Study: Welfare Pays More Than Minimum Wage in Most States

By:  Ralph R. Reiland
Study: Welfare Pays More Than Minimum Wage in Most States

If you don’t want to work, the good news is that a new study by the Cato Institute shows that welfare currently pays more than the minimum.

A new study by the Cato Institute, “The Work Versus Welfare Trade-Off, 2013,” shows that welfare currently pays more than the minimum wage in 35 states in the United States, even figuring in the Earned Income Tax Credit that subsidizes low-income workers.

Creating an even greater obstacle to moving from taxpayer-subsidized leisure to work, the study shows that welfare in 12 states and Washington, D.C., currently pays more than $15 per hour, double the national minimum wage.

Along with the District of Columbia, these are the 12 states with welfare benefits in excess of $15 per hour — in downward order from the most generous, Hawaii at $29.13 an hour, to Wyoming at $15.68: Hawaii, District of Columbia, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont, New Hampshire, Maryland, California, Oregon, Wyoming.

Not surprisingly, the study’s authors, Michael Tanner and Charles Hughes, a senior policy analyst and a research assistant at Cato, respectively, conclude that the current welfare system acts as a “disincentive to work.”

Tanner and Hughes report that welfare’s disincentive to work, the government-erected impediment to getting on the first rung of the occupational ladder, may be actually becoming more ruinous: “Welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job, and the balance between welfare and work may actually have grown worse in recent years.”

Similarly, Tanner and Hughes report in this new study that a previous Cato study published in 1995, “The Work vs. Welfare Trade-Off,” showed that the dollar value of a typical welfare recipient’s full package of benefits in all 50 states and the District of Columbia significantly exceeded the poverty level, as defined by federal government standards.

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