Welfare Pays More than Minimum Wage in 35 States: Q&A with Cato's Michael Tanner
"If you came to me and offered to pay me what I'm making now and tell me that I could stay home I'm certainly going to think about it," says Michael Tanner, senior fellow at the Cato Institute.
In his most recent study, The Work Versus Welfare Trade-Off: 2013, Tanner reveals how welfare participants can earn more than working a minimum wage job in 35 states.
"There's no evidence to show [welfare recipients] are any lazier than the rest of us, but they also aren't dumber than the rest of us," Tanner explains. "If you offer them the same incentives that's what they will do."
Tanner sat down with Reason's Nick Gillespie to discuss his report, the mixed legacy of welfare reform, and his recommendations to fix the system.
About 7 minutes. Cameras by Amanda Winkler and Joshua Swain. Edited by Swain.
Click the buttons below for downloadable versions of this video, and don't forget to subscribe to Reason TV's Youtube channel for more content like this.
Editor's Note: As of February 29, 2024, commenting privileges on reason.com posts are limited to Reason Plus subscribers. Past commenters are grandfathered in for a temporary period. Subscribe here to preserve your ability to comment. Your Reason Plus subscription also gives you an ad-free version of reason.com, along with full access to the digital edition and archives of Reason magazine. We request that comments be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of reason.com or Reason Foundation. We reserve the right to delete any comment and ban commenters for any reason at any time. Comments may only be edited within 5 minutes of posting. Report abuses.
Please
to post comments
Govt doesn't need our taxes. Govt can print currency. Govt is imposing taxes to keep us subservient.
http://www.lietaer.com/2010/03.....xperiment/
Currency is not wealth.
Also, no matter what Krugman and the dummies who believe him, like our own ButtFace, say, inflation is real and it can happen here. We are not a magical kingdom and our ability to dominate the entire world is diminishing with each passing day.
Inflation is real and it's happening. Been to the grocery store lately?
Yep
Not sensing any inflation when I use my Obama Bucks food stamps SNAP Card? at the local Kroger.
Just sayin'....
/Welfare Queen?
Anyone else see the video where the surfer dude uses his to buy sushi and lobster?
Why no link ?
Remember when groceries weren't just for the 1%?
No. Was there such a time?
I'm channeling this guy:
http://lolzonline.com/imagefil.....9_6175.jpg
Wee r da 99%!
Would that be the same U of M which just recently figured out it could save ~$10MM a year in administrative costs? And I bet they'll still have 10 VP's of diversity and average one staffer per student at one of the largest colleges in the country...
Printing currency is the functional equivalent of a tax. There's no difference between the government seizing 10% of your wealth, and devaluing the currency by 10%. You are 10% poorer either way.
Someone who does not understand that money and wealth are not the same thing cannot comprehend your statement.
This makes Friedman's argument for a minimum level income through reverse income taxes even more poignant. Just pay these people off, and do away with the excessive welfare state built to support them.
Friedman had some good ideas. This wasn't one of them. Freedom ruled by political pragmatism isn't freedom.
And freedom ruled by a rigid, economic orthodoxy is freedom?
Larf.
Our government is destroying the incentive to work or to do anything to better ones self, at an astonishing pace.
So my question is, where does this break? We're on our way to creating a majority class of citizens who have no skills and no desire to achieve anything because they are handed everything they need to survive and more with nothing expected from them in return.
This will make it impossible to vote out the enablers of the situation. So at what point can the rest of us no longer support all of the free loaders? Can it just continue forever? Eventually, all but the most ambitious will just say screw it, if you can't beat them, just give up and join them, refuse to work.
"Government is the great fiction through which everybody endeavors to live at the expense of everybody else."
His quotes are some of the best ever.
Government, which has bread for all mouths, work for all hands, capital for all enterprises, credit for all projects, oil for all wounds, balm for all sufferings, advice for all perplexities, solutions for all doubts, truths for all intellects, diversions for all who want them, milk for infancy, and wine for old age - which can provide for all our wants, satisfy all our curiosity, correct all our errors, repair all our faults, and exempt us henceforth from the necessity for foresight, prudence, judgment, sagacity, experience, order, economy, temperance, and activity.
This is what the progressives actually believe.
You sure know a lot of progressives, I bet.
With your attitude towards them, I bet they simply can't wait to invite you to their parties.
This website seems to be seething with ignorant fucktards, such as yourself.
Did you see that recent story on math skills and partisanship? Republicans/conservatives were, on average, better at math. But, at the top decile, the people *really* good at math, heavily leaned Democratic.
And yet, you, seemingly braindead douchebag, write off the entire left.
Go to hell.
For someone bitching about a generalization you sure seem to offer little else.
"but at the top decile, . . . blah blah"
"This website seems to be seething with ignorant fucktards . . . "
So, beside deflection, derision, denial and declaration, can you offer us a list of "progressives" who believe something contrary to what Hyperion's post stated? Any argument? Or just ignorant seething whines?
One of my favs by far, once you read bastiat you no longer have any excuses for being an economic illiterate
Amen.
It won't for a while at least because people like us (the commentariat) will continue to work to support our families.
The breaking point comes when working literally costs you more money than not working.
That point will never come. The politicians and bureaucrats have gotten very good at milking as much as possible from the system without breaking the system. We're in a fairly stable state where you can live comfortably without working, or you can work for something better than comfortable, understanding that you are also supporting the non-workers. I think the powers that be are smart enough to make sure that the ambitious among us will always get just enough out of working to make it worth our while to continue doing so.
I think "comfortable" is a little strong, but it's certainly possible to live at what most people would consider a lower-middle class level without actually working, provided you set your expectations to a low enough level.
Living solely on welfare and benefits, you're not going to go hungry, or even lose weight, but you're not going to be eating at 5-star restaurants every night. You can probably score a decent used car if you pay cash. You won't be able to own a home, of course, but you can probably get a decent apartment or even townhouse. Granted, it won't be in a nice part of town, and you will definitely have crackheads in your lawn from time to time, but you also won't pay a dime for it. You'll have cable, a good-sized HD tv, probably a computer if you want one, Internet access, and definitely a smart phone.
It's just like the whole "bread and circuses" thing. If you're content to settle for a mediocre quality of life with a few short-term creature comforts, then there's no reason to come off the dole. If you have any ambition at all, even if it's as modest as not depending on taxpayers for everything, this life isn't for you, but there are plenty of people who not only are perfectly content with this state of affairs, but simultaneously see themselves as entitled to this and more as well as being victimized by the society that provides these things.
A great many people in the world would regard that as comfortable.
You won't be able to own a home
WRONG! I know this, for a fact, to not be true. Better do some research. There are families with no earned income, on total state assistance, who are buying homes.
And then having the cities use eminent domain to steal the property for them so they won't have to pay off the loan.
That was exactly the case with the people who owned my house before the bank that I bought it from!
In my neighborhood, mixed in with million dollar brownstones and 300-600k condos, are split level townhome projects. They are pretty nice and have little backyards.
The people who live in them sit on their stoops all day, and the paranoid part of me feels like they're laughing at me when I walk by in my work clothes.
So they don't even have the negative of living in a bad neighborhood.
That point will never come.
Yes it will. Happened in Canada it can happen to you. Feds cut the budget by 10% non-interest spending in the '90s. They didn't go Galt's Gulch but it was a massive change and Canada has never been the same-thank God.
Except Quebec. Still tinkering with social-welfare.
I think you give "them" too much credit.
The welfare state has grown as individual groups of political interests have purchased votes without regard to the general welfare.
A few years back, I'd have agreed with you. Now, I'm not so sure. I think they may have become just detached enough from reality to think the goose that lays the golden eggs (the private sector economy) will never die no matter what they do to it. The old establishment may have been like you described. Anymore, they're so impressed by their own certifications and credentials that they only really listen to one another.
It appears that a huge chunk of welfare is going to supplement the incomes of people, rather than rescuing them from total poverty. My wife has noted that among the other homeschoolers, there are the affluent, who can afford a stay-at-home parent, the less affluent, who take the financial hit to keep their kids out of public school (often for religious reasons), then a substantial group of people on welfare. These are working age mothers (almost all women for all categories) who are choosing not to work. They can make that choice because they get a variety of government "benefits" that allow them to do so. They also use that money to maintain a lifestyle beyond their means.
and they are backed by a political class that is willing to continue that in exchanged for hoped-for votes.
This is my main complaint about all welfare assistance. SNAP doesn't subsidize your food, but your smart phone. HUD doesn't subsidize your home, but your satellite TV.
It struck me a couple of years ago after my dad introduced me to some people he knows that what ends up happening in most cases is that we are paying for the necessities so that they can spend their own money on their vices. The reality is that we subsidize many of the very habits (smoking, drinking/drugging to excess, gambling, etc.) and behaviors that led them into poor health and poverty in the first place.
As a homeschooler, I would guess these are fairly rare. I could be persuaded to view this as a do it yourself voucher system to create a fair playing field for excellence in education.
I think you should blame the Federal government, since it is your State government that manages the program.
Probably a bunch of Democrats, right?
Looting is a form of self employment.
Clearly we need to raise the min wage to above welfare
/derp
it's disappointing that this study has not gotten more traction. It perfectly illustrates why this administration would consider the current state of the economy, with its growing entitlement class and part-time workforce, as a feature rather than a bug.
What Tanner says about incentives, I have heard actual people say.
This study is obviously racist, you tea-sacking nogoodnik. Only outlets like faux news would publish propaganda like that.
Nicely done.
I worked in welfare to work a million years ago when it was a functional program. I think Tanner misses some of the more obvious incentives. Have you ever had to wrestle two toddlers on a city bus? Holy crap, that's it's own disincentive to work.
The premise is a solid one, but the fact that one political distribution scheme, welfare, out-pays a politically rigged minimum payrate is noteworthy, but not as a headline at the expense of the more relevant points in this interview.
And, of course, the "tax" (in terms of the loss of needs-tested benefits) on a marginal dollar earned is crippling.
It's a TRAP.
Much more crippling for those who pay no income tax than for those in the higher income brackets. Most people don't realize this. Above a certain income your marginal tax is always less than 100%, but steadily increasing. Below that income your marginal tax can actually be greater than 100% and is heavily dependent on a large number of demographical factors. It's ridiculous.
Which is why an across the board minimum level income might be a better option than our current system.
Once you get rid of the dozens of various welfare programs, the array of social workers that administer them, the bureaucrats that audit them, there is quite a bit of money available to give out. And everyone receiving it still has a normal incentive to work.
If you combine it with removing all of the tax deductions from the tax code, you also eliminate a legion of tax preparers and 30 billion hours a year of tax preparation.
However, for it to work, every citizen has to get the minimum amount, or you have to phase it out at a pretty high level of income.
Incentives are a LIEbertarian myth. There's no proof that a comrade in the Glorious People's Revolution would shirk his duty of Revolutionary Labor to receive as much in unemployment benefits as he would from Revolutionary Labor.
No one needs more than his neighbor and only a dastard wants more than his neighbor.
"There's no evidence to show [welfare recipients] are any lazier than the rest of us, but they also aren't dumber than the rest of us," Tanner explains. "If you offer them the same incentives that's what they will do."
Whatever. The people I know who are on total state assistance are the types who would not get off their arse to help you with anything, at all, ever. They are the type you would see sitting on their porch and you, as a neighbor walk over and say:
You: 'Hey, I'm trying to put up this new mailbox, can you come over here and hold this thing up straight while I pour some concrete in the hole, just hold it for a minute you know?'
Welfare neighbor: Umm, we're getting ready to eat dinner, can't do it. Then we're leaving for the day.
You: Ok, what about tomorrow?
Welfare neighbor: Nope, can't do that, too busy, and also, bad back you know. Nope, I can't do it.
We hired a welfare case out of a favor to someone. All the 'they deserve a shot' stuff went into the decision.
What a disaster. She didn't last two months. There's simply no work ethic.
People on welfare are there for a reason.
Anyway, our days of playing social niceties are over. It disrupts the business and creates too much instability (to say nothing about animosity among the workers who don't like perceived slacking). I wish I could say let the state deal with her but she's only 33. Too young to be a lost case but she is.
The funny thing is her mother works two jobs and is at wits end with her daughter. Her uncle, whose wife is the cook at my place, refuses to speak with her.
But the derps see nothing wrong with destroying lives through welfare. Of course, I'm a bad guy for setting a 'red line' so to speak. It's either that or lose business but you can bet your bottom dollar clients would notice and question our competence.
Who really set this "red line" of which you speak ?
Individuals need to follow the example set by our CnC and stop falsely claiming credit for setting red lines.
I must remind you that there are people who end up in this system after fighting tooth and nail to stay out of it. While your assumptions may seem true, there are always exceptions.
You grow up on welfare, Carolyn? I did. Most of the families I knew were on welfare. And you know what? I can't think of any who weren't there by choice.
Not saying a word you've uttered is anything but 100% accurate, but I don't think that's an indication of some inherent laziness. As you almost suggest, welfare itself breeds the laziness. Think about it this way. What is the hardest day of the week to drag yourself into the office (you seem to own a business; so you might not be as familiar with this notion of a work week; so consider what you see with your employees)? Generally, it's Monday. You've had the weekend to unwind. You've gotten used to relaxing. Throwing yourself back into actual work is a lot harder than if you'd been working all along.
Is the comment for me Bill?
No, she wasn't lazy. She in fact showed great potential which was doubly frustrating. She was unstable and not grasping her responsibilities. There was always an excuse every second day. The mother herself said her daughter had been on welfare all her a life; it's a tough drug to kick. That's why the state acts more like an enabler than helper.
Not sure I follow you. Are you presupposing I didn't work as an employee prior to starting my business?
I worked for 15 years in (10 in financial services) , then raised my daughter for three while my wife worked before starting the business. I know all about the drudgery of Mondays. And I had the added pleasure of driving in horrendous traffic in -20c weather on dreary, wintry Montreal mornings - sometimes in blizzards and storms navigating through multiple accidents.
Now THAT'S depressing. But hey, we did it.
So yes, getting back in the routine is hard and never having one even harder.
What has changed for me is I would never want to work for anyone else but myself. THAT'S the major, significant difference for entrepreneurs: The autonomy.
Unless I go work for a small company where I respect the owners.
Oh. To boot. I'm paying down large loads of debt incurred for business and personal (which I had to when no income came in from the business).
I don't take whatever is left over in the accounts as salary which I could use. I leave it for the long-term viability of the business.
That's a massive mozza ball hanging over me everyday. Which is why I kinda chuckle at OWS types.
There's no evidence to show [welfare recipients] are any lazier than the rest of us
Just shows you don't mingle much with the plebes. Reagan's quip about 'welfare queens' was dead on accurate. Haughtiness, ingratitude and slothfulness, those characteristics overflow amongst the bearers of EBT cards.
Head down to Martin Luther King Jr Blvd, in whatever town you live it's residents will be about 98% Democrat and about 80% wholly dependent on government donatives.
Yeah, you will find the same happens in minority communities that receive unearned benefits, as well. They are only human, after all. The welfare state corrupts the moral temperament of everyone it touches.
"The welfare state corrupts the moral temperament of everyone it touches."
Exactly. The thing is, I can't really deny that many of those on welfare are lazy. It's just the implied why that I see from too many commenters. Yes, they're lazy. But, they're lazy because they're on welfare. If they actually hit bottom and had to pick themselves up, I think we'd be surprised at how enterprising and resourceful they'd become.
There are definitely people who are in a bad way and fully intend to get off the dole as soon as they're able. And there are definitely mothers with children who've been abandoned by the father and have no way of making a living sufficient to provide for their family without some kind of help. But there are also, DEFINITELY, a lot of people who believe that they are owed whatever they want by the rest of society, should feel no gratitude or impetus to do for themselves, and are angry that they aren't being given more. These are the people I would love to see thrown out of their Section 8 apartment with nothing but the clothes on their backs on a brisk February night.
Want to know a sure way to create more fatherless children? Pay single mothers for being single mothers, with a guaranteed government income and you will create a legion of them and all of them voting Democrat if they vote.
You want to actually help single mothers? Remove that tax-payer guarantee and allow charities and mutual aid societies to do their job.
+infinity
Welfare has done more to hurt minorities than all of our monocle factories combined. It's a toss up between the War on Drugs and Welfare, but I still give the edge to the latter.
Oh, look, it's Merkin. Hi, Merkin. Happy Troll-free Thursday.
Hey, don't talk to it!!
Eh I think the percentages are probably the same, but an asshole being an asshole in the grocery store about his own money is one thing, but it's another thing entirely when someone is bitching and moaning about "their" EBT not working, holding up me with my own fucking money.
The nephew works for a boss, a friend of mine, who shuffles him around his three stores. Ones a cigar shop where I like to hang out, the other two are convenience stores. One of which doesn't have EBT, when the little abrasive trolls come in, not knowing this, even though there is a sign prominently displayed, No EBTs, they fill their baskets, and perch it up to the counter flashing the EBTs. The next thing that happens is the screaming of racial epitaphs hurled at the nephew, a six foot five+ dude. It's a near daily occurrence. He gets the scenario you mention a lot at the other store.
Epithets? Epitaphs are the things on tombstones, dude.
What I get for relying on auto correct.
For example, "Tonio is consistenly a cunt because he makes it a point to correct inane trivialities, while completely failing to correct his own moronic opinions"
is an example of an epithet
"Here lies Tonio, roundly despised because he wasted his life frequently and obnoxiously correcting inane trivialities, while completely failing to correct his own moronic opinions"
is an example of epitaph.
Ouch, man.
I bet you they buy high-priced fancy items that most people would like to buy but can't.
Is go buys me a $15 dolla pie!
That can be an accent of any race or creed. Thank you.
Again, to cite the above example. The girl we hired was getting decent coin and a chance to set her life straight. We helped her get a "tax credit" to help pay to have her daughter come to the daycare - the child was in desperate need of nourishment and socialization.
Not only did she mess her up her shot, she claimed she wasn't given a chance (in daycare if you're not showing up every other day for TWO months that's more than enough of a chance) and even had the audacity to say we were breaking the law by paying her cash - which we declared.
She also didn't appreciate the cut in price we gave her AND the fact she was in arrears which I forgave.
And she STILL spat in our faces.
My hippie liberal sister said, "you try and help and we're somehow turned into the bad guys."
Yup.
That's the mindset of the welfare queen and the progressives who support them.
I'm trying to put up this new mailbox, can you come over here and hold this thing up straight while I pour some concrete in the hole, just hold it for a minute you know?'
You can't fool me. You're trying to get me busted out of my disability check. Snitches get stitches, bro.
excellent
The counterargument to this study is that it is wrong because it lumps all the welfare programs together and assumes someone can tap all of them. Thoughts?
I feel that American Libertarians need to go to Mexico and really see what un-regulated capitalism with zero safety nets looks like.
I'd hate to see this place turn into that. I hope and actually pray they you guys never ever get control of the government.
I think that American Liberals need to actually learn about places like Mexico and why they're poor before you open your facehole or string together wordss.
Seriously. Mexico? Unregulated capitalism? Buh? Huh?
"go to Mexico and really see what un-regulated capitalism with zero safety nets"
Hahahhahaaaahaa
I feel the Progs need to go to Venezuela to see what a proper state looks like. Just remember to bring toilet paper!
Alice Bowie:
I feel that American Libertarians need to go to Mexico and really see what un-regulated capitalism with zero safety nets looks like.
Do zero safety nets look like this?
Mexico is realizing its commitment to building a social safety
net, after developing innovative
programs over the past two decades that target universal health care, poverty reduction and food security....Social programs cover more than half of Mexico's population
Maybe you should hope and pray for access to reading material.
Seriously, Alice, why would you say such a stupid thing? Did you not realize it was stupid, or do you just enjoy sharing your stupidity with others?
My friend's wife is Mexican and goes every year. Mexico is NOT libertarianism at work.
Tell you what, Alice, I'll go to Mexico when you go to North Korea to see what government interventionism leads to.
"that it is wrong because it lumps all the welfare programs together and assumes someone can tap all of them. "
That doesn't make it wrong though, as some people can.
I don't know a single liberal who would not take that to be an argument for raising the minimum wages.
I can speak for the fiscal liberals.
Yes. Raise the minimum wage.
Or, eliminate the mimimum wage and raise welfare.
Or, eliminate both and use the tax payer money to hire more cops. You'll need them.
We need more prisons. Violence has been going down and it's precisely because we incarcerate so many non-violent offenders.
Or, eliminate both and use the tax payer money to hire more cops. You'll need them.
People who think the minimum/living wage is the be-all of economic security are morons. Minimum wage has historically been reactive to inflation in the costs of goods and services, and thus does not serve to actually solve the problem it pretends to address--the relative inability to purchase these items.
If you want to not have to worry about minimum/living wages, start promoting policies that will encourage deflation of the currency and make things easier to buy, including housing, food, and healthcare.
Eisenhower ran the country on $750 billion, inflation-adjusted. FDR did it on $150 billion, inflation-adjusted, at the height of the Depression. But until liberals are willing to accept the reality of the limits of scale, they'll go on thinking that the problem lies in the fact that burger flippers aren't being paid $4 an hour more on an inflation-adjusted basis than they were in 1969.
What's a fiscal liberal?
"What's a moi-der?" Fat Tony.
My God, you're right! The country would collapse if the 5% of its workers earning minimum wage don't get a raise or *gasp* even a cut.
"Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 21 percent earned the minimum wage or less, compared with about 3 percent of workers age 25 and over."
And how's the employment situation looking for our up and coming unskilled best and brightest? Not so good. So what's dear Alice's solution? That's right, let's make their labor more expensive so even fewer of them have jobs. It's brilliant! Why can't you stupid Libertarians get out of the way of the new workers' paradise Alice is just dying to bring you?! WHY?!!
Sadly true. It says something that we can accurately predict the fallacies they'll embrace before they do.
yeah, exactly-sort of one of those things where you don't know whether to laugh or cry, I just craugh...I craugh hillarious heartwarming enjoyable tears of pleasant sorrow.
Workers compensation here in Quebec (CSST) pays out by law minimum $22 000. So if you earn anything below that at work you have an incentive to get hurt and claim. So a person earning $18 000 gets a bad back gets $22 000. Bang! They just made 4gs. And then they wonder why we run deficits and are in debt.
Of course, as a prog would spin it, they (worker's comp) wouldn't have to do that if the greedy business owner wouldn't pay so low a wage!
OK, so let's play a little game. Let's call it the fair game. If we can force the employer to pay a "living" wage because capitalism is bad, then why can't the employer force the employee to NOT take another high paying job? I mean, capitalism is bad, right? If so then it has to be bad for the employee just like the employer and both need to be protected from it.
That's probably racist.
Slavery ya know.
But choices are bad aren't they?
Capitalism is neither here nor there - the employee is a victim, and the employer is a victimizer. What's good for the employer is bad, what's good for the employee is good. Simple.
There is no "good for employee and employer." If it is good for the employer, then it is not good enough for the employee.
?
I pay a salary. Employee goes and lives with money. "Bad" for me, but "good" for them, no?
But it isn't "bad" for me because I do need good employees. So we try and hammer a deal that's perceived to be fair by both sides.
The profits of a business is the rewards for the risk outlay. Progs conveniently ignore this final point: The person laying down the risk expects a return on their capital plus to be paid back for their troubles.
That's "good" for both sides because it tells the employer the business is viable and preserves jobs.
No?
'"There's no evidence to show [welfare recipients] are any lazier than the rest of us, but they also aren't dumber than the rest of us," Tanner explains. "If you offer them the same incentives that's what they will do." '
This a billion times over. What liberals don't understand is you don't need to make judgments on anyone's character in order to condemn welfare. Laziness may or may not be at work. But it's kind of irrelevant.
Well this is just intolerable that Welfare pays more than minimum wage. Obviously we need to raise the minimum wage, right?
Well this is just intolerable that Welfare pays more than minimum wage. Obviously we need to raise the minimum wage, right?
Welfare is not a liveable wage! If we don't want to work or can't, it is our right and we should not be discriminated against! Our poverty is worn like a badge on our sleeve and we are proud to be part of our association that goes back multiple generations in many cases! Remember that when the get out the vote volunteers show us how to vote our entitlements, we become a powerful political force that will soon be a majority! It's quite comfy here in California! We do not want EVERY voter on welfare, just 51% of them: We need the other 49% to function as worker drones.
my roomate's mom makes on the internet. She has been out of a job for six months but last month her paycheck was just working on the internet for a few hours. browse this site......
http://WWW.RUSH60.COM
Thank you very much