NewburyportNews.com, Newburyport, MA

August 31, 2013

Labor Day: time to reflect on workers and welfare

Barbara Anderson
Newburyport Daily News

---- — Here so soon: Labor Day, originally the celebration of the Labor Movement, that has grown to be celebrated by all of us who work for a living and, I must add, though I’m not there yet, all who worked for a living and are retired.

As the children head back to school, to learn skills that will enable them to work for a living, they and many of us working people try to take a long weekend off to enjoy the last phase of summer. Of course, other working people have to work over the holiday weekend. Note my frequent use of the four connected letters w-o-r-k.

So, how timely that the Cato Institute has just released a study by Michael Tanner and Charles Hughes titled “The Work and Welfare Trade-off: 2013”, which begins:

“The value of the full package of welfare benefits for a typical recipient in each of the 50 states and the District of Columbia exceeds the poverty level. Because welfare benefits are tax-free, their dollar value is often greater than the amount of take-home income a worker would have left after paying taxes on an equivalent pretax income. ... In 40 states, welfare pays more than an $8-an-hour job. In 17 states, the welfare package is more generous than a $10-an-hour job.”

The Cato Study is a narrow one; it doesn’t get into the able-bodied men and illegal immigrants who are getting taxpayer-funded benefits. It defines the typical welfare family as a mother over age 21 with two children ages 1 and 4, no known father, none disabled, all American citizens. The average Massachusetts welfare family “makes” $42,515 a year from the government, which is the equivalent of $50,540 of taxable income earned by working here.

It’s not quite that tidy; not all welfare recipients get all the possible benefits. And those working people who are comparing should add the value of their health insurance to their total, as Medicaid is included on the welfare side.

But: why are we comparing? There should be no comparison! For all of human history, working was the norm; that’s how human beings survived.

Most Americans support a basic safety net for the very unfortunate. But for healthy, able-bodied women? While it’s possible to make a mistake and have one child with an irresponsible man, a 21-year-old shouldn’t risk this again unless she can afford to raise two children (ages 1 and 4) herself. There should be no government incentive to be irresponsible.

The average Massachusetts welfare recipient, if she takes advantage of every available program, gets $20 an hour, which includes cash (EBT cards), food stamps (plus free government dairy products) and Medicaid. Forty-four percent of Massachusetts recipients get Section 8 housing; others get fuel assistance. We know from recent revelations about EBT card fraud that some of them had enough left over for out-of-state vacations, manicures and drugs, with thousands of dollars carried on the cards as surplus after essential spending.

Never mind the fraud, though, which is another entire column. The point of this Cato study is that, while all working people can compare our pay to welfare payments — perhaps favorably, perhaps not — the big difference is that we are working for ours and for theirs, too.

Some of the states that have the highest levels of benefits are, not surprisingly, the states that have the highest per capita tax burdens. Our Massachusetts has the second-highest welfare benefits (after Hawaii), and the second-lowest work participation after waivers from “workfare” in the nation, and the fourth-highest tax burden. Connecticut, which has the highest per capita tax burden, is third in welfare benefits. New York and New Jersey, second- and third-highest tax burdens, rank seventh and fifth in welfare benefits. In these states, we taxpayers are enablers of an addiction to dependency.

People who struggle to support their families, sometimes with jobs that are very hard and not much fun, can reasonably resent their tax dollars going to reward not-working welfare recipients. But their resentment should be aimed mostly at the politicians who create these rewards for not working; besides being unfair to those who carry them, they’re not doing the non-working poor any favors by fostering entire lives, even generations, of dependency.

Cato argues that “despite the stereotypes, there is no evidence that people receiving welfare are ‘lazy.’ ... The choice of welfare over work is often a rational decision based on the economic incentives presented. ... The high level of benefits 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.”

Cato concludes its study with these recommendations: “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.”

On Labor Day, those of us who work, whether we love or hate our jobs, know the pride of making our own way, and that’s worth celebrating.

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Barbara Anderson of Marblehead is executive director of Citizens for Limited Taxation.