Welfare policies intended to get people back on their feet are actually keeping them on the dole by reducing economic incentives to seek better-paying jobs or work more hours. Instead of the tired policy of being “generous” with other people’s money, pro-growth policies are the key to getting people back to work.
Many state and federal benefit programs have gradual phase-outs, decreasing as a recipient’s income increases. However, at a certain point—called the “poverty trap” by economists—increasing one’s income by an extra dollar actually decreases disposable income, reducing the incentive to move out of poverty.
Increasing eligibility for welfare benefits, including the Supplemental Nutrition Assistance Program (SNAP) makes this problem worse.
U.S. Department of Agriculture (USDA) Secretary Tom Vilsack claims “the SNAP program has been effective in moving people out of poverty.” Vilsack also argues the program has “been effective in providing short-term help and assistance for those who are unemployed for a short period of time.”
According to new data from USDA, SNAP is getting larger, not smaller. In October 2014, the first month of fiscal year 2015, 22,867,248 U.S. households—almost one out of every five families—received food stamp benefits, adding 117,297 families to the program rolls in just one month.
Instead of SNAP “moving people out of poverty,” the population of “Food-Stamp Nation” is now larger than the population of many real nations. If SNAP’s welfare roll was its own nation, it would be the 30th most populous in the world, with a slightly higher population than Spain.
According to data from the U.S. Census Bureau, poverty rates were on the decline until President Lyndon B. Johnson declared his “war on poverty.”
Over half a century and $22 trillion spent—roughly 146 times the amount the government spent to send astronauts to the moon in Apollo 11, after adjusting for inflation—poverty stubbornly refuses to go away. It’s almost as if throwing money at the problem does not solve it.
SNAP hasn’t been moving people out of poverty, nor has it been a short-term program. Only 44 percent of SNAP recipients are employed or actively looking for work, because most people remain partially dependent on government out of economic self-interest.
Instead of seeking to enroll more people and expand entitlement programs in the name of “charity” (this so-called charity is funded by forcing others to pay against their will), legislators and elected officials should implement pro-growth policies, such as cutting taxes on employers and employees alike, and reducing businesses’ regulatory burden.
Once the nation’s entitlement and tax policies incentivize hard work and self-improvement, the “poverty trap” will be defanged, truly “moving people out of poverty.”
Jesse Hathaway is a policy advisor for budget and tax issues at The Heartland Institute.
