Posts tagged with: Charles Hughes

Blog author: jcarter
Wednesday, August 21, 2013
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welfareIn eleven states in the union, welfare pays more than the average pretax first-year wage for a teacher. In thirty-nines states, it pays more than the starting wage for a secretary. And, in the three most generous states a person on welfare can take home more money than an entry-level computer programmer.

Those are just some of the eye-opening and distressing findings in a new study by Michael Tanner and Charles Hughes of the Cato Institute on the “work versus welfare tradeoff.”

“Welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job, and the balance between welfare and work may actually have grown worse in recent years,” say Tanner and Hughes. “The current welfare system provides such a high level of benefits that it acts as a disincentive for work. Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.”

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It sounds like a late-night tv scam: make tens of thousands of dollars and don’t work at all! And yet, it turns out that the U.S. government is offering just such a deal. For instance, a welfare recipient in the state of Connecticut can make up to uncle sam's money$38,761, according to a new Cato Institute study. In Hawaii, the figure is $49,175, over 200 percent above the Federal Poverty Level. As The Heritage Foundation has pointed out, nearly half of Americans pay no income tax at this point in history.

Michael Tanner and Charles Hughes have written “Work versus Welfare Trade-off 2013: An Analysis of the Total Level of Welfare Benefits by State.” Tanner has this to say about paying people not to work:

To be clear: There is no evidence that people on welfare are lazy. Indeed, surveys of them consistently show their desire for a job. But they’re also not stupid. If you pay them more not to work than they can earn by working, many will choose not to work.

While this makes sense for them in the short term, it may actually hurt them over the long term. One of the most important steps toward avoiding or getting out of poverty is a job.Only 2.6 percent of full-time workers are poor, vs. 23.9 percent of adults who don’t work. And, while many anti-poverty activists decry low-wage jobs, even starting at a minimum-wage job can be a springboard out of poverty.

Thus, by providing such generous welfare payments, we may actually not be helping recipients.

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