Income Policy #2: Welfare Payments
Updated: Sep 8
Unemployment pays middle-class wages.
Original Proposal: The Myth of American Inequality: How Government Biases Policy Debate
-John Early, Phil Gramm, Robert Ecklund
Policy Proposal: Restrict all welfare programs, both federal and state, to low-income Americans who, to qualify, must be actively looking for work or advancing their education.
This wasn't the plan. Welfare was created as a path to re-employment, now we pay people $30,600 on average¹ to stay on their couch. This is the prophecy come to life.
At its birth, its mother -- FDR -- warned us about excessive welfare:
"Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of sound policy. It is in violation of the traditions of America. Work must be found for the able-bodied but destitute workers."²
Say it with your chest, Mr. President. But Lord knows we love prescribing narcotics.
Unemployment pays middle-class wages³. UChicago economist Casey Mulligan, shows 6 examples where this is happening:
In 24 states, unemployment benefits and ObamaCare subsidies for a family of four with no one working are the annualized equivalent of at least the national median household income.
A family making almost a quarter of a million dollars annually still qualifies for ObamaCare subsidies in every state.
In a dozen states, the value of unemployment benefits and ObamaCare subsidies exceeds the salary and benefits of the average teacher, construction worker, electrician, firefighter, truck driver, machinist, or retail associate.
In New Jersey, a family of four can receive benefits equal to an annualized earned income of $108,000 with no one working.
In Connecticut and New Jersey, a family earning $300,000 a year can receive ObamaCare subsidies.
In New Jersey, a family can earn the equivalent of $100,000 a year if both parents are collecting unemployment benefits and ObamaCare health subsidies. In Connecticut, the benefits can reach $80,000.
This isn't real policy -- this is Welfare™.
The incentives are backwards. If you're in America's bottom income quintile, it doesn't make sense to work. Working 40 hours a week only nets you $6,566 more since you're disqualified from $16,300 in benefits, and you pay more than double the payroll tax.
Clinton "ended welfare as we know it" in 1996.
His welfare reform mandated recipients actively seek work or education. It worked. The share of welfare recipients who were also working nearly 6x — from 7% in 1992 to 33% by 1999⁴. Then we took our hands off the wheel. Now unemployment pays a middle-income lifestyle.
France just lived this. Macron raised the retirement age from 62 to 64 because they couldn't pay their pensions. France rioted. Millions took to the streets. Unions shut down transit and refineries for months. Macron didn't budge. The courts backed him, with the official ruling of: math ain't mathin'. Work more, wage slave.
All of a sudden, "It's not my money the government's spending", became "here's the bill". Turns out sitting on your couch wasn't a good investment in our national interests.
Follow, like, & share so I don't have to be a wage slave until I'm 75.
Franklin D. Roosevelt, "Annual Message to Congress," January 4, 1935. Available via The American Presidency Project, UC Santa Barbara: presidency.ucsb.edu.
Moore, Steve, et al. “It Pays Not to Work in Biden’s America - and Here’s the Proof.” New York Post, New York Post, 19 Dec. 2022, nypost.com/2022/12/18/it-pays-not-to-work-in-bidens-america-thanks-to-welfare-benefits/
Gramm, Phil, et al. The Myth of American Inequality How Government Biases Policy Debate (with a New Preface). Rowman & Littlefield Publishers, Incorporated, 2024
Gramm, Phil, et al. The Myth of American Inequality How Government Biases Policy Debate (with a New Preface). Rowman & Littlefield Publishers, Incorporated, 2024.
IBP, Inc. US National Educational and Social Development Policy Handbook, Volume 2: Social Policy — Important Programs and Regulations. Washington, DC: International Business Publications, USA. p. 80.
Meyer, Bruce D., W. Kip Viscusi, and David L. Durbin. "Workers' Compensation and Injury Duration: Evidence from a Natural Experiment." American Economic Review 85, no. 3 (June 1995): 322–340
