Hey! Look, they skew the benefit/work debate in the US too! August 27, 2013Posted by WorldbyStorm in Economy, Irish Politics, The Left, US Politics.
Interesting piece on Slate.com, taken from Business Insider, on a Cato Institute report which seeks to prove that being on welfare in the US is financially more beneficial than working.
And how do they come to this conclusion?
They add up benefits available through eight programs to a low-income woman with two children, and find total benefit values well in excess of full-time minimum wage work, or even, in some states, middle-skill work. The study is called “The Welfare-Versus-Work Tradeoff,” and it’s meant to show why people don’t get off welfare.
Now isn’t that just a bit familiar? For as Josh Barro writes, this is incorrect because firstly, ‘very few people actually qualify for all eight of the programmes Cato looks at’, ‘welfare benefits for single adults are much less than those for women with children [and I presume men with children – wbs] and finally, ‘not all benefits are lost when a welfare recipient starts working’. We’ve seen that approach of rolling all potential benefits (and in particular non-cash benefits) into a single pool to try to justify similar claims here too.
Barro isn’t coy about one aspect of welfare:
That said, poverty traps are real. This is the phenomenon of people losing benefits as they earn more income of their own.
But he notes two basic truths:
It’s a problem that welfare programs need to be designed around, and there are two ways of mitigating it. One is to make benefits more generous by extending their phaseout ranges, so people don’t lose as many benefits as they earn more income. That costs money. The other is to reduce benefits. That reduces the standard of living for the most vulnerable people in America.
And the same is obviously true here as well.
And he goes further:
It’s easier to make an argument for the latter approach when you have an economy that creates broad prosperity and makes it easy for people to find living-wage jobs if they are willing to work. We don’t have that economy. This is the problem that conservatives and libertarians refuse to grapple with: If you’re unwilling to support policies that promote macroeconomic stability, such as counter-cyclical fiscal and monetary policies, you’re only making a more generous welfare state more morally necessary.
Perhaps worth remembering all this when we are next subjected to rhetoric from the government and Troika on ‘redesigning’ welfare or ‘labour activation measures’.