A new study from the Cato Institute reveals that welfare and other government benefits pay more than a minimum-wage job in 35 states.
For those on welfare and other aid from the government in many U.S. states, getting back into the work force doesn't always make much sense financially.
In fact, welfare and other government benefits pay more than a minimum-wage job in 35 states and in 13 states, the payout is more than $15 an hour, according to a new study from libertarian think tank The Cato Institute. The study found that the assistance — defined in the study as including government benefits such as food stamps, housing assistance and other programs — pays more than a first-year teacher’s salary in 11 states, the starting salary for a secretary in 39 states and an entry-level job as a computer programmer in three states.
It should be noted that not everyone receiving public assistance is eligible for or receives all of the programs included in Cato’s study. So if a person didn’t get help from all of the programs Cato studied, they might actually make less than minimum wage.
The study "does make a lot of assumptions about what benefits a typical family receives and argues that all the means-tested programs should be included in their fictional family profile," said Catherine Lawrence, an assistant professor at the University of Albany's School of Social Welfare. "Research with actual families shows the extreme financial strain of living on welfare or low-wage work; neither welfare nor low-wage employment alone do a very good job supporting the health and well-being of families with children."
About 1.72 million families received direct assistance during an average month in 2012 through Temporary Assistance for Needy Families, according to the latest data from the federal government’s Office of Family Assistance. That adds up to roughly half the 3.94 million families who received TANF in 1997, according to an Urban Institute report funded by the U.S. Department of Health and Human Services.
States have varying limits on the length of eligibility for welfare benefits, but most top out at 60 months in a lifetime.
"On average, families receiving cash assistance have slightly fewer than two children and receive TANF benefits for two years or less," Lawrence said. "If they were 'better off' not working, then one would find families staying longer, more than twice as long, as they actually do. ...Most long-term recipients face a significant barrier to work. For example, an adult may have a significant health issue or a seriously ill child, such as a child with asthma."
The study, called "The Work Versus Welfare Trade-Off, 2013" and authored by Michael Tanner and Charles Hughes, also found that the assistance pays more annually than the median salary in eight states "and nearly as well in numerous other states."
2013, Cato Institute
Chart ranks states and the District of Columbia on their "welfare" payout compared to working a minimum wage job.
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