When Work Is Punished: The Tragedy Of America's Welfare State

Tyler Durden's picture


Exactly two years ago, some of the more politically biased progressive media outlets (who are quite adept at creating and taking down their own strawmen arguments, if not quite as adept at using an abacus, let alone a calculator) took offense at our article "In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year." In it we merely explained what has become the painful reality in America: for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."

We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and... have the same disposable income at the end of the day.

Naturally, the topic of wealth redistribution is paramount one now that America is entering the terminal phase of its out of control spending, and whose response to hike taxes in a globalized, easily fungible world, will merely force more of the uber-wealthy to find offshore tax jurisdictions, avoid US taxation altogether, and thus result to even lower budget revenues for the US. It explains why the cluelessly incompetent but supposedly impartial Congressional Budget Office just released a key paper titled "Share of Returns Filed by Low- and Moderate-Income Workers, by Marginal Tax Rate, Under 2012 Law" which carries a chart of disposable income by net income comparable to the one above.

But perhaps the scariest chart in the entire presentation is the following summarizing the unsustainable welfare burden on current taxpayers:

  • For every 1.65 employed persons in the private sector, 1 person receives welfare assistance
  • For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.

The punchline: 110 million privately employed workers; 88 million welfare recipients and government workers and rising rapidly.

And since nothing has changed in the past two years, and in fact the situation has gotten progressively (pardon the pun) worse, here is our conclusion on this topic from two years ago:

We have been writing for over a year, how the very top of America's social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn't, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.

But for now, just stick head in sand, and pretend all is good. Self-deception is now the only thing left for the entire insolvent entitlement-addicted world.

* * *

Full must read presentation: "Welfare's Failure and the Solution"


Some other thoughts on this topic: DOES IT PAY, AT THE MARGIN, TO WORK AND SAVE?

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Tue, 11/27/2012 - 13:42 | 3014626 reload
reload's picture

QUITE SO - but it is often overlooked that large corporations which employ low skilled or unskilled labour are the major beneficiaries. Here in the UK for example emplaoyers can keep workers on (iirc) sub 24 hours per week, thus avoiding any obligation to sick pay / holiday pay / redundancy or pension contributions and hey presto: the tax payer makes up the difference to `a living wage` via the `working families tax credit` - which is a welfare payment by another name. The supermarkets, Tesco, Asda (walmart) Sainsbury, Morrison etc etc who are highly profitable are probably the biggest beneficiaries but there are many others, call centre operators etc.

A friend of my wifes recently quit her full time college lecturer job to take up a post as a 2 day a week classroom assistant - net difference in take home: Zero.

p.s -  great market calls / sentiment of late. Many thanks.

Tue, 11/27/2012 - 13:56 | 3014662 Skateboarder
Skateboarder's picture

There's no difference between college students and middle schoolers these days (with the exception of sex, drugs, alcohol, and $50k of undefaultable debt).

Tue, 11/27/2012 - 14:19 | 3014733 CrimsonAvenger
CrimsonAvenger's picture

In some places, the only difference is the debt. Those middle schoolers are getting biz-zay.

Tue, 11/27/2012 - 14:15 | 3014715 Augustus
Augustus's picture

To state that "large corporations which employ low skilled or unskilled labour are the major beneficiaries" of childcare credits is poor analysis.

There are people who MUST have employment or they will otherwise starve.  Children or no children, these people must work to have income, no different than it has always been,  In earlier times the children were placed with elderly family members or with some stay at home neighbors who provided the attention for little direct payment.  Now the government is paying someone else to perform that service.

The large companies are not the beneficiaries as the workers must show up somewhere to get the cash.  Possibly the beneficiaries are those who were not compensated before.  However, the poor care offered by the paid services may be so poor that the net result is that government is spending and paying for a worse result.

Tue, 11/27/2012 - 14:46 | 3014838 VisualCSharp
VisualCSharp's picture

When does government spend and pay for a better result?

Tue, 11/27/2012 - 13:48 | 3014641 LMAOLORI
LMAOLORI's picture



Not to worry Crony Capitalist Uncle Warren has the answer (read the comments)


Tue, 11/27/2012 - 14:57 | 3014861 Blankenstein
Blankenstein's picture

This tax dodger needs to shut his Dilly Bar hole.  Uncle Warren is one of the biggest Crony Capitalists.  He was all for the bailouts and made billions.  I guess he feels that he should always have a win-win situation because he is special, like his favorite Goldman Sux.  There are so many that qualify, but he is high on the list fighting for the spot of public enemy number one.  


Here is an excellent video someone posted yesterday.  They don't mention Warren, but I couldn't help but think about him when they are talking about the bailouts.  



Tue, 11/27/2012 - 14:36 | 3014797 Incubus
Incubus's picture

I had this little thing called pride that stopped me from taking any welfare shit when I was unemployed.


I just couldn't imagine myself presenting a cashier with some welfare card, or whatever it is they use.  Some people have no shame.


Tue, 11/27/2012 - 14:45 | 3014835 Kobe Beef
Kobe Beef's picture

They cashed in their shame for "social justice." It's so much more... "empowering."

Tue, 11/27/2012 - 19:16 | 3015751 phyuckyiu
phyuckyiu's picture

Pride is for chumps. This is America bitchez!

Tue, 11/27/2012 - 15:11 | 3014942 brady
brady's picture

I feel poor when I use a coupon.

Tue, 11/27/2012 - 18:29 | 3015607 bankerbackbacon
bankerbackbacon's picture

Pharoah tier: Gold and Silver

Fat Cat tier: Fiat, bullshit financial instruments and market making

Slave tier: Coupons, Canadian tire money, Food stamps





Wed, 11/28/2012 - 16:58 | 3018453 Bob Sacamano
Bob Sacamano's picture

"Shame" went out of style about 20 years ago.  It is a large part of the cultural problem in the US (and elsewhere).  Similarly "personal responsibility" is also out of style.  

Everyone is a victim.  Everyone is entitled.  Entitled victims are everywhere.   This culture will demand massive government (even more massive than its current enormity).  

Tue, 11/27/2012 - 16:34 | 3015213 SILVERGEDDON

" I see you are a mamber of the family Jackinoff. "

Folks, no problem here. It eliminates competition for the slippery slope of success.


Not enough room there for the few ambitious folks willing to scale the heights even with a lot of the contestants diverted by the prison of entitlement.

Stay independent. The sheeple are in for a rude awakening. 

Tue, 11/27/2012 - 13:29 | 3014581 prains
prains's picture

0,1%-1%  to the  99%   "CHECKmate"





BOHICA 2013 here it comes

Tue, 11/27/2012 - 14:06 | 3014684 Chuck Norris
Chuck Norris's picture

Time to rewatch Mo Money with the Wayans where he so wisely states: "A Job Ain't Nothin' But Work"


Tue, 11/27/2012 - 14:21 | 3014740 overbet
overbet's picture

My friend told me yesterday that he kept getting telemarketing calls with automated voice message saying "Are you currently recieving government assistance for your electricity bill each month? If not press 1 to see if we can help you qualify" 




If you never seen this give it a read if you really want to get pissed off.




Tue, 11/27/2012 - 14:24 | 3014755 optimator
optimator's picture

I love work!!

I could sit for hours watching people do it.

Tue, 11/27/2012 - 15:24 | 3014995 U4 eee aaa
U4 eee aaa's picture


Tue, 11/27/2012 - 14:35 | 3014792 slaughterer
slaughterer's picture

The Bernanke should just funnel the QE $$$ to the unemployed to daytrade on some Schwab or E-Trade account.  Obama daytrade bucks.  

Tue, 11/27/2012 - 15:05 | 3014916 q99x2
q99x2's picture

I cannot afford to work and although I have lots more time to spend money I have adapted by going to college. I used to be unhappy because work was ruining my life not anymore. If you are an American you don't have to work and aren't expected to work. Rothschilds and Rockefellers are not going to let the revolution take place until they are ready and until then whose complaining.

Tue, 11/27/2012 - 18:26 | 3015608 AGuy
AGuy's picture

"I cannot afford to work and although I have lots more time to spend money I have adapted by going to college."

<SARC>Skip the middle part! Just go from school and college straight to retirement. Why waste 40+ years of your life at a job you hate!</SARC>

Tue, 11/27/2012 - 19:18 | 3015755 phyuckyiu
phyuckyiu's picture

"I cannot afford to work"

The post should have ended there.

Tue, 11/27/2012 - 16:04 | 3015111 Ignatius
Ignatius's picture



Tue, 11/27/2012 - 16:08 | 3015139 Chuck Walla
Chuck Walla's picture

Work ruins your life.

But it sure pays off for Progressives... until it doesn't.


Tue, 11/27/2012 - 18:33 | 3015628 meizu
meizu's picture

In a technologically advanced society, where more and more work are done by machines, there is simply not enough jobs for everyone.  In the not too distant future, 70% of the population will live on a welfare, only 10% of the population, who are either highly educated or have skills that cannot be automated by machines, will have jobs.

Wed, 11/28/2012 - 04:00 | 3016673 CrockettAlmanac.com
CrockettAlmanac.com's picture

In societies which do not ship cheap currency overseas for real products technology has historically increased the need for labor.

Tue, 11/27/2012 - 13:19 | 3014535 seek
seek's picture

Reminds me of the bumper sticker: "Keep working, millions on welfare are depending on you."

The great reset can't come quickly enough.

Tue, 11/27/2012 - 13:37 | 3014613 Shizzmoney
Shizzmoney's picture

Reminds me of the bumper sticker: "Keep working, millions on welfare are depending on you."

Wow: I didn't know that Goldman, JPM, and BAC employed that many people!

Tue, 11/27/2012 - 14:44 | 3014789 tickhound
tickhound's picture

THAT welfare, as it pertains to this article, is considered "private sector." 

But you highlight just how skewed, and generous, the above statistics really are...

List the disproportionate amount of dollars redistributed to the financial and government support classes as "welfare", and the 1.65 to 1 becomes a wish.

Then we have those "private" industries and contractors sponging directly off the government teet.  The government contracted "private sector" in the DC area is just trickle down welfare... With "support waste" being distributed to entities like KPMG paid $millions for fancy accounting and bloated practices.  Anyone who has seen the "billing" knows this game. 

List all these small and large "private sector" entities and DCgov contractors as "works for the government" and the 1.25 to 1 becomes another wish. 

Just as the women making 29k, Fannie Mae is bOOOOOMING.

Tue, 11/27/2012 - 14:07 | 3014687 Colonial Intent
Colonial Intent's picture

Work for walmart, you get paid and you are eligible for food stamps, best of both worlds.

Tue, 11/27/2012 - 14:13 | 3014709 Skateboarder
Skateboarder's picture

I'm sorry, whale watching is not a favorite pastime of mine. =\

Tue, 11/27/2012 - 19:09 | 3015729 phyuckyiu
phyuckyiu's picture


Tue, 11/27/2012 - 19:25 | 3015784 Sokhmate
Sokhmate's picture

I take offense, unless you meant land whales.

Tue, 11/27/2012 - 16:45 | 3015242 flattrader
flattrader's picture

Morons who shop at Walmart thing they're getting a great deal.

They are subsidizing that corporate welfare queen through tax increment financing, tax abatements and in the past, industrial revenue bonds...not to mention subsidizing food stamps and health care for the poorly paid employees...all the while the scum family in Bentonville make billions.

Wed, 11/28/2012 - 04:02 | 3016674 CrockettAlmanac.com
CrockettAlmanac.com's picture

Walmart is the only place in town with unscented kitty litter. A 25 pound bag costs $3.65. I am bad.

Tue, 11/27/2012 - 14:19 | 3014732 Zap Powerz
Zap Powerz's picture

"The great reset can't come quickly enough."

It will come quickly enough and it will be excruciatingly painful too.

Western societies, the US in particular, are so broken and corrupt that the societies themselves are no longer capable of fixing themselves.

The slow march toward totalitarianism and wealth destruction has been going on for so long and at such a slow pace that not many have noticed and by the time they notice its too late to do anything about it (like now, for example).

Just think about how god aweful things are now compared to just 20 years ago with regard to debt, moral decay, illiteracy, illigetimacy, criminality, corruption etc.  If the American people are not completely pissed off now and marching on Washington with the proverbial pitch forks now then they never ever will be pissed off enough to fix their shitty country.

Nope, friends, the only thing that will fix this cluster fuck of a society we have is natural law.  Mother Nature is going to cull this herd soon and its going to hurt.

Have a great day.

Tue, 11/27/2012 - 14:31 | 3014774 Almost Solvent
Almost Solvent's picture

Look out with that cull the herd argument.

Idiots around here like Pants McPants will go nutz and tell you to start with yourself.

Tue, 11/27/2012 - 15:14 | 3014952 centerline
centerline's picture

Precisely.  Shit storm coming.  Enjoy today.

Tue, 11/27/2012 - 15:43 | 3015017 Skateboarder
Skateboarder's picture

The collective apathy (from a false presentation of reality from MSM, TPTB, etc.) is greater than the collective decay. When the opposite is true is when you will see the crumbling of our social structures.


Tue, 11/27/2012 - 15:38 | 3015043 Henry Hub
Henry Hub's picture

Don't be so pessimistic. We all know the answer to all our problems. All we have to do is gut Medicare and loot Social Security and everything will be fine.

Tue, 11/27/2012 - 17:04 | 3015284 RockyRacoon
RockyRacoon's picture

'Tis a tangled mess, to be sure.  Who doesn't know that the so-called system is broke?  All this article does is point out the obvious and stir up the already pissed responsible citizens.   No need for more shit stirring at this point.  Yeah, it's a mess.  Looks like your proposed reset is the only way out.  Congress sure as hell ain't gonna "fix" anything, especially as some of them don't see the defects.  It is those very conditions that keep them in office.  Whole lot more broke than just the welfare, taxation, etc. systems.  The election process is the starting point.   How 'bout term limits and an easier path for 3rd party participation?  Go to the root of the problem, not just treatment of the symptoms.

Tue, 11/27/2012 - 17:48 | 3015470 JLee2027
JLee2027's picture

Reset is inevitable since the Government won't fix anything. I do think the calls for a Constitutional Convention, as dim as they sound now, will be heard very loudy after everything collapses in a giant mess. 

Tue, 11/27/2012 - 17:58 | 3015510 JLee2027
JLee2027's picture


Does this apply to Ben Bernanke???  1792 Coinage Act


Penalty on debasing the coins.


Section 19.   And be it further enacted, That if any of the gold or silver coins which

        shall be struck or coined at the said mint shall be debased or made worse as to the 

                    proportion of the fine gold or fine silver therein contained, or shall be of less weight


                    or value than the same out to be pursuant to


                    the directions of this act, through the


                    default or with the connivance of any of the


                    officers or persons who shall be employed at


                    the said mint, for the purpose of profit or


                    gain, or otherwise with a fraudulent intent,


                    and if any of the said officers or persons


                    shall embezzle any of the metals which shall


                    at any time be committed to their charge for


                    the purpose of being coined, or any of the


                    coins which shall be struck or coined at the


                    said mint, every such officer or person who


                    shall commit any or either of the said


                    offenses, shall be deemed guilty of felony,


                    and shall suffer death.


Tue, 11/27/2012 - 18:33 | 3015626 AGuy
AGuy's picture

" If the American people are not completely pissed off now and marching on Washington with the proverbial pitch forks now then they never ever will be pissed off enough to fix their shitty country."

Based upon the November election 95% of Americas are satified with the current system. If they voted for the DNC or the RNC they support the currency system. One wants to Tax/Spend/Borrow/War and increase entitlements, the other wants lower Taxes/Spend/Borrow/War and sustain entitelements. Neigther side is interested in fixing the systemic problems.

Its going to be a long time that Americans show up with Pitch forks, and they will only show up with Pitch Forks when the dollar has collapsed and they can no longer get thier entitlements.

Tue, 11/27/2012 - 16:06 | 3015117 Ignatius
Ignatius's picture



Create a dependent class and a working class and put them at each other's throat.

When do corporations ever turn down corporate welfare?  They don't.

You wanna destroy a people, kill 'em with kindness.

Tue, 11/27/2012 - 14:26 | 3014537 Mercury
Mercury's picture

In it we merely explained what has become the painful reality in America: for increasingly more in America, it is more lucrative to sit, do nothing, and collect various welfare entitlements, than to work.

Sit, do nothing, collect and vote.


The rest of you suckas can expect this:

Dear Taxpayer: 

Yesterday we had a meeting about your money. When you get home from work please read the enclosed 4000 page document which explains what we're going to do to you next.

                                                         -Uncle Sam

Tue, 11/27/2012 - 14:44 | 3014815 BlackholeDivestment
BlackholeDivestment's picture

''Collect and Vote'' 2 Party 666 Borderless Global Crypto Fascism 

               Your first vote is ''on the money'' 


Ah, the goal of Nimrod, AKA Lucifer; put the image of the Great Seal with the name and number of a man (as a god) sealed to 666 in the right hand of all that accept and agreee with the mark of the beast, and give them a universal REAL ID account number to go with their personal bank account number in their forehead. 

The fact is, if you show up to work, or accept the gains of this market, all you are doing is committing an act of murder suicide. SO TAKE A GOOD LONG HARD LOOK IN THE MIRROR AND ASK YOUR DUSTY ASS THIS QUESTION, ''AM I THE BLACK HOLE?'' ...and when you find yourself at work, screwing the Whore of Babylon and aborting your own labor at the same time, YOU WILL CONFIRM THAT YOU ARE A SEALED HELL-BOUND WHORE OF BABYLON RIDING THE BEAST. 

...so if you are going to continue to ''chase the drangon'' and ride the Great Wal Mart of China, freemason based on eternal ''hopium'' injections from fallen angels and the Suicide Vampire Scuids, I have some bad news for you. You are sealed forever and you shall surely die because not only is your own judgment sealed upon you, but, this entire generation is going straight to Hell on Earth with you.

Tue, 11/27/2012 - 14:49 | 3014842 Mercury
Mercury's picture

And...let me guess: God has chosen you to build an ark to house and save you and your family who, along with the innocent and ignorant beasts, are the only worthy souls remaining on this great earth?

Tue, 11/27/2012 - 14:57 | 3014874 Kobe Beef
Kobe Beef's picture

Building your own ark beats collecting welfare or being ridden by the whore of Babylon anyday.

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