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It May Now Pay More to Be on Welfare Than Get an Entry-Level Job in These 34 States

It May Now Pay More to Be on Welfare Than Get an Entry-Level Job in These 34 States

If it paid better to stay at home and not work, what would you do? That’s a question being asked in more than 30 states.

Thirty-four states and the District of Columbia have made it more attractive to seek welfare benefits than entry-level employment, according to a new report from the libertarian Cato Institute.

“One of the single best ways to climb out of poverty is taking a job, but as long as welfare provides a better standard of living than an entry-level job, recipients will continue to choose it over work,” said Michael Tanner, senior policy analyst and study co-author.

Cato Institute.

The study, an updated version of the one released in 1995, is a comprehensive overview of welfare benefits in all 50 states and the District of Columbia. The 1995 study found that benefits from various government welfare programs easily exceeded the poverty level and “their dollar value was greater than the amount of take-home income a worker would receive from an entry-level job.”

Fast forward 18 years and little has improved. In fact, welfare spending has steadily increased at an unchecked rate, outpacing average entry-level incomes and making it more attractive in some areas to seek welfare over employment.

“The current welfare system provides such a high level of benefits that it acts as a disincentive for work,” the study claims. “Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.”

The feds currently fund 126 separate welfare programs, the study notes. Of these 126 programs, 72 provide “cash or in-kind benefits to recipients.” Keep in mind these 126 programs are in addition to welfare programs provided at the state and local level.

“If Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare work requirements, removing exemptions, and narrowing the definition of work,” says the study.

The national unemployment rate is currently stuck at approximately 7.4 percent. So let’s take a look at the top 15 locations in the U.S. where being on welfare pays better than having an entry-level job and their corresponding unemployment rates:

15. Minnesota

  • Pre-tax Equivalent ($): 29,350
  • Hourly Wage Equivalent ($): 14.11
  • Unemployment: 5.2 percent

14. Nevada

  • Pre-tax Equivalent ($): 29,820
  • Hourly Wage Equivalent ($): 14.34
  • Unemployment: 9.5 percent

13. Wyoming

  • Pre-tax Equivalent ($): 32.620
  • Hourly Wage Equivalent ($): 15.68
  • Unemployment: 4.6 percent

12. Oregon

  • Pre-tax Equivalent ($): 34,300
  • Hourly Wage Equivalent ($): 16.49
  • Unemployment: 8.0 percent

11. California

  • Pre-tax Equivalent ($): 37,160
  • Hourly Wage Equivalent ($): 17.87
  • Unemployment: 8.7 percent

10. Maryland

  • Pre-tax Equivalent ($): 38,160
  • Hourly Wage Equivalent ($): 18.35
  • Unemployment: 7.1 percent

9. New Hampshire

  • Pre-tax Equivalent ($): 39,750
  • Hourly Wage Equivalent ($): 19.11
  • Unemployment: 5.1 percent

8. Vermont

  • Pre-tax Equivalent ($): 42,350
  • Hourly Wage Equivalent ($): 20.36
  • Unemployment: 4.6 percent

7.  Rhode Island

  • Pre-tax Equivalent ($): 43,330
  • Hourly Wage Equivalent ($): 20.83
  • Unemployment: 8.9 percent

6. New Jersey

  • Pre-tax Equivalent ($): 43,450
  • Hourly Wage Equivalent ($): 20.89
  • Unemployment: 8.6 percent

5. New York

  • Pre-tax Equivalent ($): 43,700
  • Hourly Wage Equivalent ($): 20.01
  • Unemployment: 7.5 percent

4. Connecticut

  • Pre-tax Equivalent ($): 44,370
  • Hourly Wage Equivalent ($): 21.33
  • Unemployment: 8.1 percent

3. Massachusetts

  • Pre-tax Equivalent ($): 50,540
  • Hourly Wage Equivalent ($): 24.30
  • Unemployment: 7.2 percent

2. District of Columbia

  • Pre-tax Equivalent ($): 50,820
  • Hourly Wage Equivalent ($): 24.43
  • Unemployment: 8.6 percent

1. Hawaii

  • Pre-tax Equivalent ($): 60,590
  • Hourly Wage Equivalent ($): 29.13
  • Unemployment: 4.5

A little over half of the entries on this list have above-average unemployment rates. Perhaps not high enough to claim definitely that generous welfare packages lead to increased unemployment – but one would be hard pressed to make the opposite argument. That is, for the states with high unemployment rates, making welfare more attractive than having a job probably doesn’t help anything.

Here’s a copy of the Cato report:

Follow Becket Adams (@BecketAdams) on Twitter

(H/T: The Daily Caller). Featured image Getty Images.


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