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    Posted August 21, 2013 by
    CKThompson
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    The State of the Welfare State

     

    A recently released study from the Cato Institute analyzing the impact of welfare programs on employment concludes that the “current welfare system provides such a high level of benefits that it acts as a disincentive for work.”

    The executive summary of the report has the following conclusion:

     

    “If Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare work requirements, removing exemptions, and narrowing the definition of work. Moreover, states should consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels and tightening eligibility requirements.”

     

    The benefits vary greatly by state, and the “standard” benefits package ranges from a low of $16,984 (Mississippi) to a high of $49,175 (Hawaii). When you consider that welfare benefits are not taxed, the welfare benefits in Hawaii equate to an annual taxable income of over $60k, or nearly $30/hr. The median salary in Hawaii is roughly $36k, so the welfare benefits amount to 167% of the median wage in that state and 219% of the Federal Poverty Level.

     

    The median value of the standard package of benefits across all 50 states comes to roughly $28,500 per year, or 102% of the median household income of $27,915 across the US. (As estimated by the Census Bureau)

     

    The part of the story that caught my eye was the following paragraph:

    “Nor does our study suggest that people on welfare are lazy. Indeed, survey after survey suggests that they would prefer to be working. By not working, welfare recipients are simply responding rationally to the incentive systems our public-policy makers have established for them.”

     

    So while most Americans on public aid would prefer to be working, the system simply provides too much of an incentive to not work.


    Some of the other interesting statistics from the study include:
    - Welfare pays more than minimum wage in 35 states
    - Welfare pays more than $15/hr in 13 states
    - In 11 states, welfare pays more than the average first year salary for a teacher

     

    Links:

     

    http://www.nationalreview.com/article/356317/welfare-better-deal-work-michael-tanner

    http://object.cato.org/sites/cato.org/files/pubs/pdf/theworkversus.pdf

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