Study: Welfare pays more than work in most states
Looking for a good paying job? Well, look no further.
No, really, stop looking. In 35 states, welfare benefits pay more than a minimum wage job, according to a new study by the libertarian Cato Institute, and in 13 states welfare pays more than $15 per hour.
“One of the single best ways to climb out of poverty is taking a job, but as long as welfare provides a better standard of living than an entry-level job, recipients will continue to choose it over work,” said Michael Tanner, senior policy analyst and co-author of the study.
The study is an updated version of one Tanner put out in 1995 that estimated the full value of welfare benefits packages across the states. The 1995 study found that such tax-free welfare benefits greatly exceeded the poverty level and “their dollar value was greater than the amount of take-home income a worker would receive from an entry-level job.”
Despite efforts to curb welfare spending, many welfare programs and benefits have continued to outpace the income that many workers can receive for working an entry-level job, which disincentivizes work, according to the study.
“The current welfare system provides such a high level of benefits that it acts as a disincentive for work,” reads the study. “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.”
According to the study, the federal government funds 126 separate programs designed to support low-income earners. Seventy-two of these programs provide cash or in-kind benefits to recipients. This is on top of additional welfare programs operated by state and local governments.
Welfare recipients in Hawaii get the most benefits, according to Tanner, at $29.13 per hour — or $60,590 pre-tax income annually. However, the state’s minimum wage is only $7.25 per hour, according to the Labor Department. Hawaiians on welfare also earn 167 percent of the median salary in the state, which is only $36,275.
The District of Columbia, Massachusetts and Connecticut have the next more generous welfare benefits.
D.C. welfare recipients can earn $24.43 per hour. In Massachusetts they can get $24.30 per hour. In Connecticut welfare recipients can receive $21.33 per hour.
“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,” says the study.
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