abilities or capabilities of another.

  15. Since you on the right are not in favor of allowing people to earn an actual living wage, I’m very glad to hear that welfare pays more than work. Of course, logically, it would be smarter to offer the incentive of work by making it pay better, but this concept seems to be lost on the right, for some strange reason. Go figure.

    • I’m all in favor of EARNING a living wage. I’m not in favor of forcing businesses to be charities paying more than a job is worth. When someone takes the initiative to educate and train themselves for a better paying job, they earn more. That’s how you EARN a living wage.

  16. That concept you just wrote above no longer works in the current economy. We have people with Master’s degrees working at Burger King now.

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