Fact: Massachusetts has a program for giving some welfare recipients a vehicle.
Notice the word “giving” was used. The word was used purposefully. Welfare receipients who receive a car from the state government keep them, forever, even when they are off of the program.
While on the program, those eligible recipients also receive state subsidized car insurance, and AAA membership.
I find the timing on this story interestingly convenient as my high school senior was just finishing up an Economics paper yesterday. The theme of the paper was focused on the fact that most governmental economic decisions are made without much thought about the long term or general impact of the policy.
To prove the theory, my student focused on minimum wage and welfare. He cited a true but weaker example that welfare recipients are afraid of going off of welfare because of the security blanket it provides and how long it takes to get back on. If they just stay on assistance permanently, their lives are more stable. True, but perhaps not the best example. In an assignment calling for about 750 words, its best to use the strongest example and reasoning you can find.
One of the biggest problems with welfare traditionally is that it’s overall benefits actually pay more than low wage jobs, particularly when you account for all of the assistance most programs provide such as Medicaid, subsidized housing, and food stamps. And that doesn’t begin to take in to account any of the other, tangential benefits such as school lunch programs, energy assistance, or educational subsidies like Pell Grants.
A 1995 Cato Institute study bears out the theory that welfare pays more. In that study, the welfare benefits measured paid the recipient and average of $10 per hour, compared to an average of $8 per hour for an unskilled wage.
And why is a 1995 study relevant? Because the Stimulus Bill rolled back welfare reform and added to it. And based on the general direction of Obama administration policy and the bent of Congress, it seems likely that there will be even more “investment” in this area going forward.
Regardless of whether or not the Stimulus Bill added to welfare, if one accepts the premise that welfare reform was rolled back, in today’s dollars (admittedly a rather nebulous concept) $8 an hour would be equivalent to $12 per hour, while $10 would be equivalent to $15.
Add a free car, insurance, and emergency road-side services.
What would you do, in absence of personal pride? Would you go get a job at flipping burgers at McDonald’s, stocking shelves at Wal-Mart, or straightening up the clothes on an Old Navy table paying $9 – $12 an hour so as to work your way up the chain over time and lose your benefits?
Or would you stick with the benefits you are receiving?
Fact: Welfare is a trap. It’s a trap for the people receiving it, a trap for the economy, and a trap for the taxpayers.