The Leaflet – Does Welfare Pay More Than A Job?

Published August 29, 2013

Does Welfare Pay More Than A Job?


A new Cato Institute study reveals welfare benefits are so great for many individuals that working low- or medium-wage jobs can actually result in a decrease in living standards. According to a analysis of the report a family in Hawaii could make more money by collecting welfare benefits than from earning $61,000 per year from a full-time job.

“Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour. 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,” noted the study’s authors, Michael Tanner and Charles Hughes, in the introduction.

Tanner and Hughes note the use of welfare isn’t due to laziness or an unwillingness to work, but to bad economic incentives. Due to these incentives, more individuals are sucked out of the labor force, leading to decreased productivity, lower economic growth, and greater fiscal burdens on the taxpayer.

In a recent Research & Commentary on welfare reform, The Heartland Institute’s Logan Pike writes more than one-third of Americans currently collect some form of government-funded welfare. The commentary goes on to point out 80 percent of Americans think work is the best solution to poverty, and therefore America is ready to see a reduction in government welfare programs.

Later this year, Heartland will be releasing an update of its 2008 report card ranking the welfare systems of all 50 states. The analysis will reveal which states over the past five years have made their welfare programs better and which ones have gone backwards.

This week’s edition of The Leaflet features Heartland work addressing the effects of welfare reform, terrorism insurance, cybersecurity, climate change, and liberal opposition to Common Core.


John Nothdurft
Director of Government Relations
The Heartland Institute



Research & Commentary: Welfare Reform Policies
Budget & Tax

In 1996, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was implemented. Federal welfare reform gave flexibility to states allowing them to take advantage of the opportunity to reform their welfare systems.

Proponents of the current welfare system say many Americans in poverty have a need for aid from their state. Opponents, however, understand the system requires taxpayers to pick up the bill for failed programs and leaves the poor in a program that destroys opportunity for them.

Today, more than a third of Americans receive some type of means-tested welfare aid, with an average of $9,000 per person totaling nearly $1 trillion in taxpayer dollars annually. Taxpayers have financed almost $20 trillion in welfare spending since the 1960s.

Some governors and legislatures have seized the opportunities provided by PRWORA and developed thoughtful policies and integrated services needed to help recipients move into the workplace. These policies include: providing welfare applicants with a cash diversion program to meet a short-term need, worth up to a few months of benefits, instead of fully enrolling them in welfare; implementing a family cap provision to reduce or eliminate the benefits one can receive for each additional child born while the mother remains on welfare; imposing lifetime limits for recipients; and enforcing full family sanctions to secure compliance by Temporary Assistance and Needy Families (TANF) recipients with work and other requirements for eligibility.

On July 12, 2012, the Obama Administration issued a new policy asserting it would provide waivers to exempt states from the work requirements established in the 1996 welfare reform law. Despite this provision, a Rasmussen Report found, a full 80 percent of Americans agree with the statement “work is the best solution for poverty.” Work improves family well-being economically, by providing a stable source of income and the opportunity to acquire assets, as well as socially and culturally. States should continue to include in their state TANF plans a requirement for recipients to begin work immediately before receiving benefits.

Successful anti-poverty efforts necessitate most or all of these policies be implemented, since they work together to create the appropriate incentives and opportunities for welfare recipients. Policies should escalate opportunities for upward mobility and self-sufficiency. Providing aid to those in need also should include policies to help individuals become independent. Reforming the fragmented welfare system is vital to helping reconstruct ladders of opportunity in order for more Americans to achieve a prosperous future.



Research & Commentary: Terrorism Risk Insurance Act Extension
Finance, Insurance, and Real Estate

The Terrorism Risk Insurance Act (TRIA) is currently set to expire at the end of 2014 and both its supporters and detractors have been pushing Congress to act by either extending the program or allowing it to expire and be replaced by private terrorism insurance. TRIA has deep flaws and imposes billions of dollars in liabilities on taxpayers.

Under the program, signed into law in 2002 by President George W. Bush, if industry-wide private commercial and workers compensation insurance claims from a terrorist attack were to exceed $27.5 billion, TRIA would kick in and cover the remaining expenses up to $100 billion. Congress almost certainly would lift the $100 billion cap if claims exceeded that amount.

In this Research & Commentary, Senior Policy Analyst Matthew Glans argues that before another extension is passed in 2014, Congress should consider other options in the private market; continuing to subsidize the terrorism insurance market in perpetuity is not a sound long-term policy.

Cybersecurity Can Be Achieved without Big Government


In this article from The Heartlander digital magazine, originally published in the Washington Examiner, Steve Titch, policy advisor to The Heartland Institute, discusses cybersecurity and what the government’s role should be in protecting the data of U.S. citizens. Titch argues costly and intrusive regulations are unlikely to work.

“Instead of rushing to implement an intrusive set of cybersecurity regulations, legislators should step back and rationally assess the real cyberthreats and consider how existing laws apply. Theft, fraud, vandalism, and sabotage have been against the law since long before the Internet emerged. They’re as illegal as ever, when done through the Internet.

“Today’s cybersecurity challenges can and should be met within a constitutional framework that respects liberty, privacy, property, and legal due process. There is no reason the law should favor state power at the expense of individual rights in combating computer crime or defending the nation’s information systems from foreign attack.”


Letter: Other Nations Would Negate Any U.S. Attempt to Tackle Climate Change

In a letter recently published in the Chicago Sun-Times, Policy Analyst Taylor Smith responds to a Sun-Times editorial praising proposed action by the U.S. government to address climate change, further going on to say such leadership is needed for other countries to follow and take action themselves.

Smith responds, “According to the International Energy Agency, China, India and Germany already are expanding coal consumption and increasing emissions. In fact, coal is the world’s fastest-growing fossil fuel, according to the BP Statistical Review of World Energy 2013. Unless a new source of electricity generation emerges that’s cheaper than coal, these trends are likely to continue, no matter what any international spokesperson might say.”

Podcast: The Left Opposes Common Core, Too

The media routinely reports opposition to national Common Core education standards and tests resides within fringe elements of the Right, such as Tea Parties. That’s not the case, says author and middle school science teacher Kris Nielsen.

Nielsen, who describes himself as being “on the Left,” talks to Heartland Research Fellow Joy Pullmann about grassroots opposition to Common Core spanning across the political spectrum, why teachers are afraid to speak up, and better ways to keep schools accountable without tying everything to one test.