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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sunnyside's picture

I think that the number is closer to 70% out of wedlock last reported.  The destruction of the black family and father figure is pretty well complete.  The federal gov't is the father to most black youth in this country.

 

Overfed's picture

"Black Culture" is the worst thing to happen to black people in 500 years.

Cathartes Aura's picture

always helpful to remember that "African Americans" are only 13% of the population, and out of that, "half" will be males, and then there's only a certain age group that can birth. . .

how many African American birth moms benefit-ing make up a Banker/CEO corporate bonus - MATH, please.

darteaus's picture

"Hell, I don't know ANYONE making $60K."

Your ignorance does not invalidate the argument - that 'A single mother making $60K...'.


toady's picture

OK, but do you know anyone making $60K? Especially any single mother's? I'm sure there are a few in NYC and other high rent locations, but that would just mitigate the higher pay rate.

darteaus's picture

Yes - my wife and I.  Single mothers - no.

We did not start off making $60K - I started off making $3.85/hour, and I built my job skills.

The whole point of the article is that the government has created an incentive to not work, as a single mother would need to make $60K to cross the threshold of having more disposable income.  When she figures in the few shekels difference versus giving up 40+ hours/week - that is a HUGE "wall to climb", and few will choose to climb it.

So, now you have an underclass of single parents dependent on government benefits, ultimately taken from the productive.  Where will that lead?

toady's picture

I remember $3.85! I started at $3.35 in the late 70's, then jumped to $3.85 when the minimum wage was increased. Ah, the good ol' days!

I, and many of my friends in telecom & IT, were making low 6 figures until offshoring hit. Now the highest paid one in that group makes 40k at an IT startup.

It's just messed up out there. The bulk of people making decent money are people holding on to old paradigm jobs, while anyone trying to start a career better get used to no benefits,long hours, and low pay.

Given that to look forward to, I find it difficult to find fault with those looking for better options.

darteaus's picture

"...bust my ass to not have time with my kids"

Why aren't your kids in school instead of sitting around the house watching soaps with you?

ilovefreedom's picture

Bingo.

Imagine you make a six-figure salary but don't have kids and have quite of bit of cash saved up.

You toil everyday, 2 hours in traffic to commute to work a job you don't love-- you don't even like it, but hey, you make more than you friends, some of them can't even find a job.

A few of your friends are unemployment, they wake up at 10am, read a book, go to the beach, have a leisurely lunch, badger you to hang out after work because they've been doing nothing all day and you're exhausted by the time you get home. You have lots of cash comparatively, but very little free time in which to spend it.

After all of this unemployment starts looking pretty good... why work so hard when your life isn't necessarily better than someone on unemployment?

Cathartes Aura's picture

do it.  you've studied the facts, and made the correlations, and are obviously curious - you should definitely try out your theories before they eat you alive with bitterness.

quit the paycheck, sign up for free stuff, and then report back to ZH how brilliant reading a book & hanging at the beach every day really is!

I'm serious by the way.

Henry Hub's picture

Call me naive, but I still believe that the vast majority of people, given the choice, would choose to work over being unemployed. A lot of people are underestimating the harm unemployment causes on people; lost of self esteem, loss of respect from family members, etc. Anyone who has been unemployed for any length of time is aware of this. 

blunderdog's picture

That's not naive, that's honest.

Seasmoke's picture

WORK is a 4 letter word !

Againstthelie's picture

Same here in Europe.

The parasites below AND above are destroying the laborious middle class and the middle class doesn't recognize, that there is NO political party that is defending it.

The wise reaction is: Try to get out of the productive workforce and have no official income. Too bad the productive white ants see this as bad parasitic behaviour and keep the parasitic system, that destroys themselves, running, with their behaviour.

Good is bad and bad is good under this regime of parasites.

Bicycle Repairman's picture

This is the answer, IMHO.  Increasingly the 1% do not value your work.  They buy off the 47% cheaply to control them, and control their votes and control democracy and there by control you.

Jason T's picture

go galt, get productive oneself and be self sufficient.

if you got brains and skills, you will have high standard of living being self sufficient.  

the iD's picture

"One can only also hope that... the disappearing middle class is also selling off its weaponry. Because if it isn't..."

RGR hits new all time high today...

LawsofPhysics's picture

Apparently, the middle class is more familiar with Otto Von Bismark than originally thought.

chet's picture

I don't refute the basic premise here. 

But how is the "head of a household of four earning minimum wage" sitting around doing nothing?  He's working some (likely thankless) minimum wage job to support his family. 

Be careful not to denigrate the working poor while attacking the welfare state.  They are two different things.

MeBizarro's picture

Neither party really gives 2 $hits about the working poor.  Only thing that has really been done for them to help them out in the past 15 years is the EIC credit (which I would like to see expanded & offset with welfare benefit) reductions to encourage people to work) and Obamacare (which was plenty of flaws and warts but is still better than no coverage). 

blunderdog's picture

Well-spotted.  The original article was bullshit, too.

"Disposable income" had a different meaning in this context.  It didn't actually refer to INCOME--it was a hedonic calculation which attributed a theoretical income level to people so blessed to live "for free" in housing projects and get food "for free" from SNAP.

Folks who haven't been around the poor have an incredibly unrealistic set of beliefs about how great it is.

BLOTTO's picture

They say moderation is the key to life...yeah - except 'work.' Then 'moderation' gets thrown out the fuckin window.

...

And im not lazy - ive been employed since 14 and im currently 38..during that time ive never been unemployed and never been off work longer then 1 month.

.

Work - Monday to Friday...off Saturday and Sunday. Just how the education system set us up for...scheduled slavery with breaks and lunches.

...

How is the moderation working out? Damn calendar/time/space ruling us yet again courtesy of our global occult elitists.

 

Panafrican Funktron Robot's picture

Personally, I just adjust my effort level to meet my level of compensation in real (vs. nominal) terms.  I have similarly attended work from the time I was 15 to my current ripe old age of 34 (I was one of those weird fuckers that actually worked his way through school, graduating with no debt), and I spent much of my 20's getting burned out working 70-80 hours a week.  That turned out to be a pretty fucking stupid life path.  So, now I work at a nameless/faceless desk job, doing, as one fellow in the film The Office put it, "just enough not to get fired".  Fuck effort.  There are better places to spend one's energy, like relaxing, spending time with wife/kids, learning skills that are actually useful in this strange space called "free time".  

catacl1sm's picture

You're referring to "Office Space", the inspiration of our generation.

EscapingProgress's picture

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years." - Alexander Tytler

NotApplicable's picture

"Every election is a sort of advance auction sale of stolen goods." -- H. L. Mencken

Insideher Trading's picture

Free market capitalists hear the words welfare and altruism and automatically negative connotations arise.

The leftists in this country love welfare of all kinds for everyone. This is exactly what they want because if they can control how much carbon you use, what kind of car you drive, what goes into your body, etc, than they have complete control over you. They don't care if they're starving in some urban project, as long as you maintain control of the masses, you maintain power.

This welfare mentality is not by accident, it is by design.

LawsofPhysics's picture

correct.  It is and has always been about power and control, period.  Money is indeed an illusion.

Insideher Trading's picture

Don't forget...

Nancy Pelosi said the best way to stimulate the economy is with welfare.

As insidious as it is the government is now starting to censor the internet.

It started with online poker sites, than intrade got whacked...to boot they are spying on all of your digital communications.

These are mainly leftist ideological laws/actions.

LawsofPhysics's picture

still very tied to the earth, Nature, and the laws of physics in my current profession.  Have faith, that which cannot be sustained, won't be.  Hedge accordingly (it's all you can do anyway).

Henry Hub's picture

***government is now starting to censor the internet...These are mainly leftist ideological laws/actions***

Censoring the Internet is a function the totalitarian police state being created by the oligarchs that own and control this country. Leftist ideology has nothing to do with it.

Toolshed's picture

Yeah, it's all the Left's fault. The geniuses on the Right never make mistakes or implement self serving policies. You, and everyone that thinks like you, are a dream come true for TPTB. Good job!

NotApplicable's picture

I downvoted you both for playing the divide and conquer game of lefty vs. righty.

Shame on you, supporting evil like that!

And for what?

DUH!!!!!

dogbreath's picture

democrat  =  free goodies for the lower class courtesyof the middle class

republican  =  free shit for the upper classes courtesyof the middle class

 

tell me again who is right wing

Republicae's picture

It appears, more and more, that you are correct. In the eyes of government bureaucracy, the ideal would be to remove all determination from the individual to make choices in his consumption of goods and services, in his ability to think for himself, to have a type of censorship that only allows for the individual to think that which is generally acceptable to the whole of society, of course, what is acceptable to the whole of society has been engineered through decades of gradual compulsory regiments, each building one upon the other, all with the goal of a collective conformity of purpose. We talk about the dumbing down of the American public, but we fail to understand that has simply been one of the methodical processes of control that the government bureaucracy has implemented in its quest for placating and thus dominating the independent spirit of the individual. This government has evolved into what other governments throughout history evolved into, that being a Paternal Organization set to develop the public opinion with a defined belief system, one that is ultimately compliant with and supportive of government without the necessity to question its directives.

 

It is therefore, essential that any hint of free market decision-making be eliminated, for once a person cannot longer determine his own choice in consumption, then the individual becomes essentially a ward of the State. Likewise, the assault on the idea that there is a Right to Private Property is an equally essential component of the overall directive of control. When the government can issue money substitutes that cannot, by definition, be considered the actual real property of the bearer, then the remaining directives become easier to establish. Government intervention and thus interference in economics is the main avenue utilized by government to implement its controls over the population. What has happened and is happening is nothing short of a longer version of a communist revolution; instead of a radical violent revolution, the same effects can be achieved through a gradual introduction of what amounts to communism through incremental government directives, regulations, prohibitions and induction training in public opinion, i.e. “political correctness”.

 

Never assume that there is not a political and social purpose behind the governments programs, which directly interfere with market forces, whether it is through regulation, monetary creation or manipulation, all are methodologies toward the goal of ultimate control over an increasingly compliant population. It is evident that through such interference into the markets, businesses and entrepreneurs are systematically forced to actually change the way they do business from market induction to government bureaucratic dictates. Business must take its signals from a distorted view of the market, one that is regulated and controlled instead of proper market signals. Instead of obeying market directives, which actually generate a market result, businesses must obey a plethora of government regulations that are so immense that even the regulators cannot adequately discharge their regulatory duties and can rarely properly interpret the very regulations they are responsible to enforce. Far from being a negative for government regulators, such vagueness is necessary for it provides government with a broadness of implementation and an “out” when such policies are questioned.

 

Such bureaucratic systems are always subject to corruption, this is true anytime actual market forces are interfered with and controlled. Under normal free market conditions, fraud is short-lived due to the fact that there are signals given that alert the consumer early of the possibility of corruption. Under a system where government intervenes and interferes with market processes, fraud becomes easily hidden since the market signaling process is distorted through government intervention and the regulatory processes employed. It is also essential to understand that any system that employs force to achieve a goal will always create an atmosphere where few will profit from many and income distribution is always stratified through such systems of bureaucratic controls and intervention. Government patronages become common place as those with political connections benefit the most.

 

Opportunities become very limited due to regulated competition that favors certain politically connected corporations, entrepreneurship becomes increasingly difficult to compete in business where regulation is based upon government patronage to the virtual exclusion of those that might build a better mouse trap but are limited in the opportunity to do so because the established mice trap company is protected by official regulatory walls. There can be no possible way to insure an equitable field of opportunity under such systems, as a rule there are those few therefore, who will prosper at the expense of the majority of individuals. As we have seen, risk becomes socialized while profits remain privatized which, is a complete distortion of market principles where risk and profits are always a private combination of business.

 

It can be observed therefore, that there is simply no possible method by which the bureaucratic regime can exert such power with any degree of fairness or equitable distribution of opportunity. There is the assumption, by those in government, that it is within the power of government to implement changes in the market that will actually produce equitable results, thus the exercise such power under that assumption, but reality points to a very different set of results. Government intervention into the markets is based on certain assumptions. Most bureaucrats tend to view the public with a condescending eye, one that sees the public as needing direction and guardianship. Thus, government becomes the social worker and policeman of the population. It is this attitude that permeates bureaucracy and provides the excuse for more and more intervention into individual lives, organizing the individuals through classifications and groupings, stratifying the population into distinct and separate classes all for the purpose of social control.

ElvisDog's picture

Okay, hands up, who actually read the 1000 word post written above? Seriously, dude, if you can't make your point in 50 words or less don't bother.

Republicae's picture

Dude....then why on earth did you read it? It was, after all, your option. Seriously, dude...why did you bother? The assumption therefore, is that because the original article was so extensive that you also decided not to read it...are you so slothful, really? Hilarious!

Almost Solvent's picture

Everything today has to be "twitterized" so that any thought or writing is 140 characters or less.

 

Critical thinking and writing is not helpful to the status quo . . .

Republicae's picture

That is, unfortunately, the truth of the times...

ElvisDog's picture

I read the first paragraph and gave up. Long and bloviating does not equal meangingful and well-written. Effective communication is concise, readable, and to the point. Honestly, I had no idea what your point was and wasn't going to waste my time with the other 75% of it.

Panafrican Funktron Robot's picture

Having taken the time to read the whole post, I can attest to a feeling of regret at time wasted.  Really, saying "government is bad" would have been about as illuminating.  

Uncle Remus's picture

"Effective communication is concise, readable, and to the point."

I see short is not on that list.

Republicae's picture

Obviously...but not unexpected.

darteaus's picture

A politician only collects money for something.  They only have welfare - corporate and public - to sell.

buzzsaw99's picture

Everyone should just rob pension funds like the maggots do. Trying to set one class of poor against the other is a divide and conquer strategy devised by the corzine kleptocrats of the world.

centerline's picture

Too late.  Those cookie jars are stuffed full of IOUs and other assorted love notes.

eaglerock's picture

Sickening.  One other chart I would like to see is what is the payout per child, and is it an economic benefit to have more children when on welfare.