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In many states, welfare can pay better than an honest day’s work

By   /   August 21, 2013  /   8 Comments

THE GOOD LIFE: In many states, welfare benefits can provide as much income as an entry-level job.  In a few states, the total is even higher.

 

By Benjamin Yount and Eric Boehm | Watchdog.org

In more than a dozen states, a family of three can live on what is essentially a middle-class salary without holding down a job.

That’s the startling revelation at the heart of a new report from the Cato Institute, a libertarian think tank based in Washington D.C., which annually reviews the average value of welfare benefits in each of the 50 states.

A combination of food stamps, temporary cash grants, WIC, and housing assistance is worth a pre-tax value more than $30,000 in 16 states. In Hawaii, the most generous state, a working family of three would have to earn almost $61,000 just to be even with the $50,000 in welfare the government hands out.

The report examines the value of government assistance and whether that “help” is actually keeping people from getting a job.

“Poor people are not lazy. Every survey you look at, people on welfare say they’d prefer to have a job,” said report co-author Mike Tanner, a senior fellow with Cato. “On the other hand, poor people are not stupid either. If you’re willing to pay someone two, or sometimes, three times more than they are likely to make at an entry level job…chances are they are not likely to work real hard to get into that job.” (Hear the full conversation with Mike Tanner Welfare vs. Work)

The report will make anyone with a low-paying job cringe. In 11 states, welfare programs pay more than the starting salary for a teacher. In 39 states, welfare programs pay better than the starting salary for a secretary.

All told, the federal government spent $668 billion on those programs last year, according to the report, which also took into account $284 billion worth of welfare spending at the state level.

In Hawaii, where welfare benefits are at their highest, single mothers collect an average benefit of $49,175, according to the Cato study.

Because welfare is not subject to taxes, a person would have to earn more than $60,000 annually in Hawaii to take home the same amount as someone on welfare.

Hawaii Senate Minority Leader Sam Slom

Hawaii Senate Minority Leader Sam Slom

Sen. Sam Slom, R-Honolulu, minority leader of the Hawaii State Senate, and the sole Republican in the chamber, said the study’s results are “not surprising” to those who have followed recent increases in total welfare benefits and expenditures.

“I said in a public hearing several years ago that within a few years, our human services welfare costs would surpass public education in Hawaii. This came to pass late in 2012,” Slom told Hawaii Reporter. “It is a shame that Hawaii has such huge governmental costs and tax burden, which in turn creates more of a welfare class and the growing inability of a middle class to sustain themselves, let alone to privately assist the less fortunate.”

But two researchers at the Center for Budget and Policy Priorities, a liberal think tank also based in Washington, D.C., say Cato’s conclusions are based on some faulty assumptions.

In a review of the Cato report published Wednesday, Sharon Parrott and LaDonna Pavetti wrote that the welfare system serves as support for working families, not a disincentive to find a job.

The two researchers said Cato’s assessment incorrectly assumes that all single parents with two or more children would qualify for all types of benefits. They also said the report fails to account for the fact that many welfare recipients are working low-paying jobs.

“To be sure, many working families struggle because their earnings are low and the assistance they receive often isn’t enough to make ends meet, particularly if they have significant child care or transportation costs,” they wrote.

TANNER: Government policies incentivize welfare over work.

TANNER: Government policies incentivize welfare over work.

Tanner points out that, officially, 42 percent of people on welfare are working.

But the Cato study notes the numbers are actually much lower. Welfare recipients can be classified as working while looking for a job, or simply taking part in a job training program. Tanner estimates only about 20 percent of people receiving welfare benefits have a non-subsidized job.

Only 17 percent of Missouri’s Temporary Assistance for Needy Families recipients have jobs, according to the report, ranking the state dead last.

“We need to tighten the work requirements,” Tanner said of how to improve those numbers. “Even in Illinois, a state that is doing much better than the national average (with) 58 percent of people working. That means 42 percent of people on welfare are not working.”

Tanner adds that states and the federal government should also cap welfare benefits, and that creating good paying jobs is the best way to get people off of welfare.

Boehm is a reporter for Watchdog.org and can be reached at Eric@PAIndependent.com.  Yount is a reporter for Illinois Watchdog and can be reached at Ben@IllinoisWatchdog.org

Hawaii Reporter’s Malia Zimmerman contributed to this report.

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Eric is a reporter for Watchdog.org and former bureau chief for Pennsylvania Independent. He lives in Minneapolis, Minnesota, where he enjoys great weather and low taxes while writing about state governments, pensions, labor issues and economic/civil liberty. Previously, he worked for more than three years in Harrisburg, Pennsylvania, covering Pennsylvania state politics and occasionally sneaking across the border to Delaware to buy six-packs of beer. He has also lived (in order of desirability) in Brussels, Belgium, Pennsburg, Pa., Fairfield, Conn., and Rochester, N.Y. His work has appeared in Reason Magazine, National Review Online, The Freeman Magazine, The Philadelphia Inquirer, The Washington Examiner and elsewhere. He received a bachelor's degree from Fairfield University in 2009, but he refuses to hang on his wall until his student loans are fully paid off sometime in the mid-2020s. When he steps away from the computer, he enjoys drinking craft beers in classy bars, cheering for an eclectic mix of favorite sports teams (mostly based in Philadelphia) and traveling to new places.

  • wrongheifer

    why are there zero comments here… I guess I’m the last one to know this since I work..

  • Prospertor69

    Me, I like low numbers of comments. Everyone else will read mine, instead of skipping over it!
    It is sad that some governments did give thought into what unintended con-sequences would likely occur by passing laws. Their generousity, comes at the price to the tax payers and the receivers. If the welfare recipients have an incentive to work they will. On the other hand, if they are getting a lot for nothing, why look for a job? As for the two think tanks,quibbling about words, 42-58% not working or looking for work. Call it many, most or some. Its to way to numerous!

  • Leanne Musson Watts

    Too many trolls… People don’t want to comment and be crucified.

  • My1Grace

    I’d like to see the breakdown of states, such as which 16 states pay more than $30K/year, which 11 states pay welfare receipients more than a teacher and which 39 states pay more than a secretary. If I lived in one of those states, I’d like to know that.

  • jeanne

    if one believes oneself to be a worthwhile, productive, important asset with something to offer to society, and if one believes that God created each of us in the image of His Son, Jesus, and if we refuse to listen to the lies of satan, we are then in a place to seek Gods provision and guidance in terms of work, money, and decisions and choices. we need to learn to live within our means, and help those who TRULY need help. This is not about getting something free for me. It is about me helping myself by taking care of myself and also taking care of those around me *(friends, neighbors, children) who cannot help themselves, not those who are willing to take from all of us, because the government is not able to get a handle on welfare. Believe in Jesus, take care of yourself so that you can help others and leave the government out of it.

  • https://www.facebook.com/bradley.s.parker BradleyParker

    I’m sure it’s in the CATO Institute report, if you choose to read it.

  • sarah5775

    There is a tremendous problem with these statistics. You are comparing apples and oranges. You are comparing a single worker without a family to a family and children headed by a person who collects welfare. Most people on welfare are families. There are people who are supporting families, not individuals.

    Also, the average length of time for a person or family to stay on welfare is 2 years http://salt.claretianpubs.org/issues/welfare/davids.html

    and 9 out of 10 people on welfare are diabled, elderly, or ALREADY WORKING and not making enough to support themselves.

    http://www.cbpp.org/cms/?fa=view&id=3677

  • Jblaze

    How do I get welfare? Or does being 24 white college educated and male make me not allowed? I’d take that money and do amazing things but I’m only allowed to be a slave for my dollars.

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