Friday, August 23, 2013

Welfare or work - which is more attractive?

Michael Tanner of the Cato Institute did a state by state study on the cash benefits derived from welfare versus getting a job.

He found that in Minnesota, the welfare benefits were the equivalent of $14 an hour, far above the minimum wage.

One can see why a person would tilt towards welfare if the alternative is a job they don't like.  Tanner summarizes his study by writing:
The current welfare system provides such a high level of benefits that it acts as a disincentive for work. 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.  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.  Moreover, states should consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels and tightening eligibility requirements.

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