Do welfare recipients have an incentive to work?
posted at 9:21 am on August 10, 2012 by Rob Bluey
There are more than 70 separate welfare programs operated by the federal government today. The cumulative cost is nearly $1 trillion per year and rapidly expanding on President Obama’s watch.
Over the past few weeks, we’ve been talking about just one. The Temporary Assistance for Needy Families (TANF) program was the centerpiece of President Bill Clinton’s landmark reform in 1996. TANF includes something the government’s other welfare programs lack: mandatory work requirements. That’s why the illegal move by the Department of Health and Human Services to gut the law was so alarming. By allowing states to waive work requirements, the Obama administration essentially ended our most successful welfare program, one that helped more than 3 million Americans escape poverty.
If there’s anything good to come of this debate, it’s the opportunity to fix the failed welfare state. Writing for National Review yesterday, Michael Franc pinpoints one of the central problems that needs to be addressed:
In many cases, economists have calculated, welfare recipients who enter the work force or receive pay raises lose a dollar or more of benefits for each additional dollar they earn. The system makes fools of those who work hard.
Recently the chairmen of two important subcommittees on Capitol Hill convened a hearing on this issue. The hearing elicited some revealing testimony from one of the chairmen’s congressional colleagues.
“The more benefits the government provides, the stronger the disincentive to work,” Representative Geoff Davis (R., Ky.) pointed out. The great irony, he added, is that although federal welfare programs “are designed to alleviate poverty while promoting work,” collectively they have “an unintended side effect of discouraging harder work and higher earnings.”
Less work and lower earnings, in turn, translate into greater dependency on the government — and zero or even downward social and economic mobility for those mired in poverty.
At the congressional hearing, it was liberal Rep. Gwen Moore (D-WI) who provided some of the most enlightening testimony. As a single mother with kids, Moore once relied on welfare. She spoke in personal terms about the tradeoffs recipients must make when their employer offers a promotion or pay increase. In her case, she once “begged my supervisor not to give me a 50-cents-an-hour raise lest I lose Title 20 daycare.” Moore said the same factors were at play with her Medicaid.
What government bureaucrat devised this scheme?
In the land of the free and home of the brave, our government is forcing America’s poor to make choices that Franc says should be “no-brainer decisions.” Of course she should take the job, the pay raise, promotion and climb the ladder. Only in Moore’s case, those weren’t actually incentives.
Rep. Jim Jordan (R-OH), chairman of the conservative Republican Study Committee, is spearheading the next wave of welfare reform on Capitol Hill. The Welfare Reform Act of 2011 would require recipients of food stamps to work or prepare for a job, disclose the costs of total federal, state, and local welfare spending, and return welfare spending to its 2007 level once unemployment hits 6.5 percent.
That’s more than Obama has offered. His administration’s illegal action — and, yes, it was illegal — moves America in the wrong direction. Or, perhaps more accurately, it makes Americans more dependent on government. According to The Heritage Foundation’s Index of Dependence on Government:
Today, more people than ever before—67.3 million Americans, from college students to retirees to welfare beneficiaries—depend on the federal government for housing, food, income, student aid, or other assistance once considered to be the responsibility of individuals, families, neighborhoods, churches, and other civil society institutions. The United States reached another milestone in 2010: For the first time in history, half the population pays no federal income taxes.
We can do better. It’s time to fix our broken welfare system.
Rob Bluey directs the Center for Media and Public Policy, an investigative journalism operation at The Heritage Foundation. Follow him on Twitter: @RobertBluey