Societal Cost of Permanent Welfare
When we analyze the success of government welfare programs, it is important to take into account the societal costs of perpetuating a system of ineffective programs that trap those in need in an endless cycle of dependence. Last month’s disappointing AP report revealed that four out of 5 U.S. adults will struggle with joblessness, poverty, or reliance on welfare at some point in their lives. This second blog post on welfare reform highlights examples of how food stamps, housing subsidies, and welfare payment programs – while all well-intentioned — have had huge societal costs due to perverse incentives and unintended consequences.
This Administration has focused on increasing food stamp recipients and ignored the greater costs of continued dependency. Over the last 5 years, the number of persons enrolled in the Supplemental Nutrition Assistance Program (SNAP) has increased by more than 50%, while at the same time work requirement provisions for participation in the program have decreased. During her testimony at a House Budget Committee hearing on the War on Poverty, Eloise Anderson – the Secretary of the Wisconsin Department of Children and Families – spoke about a particular experience working with a young boy who received free lunches through his school’s supplemental food program. He confided in her that he did not want the lunch the school provided. Instead, what the young boy wanted was a lunch that came in a brown paper bag, because lunches in brown paper bags meant someone’s mom “cared about them.” Ms. Anderson’s story is an example that illustrates the point that sometimes these programs undermine the dignity of the individual. These real costs are much harder to calculate than those that are monetary, but often have a larger impact on the families themselves.
A similar example is evident in the nation’s public housing programs, in which some users are lulled into a sense of security and complacency, perpetuating dependency and reducing resources for those that truly need the assistance. Larry C. Woods, CEO and Executive Director of the Housing Authority of the City of Winston-Salem, NC, offered an example from his 27 years of leadership experience in the field of community and economic development, specifically involved in the development of affordable housing opportunities in economically disadvantaged urban areas. He described the adverse effects of one particular program he administers is public housing, which provides a rental subsidy to housing authorities to provide housing for eligible low income families.
While the intent of the program is worthy, the problem is that it is poorly tailored and has created an incentive for residents to stay in the subsidy program for unnecessary lengthy stays, contributing to generational poverty, increased demands for governmental subsidies, and longer waiting lists for those who truly need the temporary assistance. The policies and regulations, as currently arranged, provide for unconditional, open-ended housing subsidies that discourage self-sufficiency and create the expectation that the assistance will always be there. Indeed, surveys of the residents revealed that they believed they had reached the goal of independence, and had no intention of ever leaving the program or finding employment.
Finally, the amount of welfare payments are currently so high that they outpace the expected income from most entry-level jobs. A recent white paper released by the Cato Institute expands on this point and shows that in 13 states, welfare pays as much as $15 per hour. In nine states, welfare pays more than a teacher could expect to earn in his or her first year; in 29 states, welfare pays more than the starting salary for a secretary. Individuals who choose not to begin working and instead remain on welfare in these examples are not lazy or incapable; rather, they are rationally responding to incentives created by the government.
There is a fine line between caring for those in need and creating a class of permanently dependent individuals. Creative strategies should give needy families a boost to reach their full potential, but not entrap them in dependency for life. There must be a permanent exit strategy, including education, financial literacy, career counseling, vocational education, jobs skills training, and employment placement among other services geared towards work and self-sufficiency. When welfare recipients become comfortable and complacent and remain on government support, the larger community loses from the benefits attributable to that individual’s full talents. Subsidized housing, food stamps, and welfare payouts are examples of programs that should be treated as temporary tools of services to reach the end goal of self-sufficiency.
In our final blog post of this series, we will offer solutions to on how to achieve just that.