Friday, November 30, 2012

"When Work is Punished" "It Does Not Pay To Work" "Why work? You're Better Off Collecting Welfare"

Those are some of the headline responses to a recent presentation given by Gary Alexander, Secretary of Public Welfare for the State of Pennsylvania. Mr Alexander shows at what point a single mother with two children would be financially better off working less and collecting various welfare benefits or working not at all and collecting various welfare benefits.

I first saw this chart from Mr. Alexander's report in an article by Tim Shaughnessy at

Click the image for a larger version. Mr. Shaughnessy wrote:

"(the chart) shows the after-tax wages (bottom blue bars) and welfare benefits (upper multicolored bars) available for a hypothetical single mom with two children at various income levels. The glass-half-full observation is that the family is able to maintain a standard of living of at least $40,000, even if the mother earns no income at all at a job. The glass-half-empty observation is reflected in the text box:

'The single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income & benefits of $57,045.'

If you can spot it, there’s even an odd range between wages of $44,000 and $50,000 where, even after receiving CHIP, the mother takes home less than if she didn’t earn any income at all. A single mom who simply worked and didn’t want to receive any assistance from the state would be worse off working at a job of $54,000 than if she didn’t work at all."

 John Hinderaker (along with many others) notes the moral dimension of the issue: "Let’s start by cutting welfare, and cutting it deeply. (I agree, but with proper discrimination.) Not only because it is wasteful, but because by devaluing work it threatens to cripple not merely our economy, but our culture. An America where you are better off cashing welfare checks than working is an America that cannot long survive."

Mr. Tyler Durden at notes the same thing. And he calls it a tragedy:

"Exactly two years ago, some of the more politically biased progressive media outlets (who are quite adept at creating and taking down their own strawmen arguments, if not quite as adept at using an abacus, let alone a calculator) took offense at our article "In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year." In it we merely explained what has become the painful reality in America: for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, 'the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.'"

Mr. Durden also links to another page from Mr. Alexander's study, showing the ratio of private sector employees to welfare recipients and public sector employees (again, click image for a larger version). This is not sustainable:

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