August 28, 2013


Why get off welfare? : Poor people aren't stupid. If they can get more from the government than they can from a job, they aren't going to work. (Michael D. Tanner, August 22, 2013, LA Times)

Because there are so many categories of welfare recipients and so many different types of benefits, it is extremely difficult to determine how many people get what combination of benefits. For the purposes of this study, we assumed a hypothetical family consisting of a mother with two children, ages 1 and 4, and calculated the combined total of seven benefits that family could receive in all 50 states.

If that mother received Temporary Assistance for Needy Families, it is almost certain that she would also receive food stamps and Medicaid as well. Roughly 87% of Needy Families do.

Approximately 61% of all Needy Families fitting our profile also receive aid from the Women, Infants and Children program, or WIC, so we included that benefit. (If the children were older, they would not be eligible for WIC but would receive other benefits such as subsidized school lunches and breakfasts.) We also included utilities assistance, given that half of welfare recipients are on that program.

Housing assistance was a tougher call. Nationwide, the rate of participation varies from nearly 82% of Needy Families in North Dakota to virtually none in Idaho. Housing programs also generally have waiting lists, meaning long-term welfare beneficiaries are most likely to receive benefits. Many states also prioritize families with young children like our profile family. We decided not to include those benefits for states where participation was less than 10%. In California, it is 11.4%.

Finally, we included the federal Emergency Assistance Food Program, which provides free commodities like milk and cheese. Our profile family would qualify in all 50 states, although usage figures are imprecise.

In Washington, D.C., and 10 particularly generous states -- Hawaii, Vermont, Connecticut, Massachusetts, New York, New Jersey, Rhode Island, Maryland, New Hampshire and California -- these seven programs provide a mother with two young children an annual benefit worth more than $35,000 a year. The value of the package in a medium-level welfare state is $28,500.

That may sound low, but it's important to remember that welfare benefits are not taxed, whereas wages are. So to put the welfare benefit package in perspective, we calculated the amount of money our recipient would have to earn in pretax income to bring home an equal amount of money if she took a 40-hour-per-week job.

After computing the federal income tax, the state income tax and payroll taxes, as well as taking into account federal and state earned income tax credits and the child tax credit, we came to the inescapable conclusion that welfare pays very well.

In fact, in 33 states and the District of Columbia, welfare pays more than an $8-an-hour job [see chart]. In 12 states, including California, as well as the District of Columbia, the welfare package is more generous than a $15-an-hour job. In Hawaii, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont and Washington, D.C., welfare pays more than a $20-an-hour job, or more than 2.75 times the minimum wage.

Posted by at August 28, 2013 5:08 PM

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