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To Get People to Work, Tighten Welfare Standards

August 18, 2013 in Economics

By Michael D. Tanner

Michael D. Tanner

Contrary to stereotypes, there is no evidence that people on welfare are lazy. Indeed, surveys of welfare recipients consistently show their desire for a job.

However, there is also evidence that many are reluctant to accept available employment opportunities. In fact, despite the work requirements included in the 1996 welfare reform, only 10 percent of adult welfare recipients in New Jersey are working in unsubsidized jobs, while roughly 32 percent are involved in the broader definition of work participation, which includes activities like job search and training.

Perhaps that is because, while poor people are not lazy, they are not stupid either. If you pay people more not to work than they can earn by working, many will choose not to work. And, New Jersey pays people on welfare a great deal not to work.

Congress and state legislatures should consider strengthening work requirements in welfare programs, removing exemptions and narrowing the definition of work.”

A new study released by the Cato Institute looks at the state-by-state value of welfare. Nationwide, our study found that the value of benefits for a typical recipient family ranged from a high of $49,175 in Hawaii to a low of $16,984 in Mississippi.

In New Jersey, a mother with two children participating in seven major welfare programs (Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, housing assistance, utility assistance and free commodities) could receive a package of benefits worth $38,728 a year, the fifth highest in the nation. Only Hawaii, Massachusetts, Connecticut and the District of Columbia provided more generous benefits.

It’s important to remember that welfare benefits are not taxed, while wages are. In fact, in some ways, the highest marginal tax rates anywhere are not for millionaires, but for someone leaving welfare and taking a job.

Don’t forget that there are additional costs associated with going to work, such as child care, transportation and clothing. Not to mention that even if the final income level remains unchanged, an individual moving from welfare to work will perceive some form of loss: a reduction in leisure as opposed to work. By not working, welfare recipients are simply responding rationally to the incentive systems our public policy makers have established for them.

Of course, not every welfare recipient meets the study’s profile, and many who do don’t receive all the benefits listed. (Only about 23 percent of New Jersey TANF recipients also receive public …read more

Source: OP-EDS

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