Welfare Programs Increase Poverty

This is how welfare economic incentives work to keep people poor.

If we create a law that says people who earn below 20,000 per year will get 5,000 in handouts, the following situation occurs:

1. As a worker earning 21,000 per year, I now have an economic disincentive to work beyond the 20,000 dollar threshold. In fact I would demand that my employer either reduce my pay or my hours until I make under the 20,000 threshold.

2. People earning less than 20,000 per year already will not have any incentive to work harder if the additional work only accumulates benefits below an additional 5000 dollars.

That is to say, if I have the option of working more and earning 4,999 additional dollars beyond my 20,000 - I will not do this because it is easier to take the free money than to work for it.

This is called the disutility of labor. People would rather not work than work if given the choice.

These economic truths apply to any welfare program at any price level for any benefits. Welfare programs will always INCREASE the social ill they are trying to solve.

Lets take another example - lets say the State creates a program that pays people 5,000 to quit smoking. If the benefit of the handouts outweighs the cost of cigarettes, people would START smoking in order to collect on the benefit that helps them quit. Even if the handout was only 100 dollars, it is worth peoples while to start smoking in a manner that they purchase less than 100 dollars in cigarettes in order to collect on the margin.

Ronald Reagan once said that we should measure a welfare programs success by how many people we are able to get off of it. This is IMPOSSIBLE when benefits are increased and benefits made more abundant. Basic economic laws make it clear that increasing welfare benefits leads to an increase in welfare rolls.

Today, the State has given up on trying to get people off of welfare and instead has done everything in its power to turn the welfare sucking horde into a political weapon against the productive class.




[edit on 25-8-2010 by mnemeth1]

yes...so welfare encourages SOME employees to attempt to earn less...since then they get the benefits so they can earn more...
guess what else....
married couples, if under enough financial stress (sick kid with no insurance, ect)
will separate, just to give the kids those necessities that the wage earner can't buy....

so, next question....
who benefits from this???
the people don't, I'm sorry....they are being giving a choice here...either live the way your want (remain married, take that overtime, ect) and go without some of the necessities of life...
or....
change the way you live!! and your needs will be taken care of, by uncle same...according to what uncle sam thinks you need!!

women who've been basically stay at home moms find themselves in the welfare lines when the marriages break up, and well, what is one of the requirements? oh ya, find a job!! so well, it brings in this who new lot of employment seekers, who, well, are more concerned with the hours that they are gonna have to work than they are how much they will be paid...cause, well, there's that nice gap placed in there they know they don't want to be in, since then, they will find themselves without some of those necessities that the gov't will give them at the lower wage....
a nice crop of employment seekers able to accept lower wages than many of those non stay at home housewives out there could accept, simply because well, their child care would surpass their earnings and then, their work would be a losing prospect!
in the end, I think it's the business sector that wins on this...they get to create brand new businesses that will serve the needs of the newly employed single moms....like childcare...and they get to enjoy employees that are expecting less and less in wages....

the rest of us all lose out...at least as I see it...

actually, I see it as the gov't using my money against me, but what the heck....



[edit on 25-8-2010 by dawnstar]

Well, I guess im living proof that generalizations are dangerous if used as a bull-horn to push economic THEORIES as fact.

Im 25 and poor enough for some services such as food stamps, blah blah. Always have been. I don't ask the government for crap. In fact, I have a couple friends who are loaded that complain about the taxes they pay to feed those damn poor people who just don't work hard enough to make more money. Some people, like my wife and I, honestly don't give a damn about money and adjust their life-style according to it. We even have a couple grand saved up and we don't even live with parents, if you can believe that.

My mother is also living proof that your statement is not always correct. She had to raise me and my two brothers on her own (thank god for great aunts and uncles who helped looked after us) while going to school and working full-time. We were on food stamps. My mom finished college, and is now a nurse practitioner making around 100k a year. Needless to say, she is no longer collecting from the government. In fact, she was on food stamps for maybe 1 year, tops.

Although your statement may be true in some instances, I honestly would rather deal with some abusing the system (or even better, monitor beneficiaries of government funds more closely to prevent this abuse) than have kids go on starving because their parent(s) don't make enough money to feed them.

Peace.

reply to post by mooseinhisglory


I worked with a lady, was her press partner for a few years...till the screen came crashing onto her neck, and well.....now she can't work, can't lift her arms high enough to put her own groceries away, matter of fact...
oh, ya, this lady worked, we worked our arses off, put in alot of ot also...
but, well, she knew exactly how many hours over she could work in a month's time and still be eligable for the medicare for her son!!!
and no, she wouldn't work more hours than that, wouldn't matter what was going on, or how pressed the company needed the job done...she just wouldn't do it...

because well, if she did, welll, her son would lose that medicaid and well.....if she had to go through the company insurance plan to replace it.....she' would have to work the overtime, just to cover the cost of the insurance just about!!

I don't blame the people.....
just wish that they'd make an honest attempt to close up that gap...
it's stupid, destructive, and well.....
it's a witch to be in (a little word play needed here to get my drift!)...

I actuallly know of a few couples that have split up, because of that little gap. and well, when it's a choice between a kid getting the medical attention he needs (one family had a very sick baby, was born immature and spent alot of time in the hospital because of lungs that just didn't develope quite right!)..
well, I can't blame them!!! I think even the most vocal against the welfare programs would be doing the same thing, if they found themselves in similar circumstances!

but, well, child support doesn't replace a husband's salary, and it doesn't replace the father or husband for the wife, so I don't see how in the world this set up is beneficial to anyone, except the business sector who really, really, want to exploit the labor force!

reply to post by mooseinhisglory


My statement is always true on the macro scale.

always.

Of course there may be individual exceptions for people with high ethics and morals, but in general, this is not the case.

It is absolutely correct to say that more welfare will always increase whatever social ill it is trying to solve - always.

The "individual exception" rule is why private charities do such a superior job in distributing aid over government. Private charities have the ability to discriminate against who they help. They can chose to only help certain people that actually need help, instead of being confined by the equality constraints on government handout programs.

Private charities also have an incentive to get people off of their charity rolls. So they will work as hard as possible to ensure the person becomes self-sufficient.


[edit on 25-8-2010 by mnemeth1]

reply to post by mnemeth1


no it isn't....
if they had all the numbers lined up right, it wouldn't....
but, well, as long as they are giving a family of let's say five, benefits that equate to a job paying over ten dollars an hour, and then well...deny families of that size making $9 or less...(numbers being used as example are about a decade old..and based on NY state....sorry....)
well, it's gonna feed the system!

reply to post by mnemeth1


or...another grand solution...
have a minimum wage that will provide enough to cover what would be needed to cover full support to the worker, and half the support needed for the average family size...

and don't come back with the "this would only feed inflation bit"! we've just watched one heck of a god awful lot of money go to save the wall street gamblers arses....
if that didn't cause inflation, then hiking up the pay for the low wage earners ain't going to either!

One form of welfare that I'm aware of pays about $3,600/year. People living on that are living in poverty.

It comes down to one simple, appalling, fact.

Very few people will except a hand up, if you are willing to give them a hand out.

Most have the attitude of "Why should I work when others will give it to me for free and I dont have to do anything but sit here?"

That is why I say (With few exceptions):

Get the hell rid of welfare!! Instate WORKFARE!!

You want assistance, you will do something.

(Back story: I have been on wellfare in the past, when I herniated 3 disks in my back and couldn't work at the job I had. Hell I couldn't even walk. But I atleast stuffed envelopes, so that the amount that I got from welfare was reduced. But I worked before, and ever since. I am now unemployed (downsized), and I still don't accept wellfare. I agree that wellfare is ok for people who genuinely NEED it. The injured and elderly. Other than that, get your butt out and get a JOB! (Admittedly harder now with the present economy))

[edit on 8/25/2010 by Ghost of Chewie]

reply to post by Incubus2


yes, but well the welfare is coming from multiple agencies, rent assistance, heap, food stamps, medicaid, schips, and afdc......
if you are quoting the afdc, well, ya...that may be right, but when you go sign up for that...well, they automatically apply you to the rest....

reply to post by Ghost of Chewie


the people on welfare already are required to work....
only well,, there isn't enough jobs for them in some areas....in others well, ya there's jobs, but they pay so little, it doesn't even cover the child care costs....

and well....you're not addressing the mass of people who are working, but well, are still needing help.

and no, single moms don't have the option of taking another close to m inimum wage jobs...it only leaves them with a higher child care bill....that well, your tax money is subsidizing...

S&F

This line of thinking is the primary reason for negative income tax systems, where there is always incentive to work more. In fact, in Slovakia we have just elected a government with negative income tax in their program, so we may be the first country to implement it instead of traditional welfare.

en.wikipedia.org...

Originally posted by dawnstar

 

and no, single moms don't have the option of taking another close to m inimum wage jobs...it only leaves them with a higher child care bill....that well, your tax money is subsidizing...

Agreed. That is why I feel that the Childcare should be offered to single mothers at the FATHERS expence! Kill two birds with one stone...

Mom gets childcare so she can work to provide her children a better life, and it gives some incentive for these guys that just "breed 'em and leave 'em" to stick around and be a DAD, not just a sperm donor.

reply to post by Maslo


at least our elected represtative would know how much they are giving away!!!

like I said, right now, aid to the poor goes through various agencies...dept of health, dept of agriculture, hud, and on and on.....
I wouldn't doubt if they do this just so no one can find out just how much the poor are in fact getting!
I like the negative tax idea....

I agree that we should get rid of welfare in all its many forms. We should also get rid of disability except for the severely handicapped. Now I'm not being cruel. I'm saying that people with minor disabilities like depression shouldn't be on benefits. Did you know that depression is the #1 mental health disability? That's a fact. Most of these people could be working. Most people are unhappy in life. It's just part of life. Some people like to complain and take pills for it. Others drown their sorrows in an alcoholic beverage. Some do both. I don't know. Depression just seems like a nonsense diagnosis. If every depressed person were on benefits, then no one would be working anywhere, except for corporate executives.

[edit on 25-8-2010 by Incubus2]

reply to post by mnemeth1


I could see how a private charity would have more scrutiny in whom they help so they could stay viable as a charity and make sure every cent counts. Its a good point.

However, the problem is people. A private charity has just as much chance of being looted or defrauded as a government program. Nothing will ever be perfect, and nothing is absolute. We screw up everything we can get our hands on. I don't put any faith in a system because a system itself can't fix anything. People have to change if we are going to get anything right.
That, my friend, is a truism on a micro and macro scale.

reply to post by Ghost of Chewie


in reality, both mother and father should be held responsible for the care of the child, both financially, and in the way of nurturing and caring for the child...

so well, if the mom has to work, because dad is unwilling or unable to fullfill the financial needs (even if he is reallly)....
well, don't care how they arrange it, maybe dad can watch the little ones while mom works, and vice versa...heck my husband and me did that for awhile (we lived in the same household though)....or maybe dad could be expected to pitch in on the childcare.

most of the people I know getting or paying child support, well, it doesn't equate to what I think would be half of the expenses that the children need. it's based on the mans income, ya know the man who couldn't support the family while they were all living under one roof...only now there are two roofs to support, a wife that really doesn't have the skills or work experience to land a decent paying job....and well...there is no way that they can support the family now, with two households to manage!

reply to post by mooseinhisglory


how did it go...oh ya...
give a man a fish, you helped him for a day...
teach the man to fish, and you've really helped him throughout his life...

if the people are working! they shouldn't need the charity!!

concentrate on a way so that working people can support themselves and their families, and well.. then you only have the disabled, and the elderly....
and a bunch of people who just can't get their crap straight!

take care of the disabled, the elderly, and well, demand that the rest get their crap straight! or..well...heck with them...

I tend to agree with the title of this post.

My daughter has a short term job on an island that is a US territory.

One of her first comments was that all the indigenous people were on welfare. To them, it's an easy life....free money. Welfare... An idea with good intentions that can be abuse and/or have unintended consequences.

It becomes even more interesting because the island has industry but they have to import foreign labor to work the industry. They can't get the indigenous people to work for a living when they get welfare for free.

So, the indigenous people went on welfare and they import labor...Does that make sense?

Now, since this is a US territory the US is going to mandate a minimum wage comparable to the US minimum wage. Once again this sounds well intended but I think that the industry will just move somewhere else where they don't have to content with the US minimum wage law. Once again negative impact from an idea that sounds good.

reply to post by Wildbob77


hahahah yeah I read all about that!

That had to do with fish canneries or something right?

Totally insane.

Total waste.

Didn't some major producer of Tuna just move operations to an all robotic plant to avoid the labor issues?