There’s no question that there are people in need—children whose parents can’t afford school lunches; homeless struggling to survive, never mind finding a job; Americans suffering from chronic illnesses that sap their financial resources.
But is our current welfare system the answer?
As a new year—and a new president—come on the scene, lawmakers are asking the hard questions about how we can best serve the poor. While the welfare system as it stands does provide some support, it also allows many to take advantage of the system, not to mention raising taxes to pay for more, arguably ineffective, services.
There’s a whole host of problems. For example, falsified documentation recently allowed a 24-year-old Californian woman to get $3,000 in healthcare benefits she shouldn’t have been eligible for.
In other cases, those in need can get help…for a price. Between 1994 and January 2017, the state-level “maximum family grant” law provided extra welfare assistance to mothers with more children—if they brought in documentation of failed attempts at sterilization or court evidence of a rape within the last 12 months.
“And what we’re talking about here,” says Jessica Bartholow of the Western Center on Law and Poverty, “is $130 [more] a month. This barely pays for diapers.”
Clearly welfare as it stands now is in desperate need of reform.
The Republican party, led by House Speaker Paul Ryan (R-WI) and Senator Marco Rubio (R-FL), has suggested a new welfare path with their Roadmap for the 21st Century Project. It proposes a new focus for welfare: helping the poor get jobs so they can support themselves and their families.
By putting the responsibility for welfare back into the hands of state and local governments, the Roadmap would also allow for individualized programs supported by federal block grants but designed locally to serve each unique community.
Because of the way welfare works now, there’s little support or incentive for low-income individuals to get jobs. As the Roadmap document describes:
Consider the situation faced by a woman in poverty who receives $12,000 a year in welfare benefits. Suppose she gets the opportunity for a job earning $16,000 a year. If she loses 50 cents in welfare benefits for every dollar she earns, that is like a 50 percent tax taking away $8,000 of the earnings from work. The payroll tax will take another 7.65 percent of earnings, federal income taxes another 10 percent on the margin, and state income taxes roughly another 5 percent on the margin. That leaves an effective marginal tax rate of 72.65 percent, providing little incentive for this woman to work.
But with a program like the Roadmap in place, there would be real financial incentives to join the workplace. Based on President Reagan’s “workfare” policies, the Roadmap would encourage individuals to get private-sector jobs. If they can’t, they would be eligible to earn their benefits at a wage equivalent to minimum wage by doing community service. The focus would be on positive reinforcement (rewarding the act of getting a job) rather than negative reinforcement (providing welfare based on lack of income).
And there’s an added benefit: encouraging entry into the workforce means less of an economic drain on others whose taxes pay for benefits like welfare.
There’s no need for welfare to be a system allowing for abuse and only limited financial assistance for those who need it. With reform, welfare can be a program that encourages the dignity—and financial gains—of the workplace. And it could get us a real foothold when it comes to the War on Poverty.