Welfare study: What's wrong with this picture?

Friday, August 23, 2013

The Cato Institute, a libertarian think-tank in Washington, has concluded that Massachusetts' welfare program pays each recipient the equivalent of $24 an hour in pre-taxable income.

Counting cash, food, housing and healthcare, that costs the state about $50,540 per welfare recipient -- an amount many workers would be delighted to make.

Figured another way, before taxes, Massachusetts' system amounts to $42,515 a year for the typical recipient, but that's not even the highest in the nation. Hawaii takes first place with $49,175 and Washington, D.C. is second with $43,099.

Not surprisingly, the study concludes that the system acts like an incentive to stay on welfare rather than pursue a job. Set up correctly, a welfare program works to eliminate the need for its existence; but excessive welfare is a self-reinforcing system.

Most of us, Nebraskans especially, have no problem with lending a helping hand to those truly in need. Letting the system grow to the point of collapse, however, will leave those very people with nowhere to turn.

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  • At least Welfare Recipients have to meet means testing requirements to qualify.

    On the other hand, Crop Insurance Subsidies are not subject to means testing or payment limits. In fact most Republicans voted to make the subsidies permanent in the recent Farm Bill.

    So much for conservatism!!

    -- Posted by Geezer on Fri, Aug 23, 2013, at 4:24 PM
  • *

    The bottom line is that when people can make more off welfare than working, they are not going to work. The gains in welfare reform during the Clinton years have all gone by the wayside with Obama.

    The farm insurance subsidies need a lot of work but are chump change compared to the food stamp program.

    -- Posted by ksfarmer on Fri, Aug 23, 2013, at 10:02 PM
  • ksfarmer

    As the article states - "Most of us, Nebraskans especially, have no problem with lending a helping hand to those truly in need." All welfare recipients have to prove the need through financial disclosure - even here in Nebraska that is the case.

    Why does the welfare group of people have to prove the financial need for Government Assistance, yet the Agriculture Industry do not? Some farmers have been receiving subsidies their whole adult life. In fact some family farms are on the third generation of subsidized farming.

    If they can't prove the need through financial disclosure they should lose their subsidies. What is good for the goose is good for the gander.

    -- Posted by Geezer on Mon, Aug 26, 2013, at 8:36 PM
  • To the McCook Daily Gazette,

    Nice job of Cherry Picking!!

    The CATO Institute is planning to issue a report in August that claims that families on cash assistance receive such generous benefits that they have no incentive to work. The report calls for a reduction in benefits and to tighten eligibility requirements. You would like to think that before making such a bold accusation, which could negatively affect the lives of the poorest children, they would have been more careful in their research about the current circumstances of these children and their families. They were not. The real situation for poor children and families in Ohio could not be more different than what they portray.

    The CATO study claims to have evidence that a "typical" welfare family of three would receive a benefit worth nearly $29,000 per year. While they are quite clear that there is "no evidence that people on welfare are lazy or do not wish to work", they claim that the lucrative benefit package and "leisure" time make accepting a job unlikely. While they are correct about welfare recipient's desire to work, they are grossly misleading about the income and living conditions for welfare recipients and other poor families. Following are the public assistance programs listed in the CATO report and the actual values of these benefits:

    Ohio Cash Assistance (Ohio Works First)

    The most obvious flaw in this study starts with a presumption of a typical welfare family of three. In Ohio, more than two thirds of all OWF cash assistance cases are "child only" cases, meaning that these are primarily children living with grandparents or other relatives, not their own parents. The average family size is actually slightly less than two. The average cash benefit is $183 per person or $4,416 per year for a family of two. We do agree with CATO on the fact that the real value of cash benefits in Ohio has dropped by 20% since 1995.

    SNAP Benefits

    CATO lists the maximum benefit allowable for a family of three as $526 per month for Supplemental Nutrition Assistance Program (SNAP) benefits, formerly known as Food Stamps. The vast majority of families on cash assistance do receive SNAP benefits, but not all receive the maximum allowable. The average SNAP benefit per person in Ohio is $132 per month per person. A typical family of two on cash assistance would receive less than the $526 amount. The average benefit for a two-person household is $264 per month.


    The CATO "study" includes $8,152 a year in housing subsidies for cash welfare recipients in Ohio. Their own report indicates that only about 10% of welfare recipients actually get the subsidy. Their inclusion of these benefits is particularly troubling given their own information that 90% of these families don't receive housing assistance. For these 90%, the amount of cash provided through the OWF program is not enough to pay rent and utilities.


    The report includes the value of Medicaid as a source of income to these families. No doubt this is a very valuable benefit but none of the money actually goes to the families. In reality many of these families are able to go to the doctor or hospital but do not have money for over the counter medication, bandages, diapers or hygiene products.

    Other Source of Income (i.e. WIC, clothing assistance, emergency food, etc.)

    Many, but not all, poor families may also receive assistance from these sources but as the report itself indicates the amounts are very small for Ohio WIC $72 per month, Utility Allowance $15 per month and Emergency Food $300.00 per year.

    Work Program Participation

    CATO lists Ohio's work program participation at 37%. In fact it is currently over the 50% required by federal law. The report cited the Obama administration for failing to enforce the work requirements when in reality it threatened Ohio with a huge financial penalty for failing to meet the 50% standard in the past. Ohio's desperate attempt to avoid this threat has led to draconian policies causing thousands of families to be cut off assistance simply because they had no transportation or means to get to work assignments.


    -- Posted by Geezer on Mon, Aug 26, 2013, at 8:43 PM
  • http://blogs.wsj.com/economics/2013/08/19/work-or-welfare-what-pays-more/

    Work or Welfare: What Pays More?

    By Brenda Cronin

    Hawaii offers the most generous welfare benefits package in the U.S., but a cluster of New England and Mid-Atlantic states aren't far behind.

    Bloomberg News

    That's according to a report out Monday, "The Work Versus Welfare Trade-Off: 2013 An Analysis of the Total Level of Welfare Benefits by State," from the libertarian Cato Institute in Washington.

    The report, by Michael Tanner and Charles Hughes, is a follow-up to Cato's 1995 study of the subject, which found that packages of welfare benefits for a typical recipient in the 50 states and the District of Columbia not only was well above the poverty level, but also more than a recipient's annual wages from an entry-level job.

    That hasn't changed in the years since the initial report, said Mr. Tanner, a senior fellow at Cato. Instead, the range has become more pronounced, as states that already offered substantial welfare benefits increased their packages while states with lower benefits decreasing their offerings.

    To be sure, not all of those who rely on government programs take part in every benefit to which they are entitled, and the most generous benefits are in states that have the highest costs of living.

    The state-by-state estimates are based on a hypothetical family participating in about seven of the 126 federal anti-poverty programs: Temporary Assistance for Needy Families; the Women, Infants and Children program; Medicaid; Supplemental Nutrition Assistance Program; and receiving help on housing and utilities.

    In Hawaii, that translates into a 2013 package of $49,175 -- up $7,265 from an inflation-adjusted $41,910 in 1995. Rounding out the top five areas for welfare benefits, along with their 2013 amounts, were: the District of Columbia ($43,099), Massachusetts ($42,515), Connecticut ($38,761) and New Jersey ($38,728).

    The state with the lowest benefits package in 2013 was Mississippi, at $16,984, followed by Tennessee ($17,413), Arkansas ($17,423), Idaho ($17,766) and Texas (18,037).

    One change the authors noted between the surveys was a slight increase in the value of work to welfare, by a few dollars an hour. "There was some improvement of the relative value of work through the Earned Income Tax Credit, particularly at the state level, and the child tax credits," Mr. Tanner said. "Those largely didn't exist in 1995."

    Some states also are curbing some housing assistance, he said, and now requiring individuals who receive welfare benefits to pay their own rent.

    The authors found that in 11 states, "welfare pays more than the average pretax first-year wage for a teacher [in those states]. In 39 states, it pays more than the starting wage for a secretary. And, in the three most generous states a person on welfare can take home more money than an entry-level computer programmer."

    Mass. is at 50k equivalent Hawaii is at 60k. this is insanity. yes we should help those that is down but I am sure that most people in our area would be happy to have a job that pays 50 to 60 thousand a year. Also, do not muddy the waters with issues non related to the welfare state our country is in. as far as farm subsidies go please note this quote from By Kent These, Farm Management Analyst and Vice President, MinnStar Bank "Nearly 80 percent of the proposed funding for the U.S. Senate version of the new farm bill will go to the Supplemental Nutrition Assistance Program (SNAP), which includes the food stamp program, the women, infants, and children (WIC) program, and the school lunch program." The farm subsidies are necessary to compete globally, whereas if the other countries reduce their farm subsidies we would be able to as well.

    -- Posted by quick13 on Tue, Aug 27, 2013, at 9:11 AM
  • quick13

    I believe that Cato has it wrong, very wrong.

    The report lumps together a set of safety net programs -- including Temporary Assistance for Needy Families (TANF) cash assistance, SNAP (formerly food stamps), Medicaid, housing assistance, and WIC (a nutrition program for pregnant and postpartum women, infants, and young children) -- under "welfare." Cato assumes -- incorrectly -- that (1) all poor families in which the parents aren't working receive all of these benefits and, (2) if a parent works, the family does not receive any forms of assistance for which it would qualify except refundable tax credits.

    That's how it can justify the claim that "the current welfare system... acts as a disincentive for work." Quite the contrary, however, these programs provide important supports for working families.

    Here, specifically, are some of the ways that Cato gets it wrong:

    Cato ignores the fact that low-income working families are eligible for, and receive, assistance through programs such as SNAP, Medicaid, housing assistance, and WIC. When considering the assistance that low-income working families receive, Cato assumes they receive none of these benefits and only get help from the Earned Income Tax Credit (EITC) and Child Tax Credit.

    The list goes on and on.


    As far as your comment about muddying the water, Farm Subsidies are a form of Welfare.

    The Environmental Working Group commissioned well known and respected agriculture economist Bruce Babcock from Iowa State University to analyze how the heavily subsidized Federal Crop Insurance Program performed during the corn belt drought of 2012.

    One of his findings were that Over-generous subsidies have turned crop insurance into more of a farm income support program than a risk-management program.

    Supporters of the current crop insurance program argue that the record-setting payouts show that the program is working exactly as it should: by covering farmers' losses, the insurance provided the financial safety net that they need to be able to pay their bills and survive to plant another crop.

    But the truth is very different. A close analysis reveals that crop insurance as it is currently structured and marketed is a bloated, taxpayer-funded income support program that in many cases allows growers, particularly the industrial-scale operations that have been enjoying record profits, to make more money from insurance payouts than they would from a healthy harvest.


    -- Posted by Geezer on Tue, Aug 27, 2013, at 6:58 PM
  • geezer, you are the one who is wrong about farm subsidies in the form of crop insurance subsidies being a form of welfare. using that line of thought, I suppose you would believe that federal flood insurance is also welfare. No insurance company that I know would or does offer insurance against floods due to natural causes. and if they did the preminium would be so high as no one could afford it. And I remind you that federal flood insurance covers 100% of the properties value. Federal Crop insurance by comparison only covers a maximum of 85% of the farmers 10 year production history. With 85% being cost prohibitive due to the fact that the least percentage of subsidy is at the 85% level. It is very much more common to find farmers with 65% to 75% coverage. Also, the more losses a farmer has, the lower his 10 year history will be, and thus the higher his premium will be. (With cost of production being close to 85% of the gross value of the crop there is very little if any chance to profit on crop insurance) In addition, I would estimate that approx. 97% of all farmers have to have a operating note with a bank or other financial institution to operate. If there is not a "safety net" available for the loans then many will be deemed a "bad risk". This in turn would cause a slow down if not stagnation in the ag community, spreading to all sectors of our economy. Do not misunderstand, I am not talking about direct payments to rice growers, or other direct payments to farm/agribusinesses for capital improvement such as cost share on terracing fields, putting in pasture dams or putting in waterlines. Insurance is to protect the farmers costs. He cannot profit from it. The EWG's figures are skewed by the number of congressmen that have made sure their voting base would be taken care of. If I am not mistaken most of the direct payments have been eliminated in the latest farm bill. Really Federal Crop insurance is the one thing that the government does that is fair. This is due to the simple fact that if the farmer does not suffer a loss due to mother nature, he does not get paid, and if he does, he does not get the potential value of the crop. He only receives 75% of his history. If he does not have a loss he still has to pay his premium. Insurance is the fairest way of keeping our ag community a vital force in our community and may I say the biggest pillar supporting our local economy.

    -- Posted by quick13 on Wed, Aug 28, 2013, at 9:05 AM
  • Federal flood insurance is a form of welfare. We pay for the insurance when someone builds a home on a flood plane. Don't build there. Why do I have to pay for someone's bad decision? If you don't live on a flood plane you can't get flood insurance.

    -- Posted by president obama on Wed, Aug 28, 2013, at 9:09 PM
  • Don't farmers also pay a premium for crop insurance? I don't recall any welfare recipients being required to pay anything for their benefits, perhaps just voting for democrats.

    -- Posted by Dudley Dawson on Thu, Aug 29, 2013, at 10:48 AM
  • I think it's a sign that the cost of living is too high or wages are too low.

    -- Posted by npwinder on Fri, Aug 30, 2013, at 4:56 PM
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