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Welfare and Work

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It seems that welfare has replaced work in America. In the last few years, we have seen the largest expansion of the welfare state since President Lyndon Johnson. We have also seen the largest decline in the labor force in 30 years.

Stephen Moore with the Heritage Foundation (and formerly with The Wall Street Journal) believes it is time to ask whether welfare has contributed to the reduction in the percentage of Americans holding a job. More than 46 million Americans are on food stamps. We have a record increase in the number of Americans on disability.

Back in 1996, the Republican Congress and President Clinton passed a bill that made work a requirement for welfare. Despite the predictions of failure and the prediction that it would harm the poor, we actually saw the number of people on welfare decrease by 50 percent. Unfortunately, the current administration has removed most of the positive requirements in that original bill.

When Stephen Moore was on my radio program, I also made the case that some of these generous welfare benefits actually are a significant disincentive to working. The CATO Institute did a study of welfare payments in each state. They argue in their monograph “The Work Versus Welfare Trade-Off” that welfare currently pays more than a minimum wage job in 35 states (even after accounting for the Earned Income Tax Credit). In 13 states, welfare pays more than $15 per hour.

If someone does a rational calculation of costs and benefits, you can see why they might not try to find a job unless it pays significantly more than minimum wage. They also found the 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.

Americans are a generous people. They don’t mind helping someone who has fallen on hard times. But they see welfare as a system that should provide a hand up not a hand out. It is no wonder that the welfare rolls are increasing when it makes more economic sense in many states to collect welfare than to find a job.

Viewpoints by Kerby Anderson

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