IN MANY STATES, WELFARE PAYS MORE THAN WORKBy PETER ROFF
January 01, 2023
Most of us agree there is dignity in work. We see self-reliance and the ability to stand on one’s own feet as being worthwhile. And we recognize there is and ought to be a profound difference between charity and subsidy.
Unfortunately, poll-obsessed policymakers and their advisers, their vision distorted by stories about the misfortune experienced by those living life in the lowest economic quintile, may have lost sight of these things.
As well-intentioned as they might be, the elite class advocates who want to spend more and more tax dollars on behalf of the needy are seeking outcomes that do more harm than good to everyone.
This may seem an outrageous proposition, but after reading the recently released Committee to Unleash Prosperity’s “Paying People Not to Work,” it’s hard to conclude otherwise. The trio of economists who conducted the study – Casey Mulligan, Erwin Antoni, and Stephen Moore – found regulations as currently written make families earning half a million dollars a year eligible for ObamaCare subsidies. They also found that in nearly half the states, unemployment benefits and ObamaCare subsidies together for a family of four where no one worked can bring in the annualized equivalent of the national median household income.
In three states, Massachusetts, Washington, and New Jersey, unemployment and health insurance benefits can equal the earnings of a job paying $100,000 annually. To most people, that probably seems excessive. It should also turn what we think now about public assistance programs on its head. The social safety net should be a temporary source of support in times of personal or national economic crisis, not a source of semi-permanent succor and sustaining income.
The problems associated with paying people not to work reached their extremes during the pandemic. Congress allocated trillions in new spending to support those forced out of work by lockdowns that closed the marketplace. Most of that aid has run its course, yet, the study suggests, it is still possible in roughly half the states for an unemployed couple receiving unemployment and health insurance subsidies to earn more than a firefighter, a construction worker, a retail clerk, or a machinist working a 40-hour week. That’s not fair.
“We all believe in a reliable safety net for when Americans lose a job or can’t work,” study co-author Moore wrote, “but it isn’t fair to the hard-working Americans who put 40 hours a week on the job, that neighbors who aren’t working a single hour can receive a higher income from not working and collecting benefits.”
The authors further argue the payment of these significant benefits is a major reason the labor force participation rate remains close to its all-time low and there are at least three million fewer Americans working today than before COVID. The ability to obtain generous financial assistance without the type of work requirements that were part of the landmark 1996 welfare reform act makes it harder for employers to find people willing to take jobs.
There are nearly 10 million jobs today in America that go unfilled, the federal government says. The excessive generosity of unemployment benefits in many states has created perverse incentives for workers to remain at home, rather than immediately going back to work and helping take down some of the ubiquitous “help wanted” signs that are restraining economic recovery.
What then are we to do? Reforms are needed, for the economic and spiritual good of the country. Unemployment insurance and Obamacare health insurance subsidies need to be re-examined carefully. The links between work and reward must be re-established by ensuring that combined government benefits do not exceed wages. Other changes are also probably necessary, as a matter of fairness to those who are working.
It is not right to pay people who will not work as much or more than those who will.