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Tuesday, August 20, 2013

Welfare Incentives

It is pathetic that it pays to be on welfare rather than take a job, but I already knew that it was true in many states. Maybe not this many. Here's the report:
The study, conducted by the CATO Institute, says in many states welfare pays better than work. Topping the list of wage-equivalent benefits for a mother and two children was Hawaii at $60,590. Idaho came in last with $11,150. 
The study found that 33 states and the District of Columbia offer welfare benefits that pay recipients more than an $8-an-hour job would. Twelve states and the District of Columbia offer welfare packages that pay better than a $15-an-hour job does. 
"There is no evidence that people on welfare are lazy," writes CATO senior fellow Michael Tanner. "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."
Also, have you heard that many rural areas in liberal states have seriously considered splitting away and forming their own new states? This article cites liberal positions on guns and energy as the primary reasons, but I know that many rural residents also disapprove of paying increasing state taxes to subsidize people living on welfare (for more money than they make themselves) in the cities, not that I have hard evidence for that. Just ears.

It tickles my fancy to think of what liberally governed states such as Colorado, Washington, and California would do if a good chunk of their net tax payers (rather than welfare recipients) were to split off from the state. It would make an already unsustainable path a genuine money crisis!

I'd be interested to see how they balance their books. Would they admit conservatives are right by reducing welfare benefits, or perhaps by becoming more business friendly through their tax and regulatory policies and thus start luring in new taxpayers?

1 comment:

  1. The problem with rural residents disapproving of paying state taxes to subsidize people living on welfare is that it's the rural residents who are on welfare and the urban residents who pay for them.

    The state of Washington: http://www.thestranger.com/seattle/welfare-state/Content?oid=6686284

    Also, see http://www.dailyyonder.com/not-thinking-about-rural-subsidies/2011/03/09/3221

    The one area of federal spending where rural areas exceed urban ones is in the broad category of income security. This includes medical benefits, Social Security, disability, food and nutrition programs and education.

    In 2009, the per capita spending on income security in rural areas was $1,639 per capita higher than in urban counties. Income security amounted to 69% of total federal spending in rural areas, but only 51% in urban areas in 2009.

    What’s the cause of this disparity? Rural people are, on average, poorer and older than those who live in the cities. As a result, almost all of the difference in spending on income security derives from spending on Social Security, disability and other direct payments, according to an analysis by the Rural Policy Research Institute.

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