Work or Welfare?? Report by State.

[OldJack]

That’s according to a report out Monday, “The Work Versus Welfare Trade-Off: 2013 An Analysis of the Total Level of Welfare Benefits by State,” from the libertarian Cato Institute in Washington.

The report, by Michael Tanner and Charles Hughes, is a follow-up to Cato’s 1995 study of the subject, which found that packages of welfare benefits for a typical recipient in the 50 states and the District of Columbia not only was well above the poverty level, but also more than a recipient’s annual wages from an entry-level job.

That hasn’t changed in the years since the initial report, said Mr. Tanner, a senior fellow at Cato. Instead, the range has become more pronounced, as states that already offered substantial welfare benefits increased their packages while states with lower benefits decreasing their offerings.

To be sure, not all of those who rely on government programs take part in every benefit to which they are entitled, and the most generous benefits are in states that have the highest costs of living.

The state-by-state estimates are based on a hypothetical family participating in about seven of the 126 federal anti-poverty programs: Temporary Assistance for Needy Families; the Women, Infants and Children program; Medicaid; Supplemental Nutrition Assistance Program; and receiving help on housing and utilities.

In Hawaii, that translates into a 2013 package of $49,175 — up $7,265 from an inflation-adjusted $41,910 in 1995. Rounding out the top five areas for welfare benefits, along with their 2013 amounts, were: the District of Columbia ($43,099), Massachusetts ($42,515), Connecticut ($38,761) and New Jersey ($38,728).

The state with the lowest benefits package in 2013 was Mississippi, at $16,984, followed by Tennessee ($17,413), Arkansas ($17,423), Idaho ($17,766) and Texas (18,037).

One change the authors noted between the surveys was a slight increase in the value of work to welfare, by a few dollars an hour. “There was some improvement of the relative value of work through the Earned Income Tax Credit, particularly at the state level, and the child tax credits,” Mr. Tanner said. “Those largely didn’t exist in 1995.”

Some states also are curbing some housing assistance, he said, and now requiring individuals who receive welfare benefits to pay their own rent.

The authors found that in 11 states, “welfare pays more than the average pretax first-year wage for a teacher [in those states]. In 39 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.”

Click any header to re-sort this chart:

State

Total Potential Welfare Benefit

Equivalent Pretax Wage

Alabama

$26,638

$23,310

Alaska

$29,275

$26,400

Arizona

$21,364

$15,320

Arkansas

$17,423

$12,230

California

$35,287

$37,160

Colorado

$20,750

$14,750

Connecticut

$38,761

$44,370

Delaware

$30,375

$29,220

Dist. of Columbia

$43,099

$50,820

Florida

$18,121

$12,600

Georgia

$19,797

$14,060

Hawaii

$49,175

$60,590

Idaho

$17,766

$11,150

Illinois

$19,442

$13,580

Indiana

$26,891

$22,900

Iowa

$20,101

$14,200

Kansas

$29,396

$26,490

Kentucky

$18,763

$13,350

Louisiana

$26,538

$22,250

Maine

$19,871

$13,920

Maryland

$35,672

$38,160

Massachusetts

$42,515

$50,540

Michigan

$28,872

$26,430

Minnesota

$31,603

$29,350

Mississippi

$16,984

$11,830

Missouri

$26,837

$22,800

Montana

$29,123

$26,930

Nebraska

$20,798

$14,420

Nevada

$31,409

$29,820

New Hampshire

$37,160

$39,750

New Jersey

$38,728

$43,450

New Mexico

$30,435

$27,900

New York

$38,004

$43,700

North Carolina

$28,142

$25,760

North Dakota

$30,681

$28,830

Ohio

$28,723

$26,200

Oklahoma

$26,784

$22,480

Oregon

$31,674

$34,300

Pennsylvania

$29,817

$28,670

Rhode Island

$38,632

$43,330

South Carolina

$26,536

$21,910

South Dakota

$29,439

$26,610

Tennessee

$17,413

$12,120

Texas

$18,037

$12,550

Utah

$19,612

$13,950

Vermont

$37,705

$42,350

Virginia

$20,884

$14,870

Washington

$30,816

$28,840

West Virginia

$27,727

$24,900

Wisconsin

$21,483

$14,890

Wyoming

$33,119

$32,620

Source: Cato Institute

[jainen]

>>more than a recipient’s annual wages from an entry-level job<<

The implication is that welfare is excessive. More than an implication, actually, as they say "states should consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels." A better solution is to increase the value of work.

What do welfare recipients do with their money? The spend it in the local economy. Cut it back and consumer income drops. Increase wages and everyone from landlords to stockholders have higher income and pay more taxes.

[Guest Taxed]

So does unemployment benefits. It is spent on short order in the local economy. Probably the most effective economic stimulus when the economy is in a tail spin.

[rfassett]

Forced increases in income simply ratchet all income and expenses upward. Witness increases in minimum wage. Ask anyone that received that increase if they are any more well off than before. The answer is no because all of the increase that the employers had to pay had to be compensated through higher prices. Higher prices and higher taxes ate up all of the increase. IMHO, reducing welfare is the ONLY answer. A recent conversation was witnessed locally where a woman working part time (by choice) at a local grocery store, who receives welfare as does her stay at home husband (by choice) and her adult child living at home (unemployed by choice) and having just got back from a cruise and had just bought a near top of the line refrigerator was heard to say, "you would be surprised at what you can buy when you don't have to spend your money on food". Ya think?

[Margaret CPA in OH]

I have not read the details but I do wonder what percentage of those on welfare or receiving benefits of various kinds are eligible for an entry level job. I suspect some number are middle-aged or older with children; some are unemployed due to downsizing and other reasons but may have many years of experience; some may be too old or disabled to work productively. And are those benefits per person or per family of one, two, five or how many? I suspect it isn't quite as clear cut as many might wish the situation to be.

A friend here has been out of a job, downsized, for 4 years after working at a local university for 28 years. She has exhausted unemployment and worked at every chance she has come across including selling tickets at carnivals, thanks to a friend. It isn't so easy to put everyone in one pot and decide what and who is worth what. I couldn't do that. I am astonished at the many who simplify rather easily.

[jainen]

>>if they are any more well off than before. The answer is no <<

That may be the political answer, but it's certainly not the mathematical answer. In 1968 the federal minimum wage was $1.60, which equals $10.56 in current dollars adjusted for inflation. Can you see that is 46% more than the actuall current rate of $7.25? That means increases in base wages have NOT caused higher costs of living. So yeah, people who received that increase are not any more well off--because the increase wasn't enough to keep up with other inflationary factors including stupid political positions..

[SaraEA]

You have to understand the source of these data. We all know you can spin statistics any way you want. The Cato Institute is libertarian and in the past has published "scientific" studies "proving" that minorities have lower IQ scores than whites, that the nation's most effective preschool program for low-income children (Head Start) doesn't work, that all child care is harmful, and all manner of treatises to support their conservative views. They start with a conclusion and bend the data to prove it. Usually their biases are exposed in the scientific literature, which soundly disputes their conclusions, but that reasoned discourse doesn't make for good headlines and is typically ignored by the media.

That said, and acknowledging that I haven't yet read their "study," I wonder how they account for a few inconvenient facts. Biggest is that TANF (welfare) is time limited to 24 months at a stretch (20 in many states) and 5 years lifetime. People just can't stay on it forever anymore, so the Institute's income levels must presuppose that the recipient is currently eligible and hasn't reached any limits yet. Similarly, WIC is only available for pregnant women and those with children under the age of five. Families can't collect that support for very long. I can only surmise that the numbers Cato used represent hypothetical families who are in that sweet spot of being eligible for all available benefits. That probably characterizes some families but certainly not most of them.

Yes, this critique comes from the same poster who a couple of weeks ago lamented that my charitable nature was curbed by an encounter with a hairdresser who was looking for a luxury rental and assuming Section 8 would cover it, was going to bring a baby home from the hospital and was looking for a way to get paid for not working, was mad at the electric company for demanding that she pay her overdue bills, and bought a gigantic flatscreen TV, all of this while surfing on her expensive smartphone with a clearly expensive data plan

Obviously I'm not denying that there are people who work harder at using the system than they do at, well, working. I'm just alerting people to the fact that everything that purports to be scientific isn't necessarily so. Anything with the word "Cato" in the byline should be approached with caution and should never be cited as "proof" of anything except their skill in using statistics to support their cause.

[kcjenkins]

Isn't it nice that only conservative groups are "using statistics to support their cause"?

[OldJack]

I wonder how many tax preparers make less than the welfare benefit in their state?

[taxxcpa]

I wonder how many tax preparers make less than the welfare benefit in their state?

I make less from tax preparation than the average welfare benefit. Welfare benefits are higher than the average social security benefit for people that have worked all their lives.

If I hadn't saved and invested for retirement, I would be living on social security supplemented by a few bucks from tax and accounting work.

[rfassett]

>>if they are any more well off than before. The answer is no <<

That may be the political answer, but it's certainly not the mathematical answer. In 1968 the federal minimum wage was $1.60, which equals $10.56 in current dollars adjusted for inflation. Can you see that is 46% more than the actuall current rate of $7.25? That means increases in base wages have NOT caused higher costs of living. So yeah, people who received that increase are not any more well off--because the increase wasn't enough to keep up with other inflationary factors including stupid political positions..

Wow - was 1968 even in the current era? Times were a lot different in 1968. Bring the analysis a little closer to current times to make it believable. I admit, I have not done the math, but if I did, I do not believe it would be as simple as you present. I believe you have to take into account all of the parameters such as taxation and earned income tax credit and welfare payments, etc, if you are going to do this analysis.

[rfassett]

There are 40 states which have time limits that can result in the termination of welfare benefits. All states have exemptions or extensions. Exemptions usually cover cases where children don't live with their natural parents because of a parent's death or assignment to foster parents and people with medical problems. In many states, individuals who can't find jobs can get extensions. So yeah, there are time limits, but they are without muscle in some states.

[Guest Taxed]

I wonder how many tax preparers make less than the welfare benefit in their state?

Don't give me any ideas!