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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Brixton Guns's picture

sounds like someones in denial over taking accountability for failing to protect his own shit.

lakecity55's picture

This is what happens when the State bcomes god.

Monedas's picture

"The real Privileged Class .... who have the luxury of unhurried dignity and the smugness that comes with total security .... are the government workers and the welfare wards !" .... Monedas      1913-2013     Comedy Jihad Ponzi Of Plenty World Tour  

Dingleberry's picture

Any woman can make more than 60k per year......if she loses some inhibitions.

mt paul's picture



ate their twinkies today...

MedicalQuack's picture

Algorithms are taking over the world...great video here that explains...when do you cross the line of when an algorithms (aka business models and formulas) cross the line and instead of being a "utility" they are now a "menace" and futhermore who gets to control their use...


No pity on the banks as they designed it with greed and they knew it and took advantage of the consumers and created this.  When the arrays of data can no longer be queried to create realistic numbers, it all falls out the bottom.  Blankfein at Goldman has a lot of nerve last week. 

Now... Jamie Dimon to Congress...is the Dodd Frank Law working...Dimon:  I don't know...

Great documentary:  Quants, the Alchemists of Wall Street, they talk here and tell you about the fiction they add to business model formulas, can't get more blatant than this.  They keep doing it because we allow it, but again the formulas and the fiction is getting tight here...IT infrastructure of some type runs everything today. 


YearZero Institute's picture

Heheh. You guys are such fucking idiots. You rambling lonely right wing extremist cunts, clutching to your feeble memories, made up histories which never existed, blaming everything except yourselves for your failures.

You are the reason your lives are shit. You want different tax structures, different laws, different economics. You are no different to anyone else, cap in hand, demanding hand outs, subsidies for your useless lives.

I fucking love your despair.

Brixton Guns's picture

Wow what a great comment.  You should send this to the editor who will likely wish to post this on the homepage.  The easiest most direct way to do this is to select all on your post, then hold Alt key down while hitting F4.  This will take you directly to the Editor's private chat where you can submit your post directly to Tyler.

Have a nice day!

YearZero Institute's picture

Heheh. You guys are such fucking idiots. You rambling lonely right wing extremist cunts, clutching to your feeble memories, made up histories which never existed, blaming everything except yourselves for your failures.

You are the reason your lives are shit. You want different tax structures, different laws, different economics. You are no different to anyone else, cap in hand, demanding hand outs, subsidies for your useless lives.

I fucking love your despair.

hawk nation's picture

Most of us just morn our loss of freedom and by your statement our countries loss of a moral compass

Monedas's picture

I smell your liberal compassion .... it stinks !

waterhorse's picture

Ah, AEI.  How ever could I have guessed...

hawk nation's picture

Whenever i read about government entitlements i am reminded of a phrase my priest used to repeat and that is "the road to hell is paved with godd intentions"

Anyone doubt based on this article that things will get very bad very quickly

FunkyOldGeezer's picture

If ZH was the official mouthpiece for the Tea Party I might understand this article being published here.

So, virtually no-one thinks wages are simply too low? Governments are not exactly well known for giving away more than they need to and welfare is normally meant to provide a standard of living just above subsistence level. The government is clearly saying what they think that level is, so yes, they're in effect saying that wages are generally too low.

Zero tax paying US companies have a LOT to answer for, no?


hawk nation's picture

Do the math you fucking idiot its a spending problem not a revenue problem

spooz's picture

Its both, shit for brains.  The low tax rates we've had for the last 20 years allowed the elites to accumulate vast stores of wealth, much shuffled into offshore accounts, while the average Joe's real wages decreased.  Not to mention the globalization issue, where big corporations make it hard for small businesses to stay competitive, while they hoard their cash overseas, waiting for our owned legislature to declare another tax holiday so they can bring it home to buy back shares and pay dividends to support stock prices. (They say its to create jobs, but they lied before, they'll lie again)  And then there are all the loopholes lobbyists inserted into our tax code, again to benefit elites, who can hire accountants to get their tax rate as low as possible.  Meanwhile, the average shmuck has no loophole to get around payroll taxes, state/local taxes, sales tax, excise tax, even though they are not earning a living wage.

The spending problem began with two unfunded wars and continues with military expenses for a bogus war on terror.

Amagnonx's picture

"Zero tax paying US companies have a LOT to answer for, no?"


How the hell is making corporations or companies pay more tax going to make things better?  Seriously.  Taxes on businesses should be ZERO.  The reason is so obvious, so inescapable I absolutely cannot believe anyone is stupid enough to claim it as a solution.


If a producing company pays taxes, that comrpesses the margins - they become less competitive - they will make this up by increasing the prices of goods sold, cutting jobs or lowering salaries.


Explain to me how higher prices, less jobs and lower salries are a solution?

Monedas's picture

Let's all go down to Social Services right now .... and see what we can get .... field research ?    We are the niggers now .... we own that word .... and can use it just as much as Richard Pryor ever did !  

spooz's picture

Do you look like an idiot too?

woggie's picture

the beast is on the gobble
and all that matters is we're all headed for it's belly

Crash2012's picture

Just think for one more second!

Obamacare will be SUBSIDIZING people making $90,000 a year in 2014!

batterycharged's picture

This bullshit gets dragged out every few years. And believe me, it's complete BULLSHIT.

Maybe you folks that eat this shit up are too far removed from poverty to know that welfare is pretty limited and not the giant handout that your simple minds create.

I make less than $18K per year, no paid vacation, no health care, no pension.

Based on this bullshit article, I should be rolling in gov't dollars, right?

I qualify for NOTHING. Not food stamps, not medicare, no housing subsidies, no federal tax credits. NADA.

Not only do I get zero gov't dollars, I am paying FICA, so while I have NO health care, I am paying so some retired rich fuck can have theirs.

Nothing is more disturbing than seeing some rich asshats hating on the poor. But I understand why it's done....CLASS WARFARE. I mean if the middle class are mad at the poor....they'll ignore Mitt Romney making $25 million/year and paying a lower tax rate than them.

My suggestion is, if it's such a good deal DO IT YOURSELF. No one is stopping you from quitting your job and living on subsistence. THen you can stop complaining about the poor, become one. OTHERWISE SHUT THE FUCK UP and be happy you're not poor.

Monedas's picture

Government workers and welfare recipients are laughing at your predicament ! You sure drank the Kool Aid !

spooz's picture

Clueless idiot.  Glazed over eyes, soaking up the corporate media, no need to check facts.  Sheeple.

spooz's picture

You obviously bought the propaganda spewed by the fascists hook, line and sinker.

moroots's picture

"Maybe you folks that eat this shit up are too far removed from poverty to know that welfare is pretty limited and not the giant handout that your simple minds create."

Per the census bureau, in 2009 .gov made over $2 trillion in transfer payments.  


batterycharged's picture

Uh, did you read your own link?

Those payments are RETIREMENT (read SS) payments and maintenance payments, medicare/aid, unemployment,  veteran benefits, and federal aid for education.

Where was the part about food stamps and housing subsidies?

Seriously, someone point out where all this cash is. I can't even get food stamps.

thomasincincy's picture

ask around. someone will give you 200 in ebt for 100 bucks. probably more and try to negotiate

and NO TAX! lol

spooz's picture

I doubt many are stupid enough to give away half their food subsidies.  They still have to eat, and will end up paying double. Idiot.

Monedas's picture

The cash is walking around money and drug money and press release data to cover the enormity of the total benefit package ! You are obviously a troll !  Happy as a pig in mud with your $18K and paying FICA .... really ?

spooz's picture

What the fuck are you talking about.  Simpleton.

Amagnonx's picture

Why would be people be blaming poor people?  People dont chose to be poor - it is policy, taxation and regulation that creates poverty. 


However, taking money from those who are producing, and using it to paper over poverty and pretend it doesnt exist is extremely expensive.  The people who caused it would rather make the middle class pay for it - which is of course unjust.


If you are poor, then once again the reason is due to those are the top who are taking all the cream - dont blame the middle class who are victims also.

uncle reggie's picture

Such bullshit! How about doing a side by side comparison with the welfare sucked up by corporations. It dwarfs what the peons get. This article is authored by those who are simply throwing out raw meat which many fools are eager to devour. Why? To keep the masses pitted against each other and pretend that lazy fucks are all to blame when in fact the real problem lies at the top of the food chain, not the bottom.

thomasincincy's picture

and that's why it's called a welfare state. it's at the top and bottom. everyone in the middle feels the squeeze. you have to game the system and/or evade taxes to live or you're a chump

edit: as that old saying goes... "shit rolls down hill" it had to start somewhere so you're more so right

Monedas's picture

DAs retiring at 56 on $200K per year should be in jail .... someday it may be a firing squad !  The oppressors are as always .... the ruling class .... government workers and their paid off voters ! Workers of the world unite against your Socialist masters !

IQ 101's picture

So Poverty is growing ? Poverty is the result of decreasing opportunity, jobs gone away, big government needys and all their licenses,permits, zoning and anal retentive paper pushing,people pillaging,pestilence propagating,producing nothing peasantry.

Darkness is the lack of light, it does not grow.light a candle.

Poverty is the lack of opportunity, build a Hot Dog cart.

But you can not because of 9 million government regulations push your cart down the road and sell your wares.

I would like to see a chart or 5 measuring the causes of poverty exclusive of fiat currency, for example, a chart demonstrating the negative effects on growth of government interference, from basic zoning laws to molesting citizens going about their free,peacefull business.

If these parasitic government fucks got it Half Way right they would be greeted cheerfully about town but are soon to become moving targets because they can not stop regulating and being the smart posh girl who got a job in an Orfice.

Poverty is not growing. Opportunity is receding.


noname's picture

I think we all know the system is broken,but do we let the 29,000 a year working mother,who has been left to fight on her own,in jobs that require her to spend most of her 29,000 on just basic needs,rot to death with her children or do we as a moral nation,with more money than God himself,give without argument something to help the less and IMO benefits us all.We have ways to do this but we get to bogged down on feeling sorry for ourselves,because someone needs the system and we cant handle the truth of this broken system.We have it and have had it for too many years so lets make it work to everyones benefit,it can be done.

Monedas's picture

You didn't read it right .... her total benefit package is slightly more than the stiff making $69K !  Both are at around $57K net !

noname's picture

I read it right and I have no problem with it because I know the reasons why its needed.I lived it.

Gimp's picture

Idily passing your time away in the grassland of hay...


The welfare population does not give a SH*T what u think...they are comfortable numb..

Monedas's picture

It's really no mystery how Obama won when half the posters on a business blog have the nanny state state of mind ?

spooz's picture

Who here voted for Obama?  Who here was stupid enough to think it would matter whether they punched D or R?  Oh, right...Alzheimers.

Brixton Guns's picture

ok.  first go study up on hegelian dialectic then look up controlled opposition, finishing up your studies with vote fraud.

then maybe realize republicrat demopublican dont make a diff.

any way you slice it comes up AIPAC.

Brixton Guns's picture

"Tyler isn't home right now."  [exit Marla stage left]


I read this article, and I am impressed by an image of a formerly-authentic and respected peer group of integrity attempting to uncover actual truth no matter how brutal the process hence the Fight Club theme, but it is but only a fleeting image as it splashes away revealing what I now see as a poorly executed ruse: proliferation of heady word strings accentuated by ego-driven "we told ya so"'s sprinkled with pungent gatekeeperdom, and dipped in a thick layer of intentional censorship, by not covering fundamental yet controversial issues which are taboo among all msm channels.  Then I see something shiny, and nothing else matters.


Soap, bitchez.


Shigure's picture

Masses of people on benefits is a symptom, the cause is fractional reserve banking.

To those calling for mass sterilisation, creating ghettos of benefit recipients, and work camps - my grandfather fought in the trenches against that sort of thing

Amagnonx's picture

I'm fairly stunned at the number of comments a post like this achieves, I would have thought it was completely uncontroversial - obviously I'm out of touch.


Taxation destroys the real economy, it doesnt matter how its spent.  The answer is not in trying to justify where the thieves might spend the loot, but rather that stealing from people with the threat of violence is just wrong, and if it becomes institutionalized leads to poverty and social distress.


The welfare money spent is an insult because if the tax had not been taken in the first place, those people would not generally need any welfare - because they would have have access to high paying employment, or their families would have enough income to support them.