$29K Income + Welfare > $69k Income


#1

According to the Pennsylvania Public Welfare Department:

Full presentation: http://www.aei.org/files/2012/07/11/-alexander-presentation_10063532278.pdf

I wonder why it is so hard to get people off of welfare?


#2

Until the money runs out, it will get worse. No wonder the Dems have effectively bought their elections.


#3

This isn’t cash money they’re getting. It’s assistant for, as the graph notes, housing, food, child health care and childcare. The person making $69,000 can spend his money on whatever he wants. The person making $29,000 only has $29,000 to spend as they see fit. The rest is spent only on things that the welfare can be spent on, like food stamps and housing.

The real problem shown in this graph are the cliffs. Namely that is in the earner’s interest to remain at $29,000 of income than to move on to $30,000. In fact, the person earning $29,000 would have to get a raise up to $69,000 to see the same effect. Welfare recipients shouldn’t have cliffs like that.


#4

The person making the $29,000 can spent that income on whatever they want because their food, lodging, health care and childcare are taken care of for them. In some cases toss in cell phones, cars and fuel too. The person making $69,000 has to make life choices with their money. Can they afford children and rent? Can they afford the commute to their jobs or is the cost of gas making the drive a losing proposition?


#5

Except that the person making $69,000 probably also gets tax deductions and credits for dependents (children), real estate taxes, and home mortgage interest, as well as medical expenses. This chart counts the welfare yet fails to accurately report money after taxes for the person making $69,000. Welfare does not count as income and is not taxed as such, and therefore is not eligible for these tax credits. There is something to lose when it’s not your money being spent on your needs or how you want it to be spent.


#6

[quote=“Trekky0623, post:5, topic:37414”]
Except that the person making $69,000 probably also gets tax deductions and credits for dependents (children), real estate taxes, and home mortgage interest, as well as medical expenses. This chart counts the welfare yet fails to accurately report money after taxes for the person making $69,000. Welfare does not count as income and is not taxed as such, and therefore is not eligible for these tax credits. There is something to lose when it’s not your money being spent on your needs or how you want it to be spent.
[/quote]I know of a situation where someone makes $20 more per month, they lose their public health insurance for their children. Make $20 per month and lose (I don’t know the actual amount) $300. Not a good deal. It’s a disincentive to improve. This family would need to make $280 more per month (not an accurate number) before reaching the same standard of living. Hey boss, forget that raise unless you give me a raise of $300 per month, please. Or forget that job. It only pays $250 more per month. That would be an impressive raise, and it’s unlikely. That’s the cliff, and this chart visually describes it. It’s the first time I’ve seen this concept depicted graphically. It’s pretty cool actually.


#7

I agree that the cliffs are bad, because it gives incentive to not make more money. I don’t agree that the experience of having $29,000/yr and welfare is the same as making $69,000.


#8

True: you have to **work a lot harder or smarter **to earn $69K than $29K, which means a significant investment in time and effort in the production process or in getting an education…


#9

[quote=“Trekky0623, post:7, topic:37414”]
I agree that the cliffs are bad, because it gives incentive to not make more money. I don’t agree that the experience of having $29,000/yr and welfare is the same as making $69,000.
[/quote]I see. I supposed I was confused by your posts then. No the welfare benefit is not preferable. You are correct in that the recipient doesn’t have as much liberty in spending that benefit, but it’s also used to pay for at least some of the same things folks who make $69,000 per year would buy. There will be differences (which is why authoritarian economics results in failure), but there will be many similarities.


#10

Two reasons: 1) some people don’t want to get off 2) People who do want to get off are sometimes stifled - if you want to start a business of your own, they will deduct your profits, and not allow you to put them back into the business.


#11

I bet California is even worse, our Welfare Rats live pretty high on the hog.
Especially the ones who work under the table, they have lots of mad money and full access to benefits.

This is pure evil, a crime to the taxpayers and a complete sacrifice of human dignity to the Welfare Rats.