Stephanie
Diamond Member
- Jul 11, 2004
- 70,230
- 10,865
- 2,040
Welfare Pays Better Than Work, Study Finds
$36,000 a Year in Hawaii
Welfare benefits are far more generous than commonly thought and
substantially exceed the amount a recipient could earn in an entry-level
job. As a result, recipients are likely to choose welfare over work,
increasing long-term dependence. Those are the principal findings in "The
Work vs. Welfare Trade-Off" (Policy Analysis no. 240) by Michael Tanner,
director of health and welfare studies; Stephen Moore, director of fiscal
policy studies; and David Hartman, CEO of Hartland Bank in Austin, Texas.
The paper was released at the height of the welfare debate in Congress.
The study examines the combined value of benefits--including Aid to
Families with Dependent Children, food stamps, Medicaid, and others--for
a typical welfare recipient in each of the 50 states. The value of those
tax-free benefits is then compared with the amount of take-home income a
worker would have left after paying taxes on an equivalent pretax income.
The following are among the study's findings.
* To match the value of welfare benefits, a mother with two children would
have to earn as much as $36,400 in Hawaii or as little as $11,500 in
Mississippi.
* In New York, Massachusetts, Connecticut, the District of Columbia,
Hawaii, Alaska, and Rhode Island, welfare pays more than a $12.00-an-hour
job--or more than two and a half times the minimum wage.
* In 40 states welfare pays more than an $8.00-an-hour job. In 17 states
the welfare package is more generous than a $10.00-an-hour job.
* Welfare benefits are especially generous in large cities. Welfare
provides the equivalent of an hourly pretax wage of $14.75 in New York
City, $12.45 in Philadelphia, $11.35 in Baltimore, and $10.90 in Detroit.
* In 9 states welfare pays more than the average first-year salary for a
teacher. In 29 states it pays more than the average starting salary for a
secretary. In 47 states welfare pays more than a janitor earns. Indeed, in
the 6 most generous states, benefits exceed the entry-level salary for a
computer programmer.
The authors conclude that if Congress or state governments are serious
about reducing welfare dependence and rewarding work, the most promising
reform is to cut benefit levels substantially.
The study has been the subject of major news coverage. In a September 28
Wall Street Journal guest column, Tanner and Moore wrote, "The welfare
reform proposals just passed by the Senate, and the earlier House version,
are designed to reduce 'hard-core' welfare dependency and reward work. But
we believe the most critical public policy implication of our findings is
that ultimately these goals can be accomplished only by cutting benefit
levels substantially. Unless and until this is done, Congress will have
failed to end welfare as we know it."
Hourly Wage Equivalent of Welfare
Hawaii $17.50
Alaska 15.48
Massachusetts 14.66
Connecticut 14.23
Washington, D.C. 13.99
New York 13.13
New Jersey 12.74
Rhode Island 12.55
California 11.59
Virginia 11.11
Maryland 10.96
New Hampshire 10.96
Maine 10.38
Delaware 10.34
Colorado 10.05
Vermont 10.05
Minnesota 10.00
Washington 9.95
Nevada 9.71
Utah 9.57
Michigan 9.47
Pennsylvania 9.47
Illinois 9.33
Wisconsin 9.33
Oregon 9.23
Wyoming 9.18
Indiana 9.13
Iowa 9.13
New Mexico 8.94
Florida 8.75
Idaho 8.65
Oklahoma 8.51
Kansas 8.46
North Dakota 8.46
Georgia 8.37
Ohio 8.37
South Dakata 8.32
Louisana 8.17
Kentucky 8.08
North Carolina 8.08
Montana 7.84
South Carolina 7.79
Nebraska 7.64
Texas 7.31
West Virginia 7.31
Missouri 7.16
Arizona 6.78
Tennessee 6.59
Arkansas 6.35
Alabama 6.25
Mississippi 5.53
cato.org
$36,000 a Year in Hawaii
Welfare benefits are far more generous than commonly thought and
substantially exceed the amount a recipient could earn in an entry-level
job. As a result, recipients are likely to choose welfare over work,
increasing long-term dependence. Those are the principal findings in "The
Work vs. Welfare Trade-Off" (Policy Analysis no. 240) by Michael Tanner,
director of health and welfare studies; Stephen Moore, director of fiscal
policy studies; and David Hartman, CEO of Hartland Bank in Austin, Texas.
The paper was released at the height of the welfare debate in Congress.
The study examines the combined value of benefits--including Aid to
Families with Dependent Children, food stamps, Medicaid, and others--for
a typical welfare recipient in each of the 50 states. The value of those
tax-free benefits is then compared with the amount of take-home income a
worker would have left after paying taxes on an equivalent pretax income.
The following are among the study's findings.
* To match the value of welfare benefits, a mother with two children would
have to earn as much as $36,400 in Hawaii or as little as $11,500 in
Mississippi.
* In New York, Massachusetts, Connecticut, the District of Columbia,
Hawaii, Alaska, and Rhode Island, welfare pays more than a $12.00-an-hour
job--or more than two and a half times the minimum wage.
* In 40 states welfare pays more than an $8.00-an-hour job. In 17 states
the welfare package is more generous than a $10.00-an-hour job.
* Welfare benefits are especially generous in large cities. Welfare
provides the equivalent of an hourly pretax wage of $14.75 in New York
City, $12.45 in Philadelphia, $11.35 in Baltimore, and $10.90 in Detroit.
* In 9 states welfare pays more than the average first-year salary for a
teacher. In 29 states it pays more than the average starting salary for a
secretary. In 47 states welfare pays more than a janitor earns. Indeed, in
the 6 most generous states, benefits exceed the entry-level salary for a
computer programmer.
The authors conclude that if Congress or state governments are serious
about reducing welfare dependence and rewarding work, the most promising
reform is to cut benefit levels substantially.
The study has been the subject of major news coverage. In a September 28
Wall Street Journal guest column, Tanner and Moore wrote, "The welfare
reform proposals just passed by the Senate, and the earlier House version,
are designed to reduce 'hard-core' welfare dependency and reward work. But
we believe the most critical public policy implication of our findings is
that ultimately these goals can be accomplished only by cutting benefit
levels substantially. Unless and until this is done, Congress will have
failed to end welfare as we know it."
Hourly Wage Equivalent of Welfare
Hawaii $17.50
Alaska 15.48
Massachusetts 14.66
Connecticut 14.23
Washington, D.C. 13.99
New York 13.13
New Jersey 12.74
Rhode Island 12.55
California 11.59
Virginia 11.11
Maryland 10.96
New Hampshire 10.96
Maine 10.38
Delaware 10.34
Colorado 10.05
Vermont 10.05
Minnesota 10.00
Washington 9.95
Nevada 9.71
Utah 9.57
Michigan 9.47
Pennsylvania 9.47
Illinois 9.33
Wisconsin 9.33
Oregon 9.23
Wyoming 9.18
Indiana 9.13
Iowa 9.13
New Mexico 8.94
Florida 8.75
Idaho 8.65
Oklahoma 8.51
Kansas 8.46
North Dakota 8.46
Georgia 8.37
Ohio 8.37
South Dakata 8.32
Louisana 8.17
Kentucky 8.08
North Carolina 8.08
Montana 7.84
South Carolina 7.79
Nebraska 7.64
Texas 7.31
West Virginia 7.31
Missouri 7.16
Arizona 6.78
Tennessee 6.59
Arkansas 6.35
Alabama 6.25
Mississippi 5.53
cato.org
