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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CaptainObvious's picture

Old folks don't need 90% of the pills they're scarfing.  I say, scale Part D back and let these folks stop supporting Big Pharma.

Cathartes Aura's picture

.gov uses medicare to funnel profits to Big Pharma - just like "welfare" is funneled to folks via plastic bankcards that award profits for the pixel creators, and prop up the Section 8 land-Lords, supermarkets, gas stations, etc. etc.

while I'd love to end folks dependency on Pharma, the cycle guarantees that anyhow. . .

Dr. Engali's picture

Why in the hell does anybody have incentive to work? You have parasites from all sides who produce nothing yet continue to suck the life blood out of the middle class. If it's not the war mongering government, it's the good for nothing bankers, and if it's not them it's the people that the system  encourages to take advantadge of it. When trillions are passed out to the bankers and the war machine I don't blame people for grabbing a few thousand bucks.

Kastorsky's picture

yea, the middle class is raped!

All the real estate agents, lawers, car salesman, paper pushers, insurance agents, cops, fbi, government bureaucrats - the productive bone of society!

adr's picture

Oh I blame the people for taking a few thousand bucks.

It's either available for everyone or available for none. That is the only fair system.

I make $60k, have a wife and a kid, didn't buy an extravagant home, have two years of cash, and only use a credit card when I can get same as cash. Yet I have less left out of my paycheck every month than the couple living next to me with six kids because the couple isn't married and the girl gets just about every welfare program known to man. I have my thermostat on 68, they have it at 75 because they get HEAP.

I guess that is why my wife says I'm always angry. I told her we could get divorced and she could quit her job. It would save me $400 a month in health insurance and she could get SNAP, HEAP, an Obamaphone saving me another $80, use her legal blindness to get on disability. Then I could get my Audi S4 and put a 1000sq ft addition on the house and have money left over every month.

Fuck all moochers from the ghetto to 5th Ave.


blunderdog's picture

If you choose to make it so much tougher on yourself, why are you complaining about it? 

Doesn't the "good feeling" that comes from being so superior make up for all your minor financial hardships?

Golden_Rule's picture

"It's either available for everyone or available for none. That is the only fair system."


That is exactly how it is.  If you lost your job tomorrow you'd qualify for the same bennies as your neighbor does.

spooz's picture

Does that $60,000 a year person get employer provided healthcare?  If so, add in an extra $12,000 to their disposable income, since you added in the Medicaid (which will not be available to millions of poor people because of state's not participating in Obamacare Medicaid expansions) for the lower income folks.

Also, states are cutting back on Childcare subsidies, so low income families can't count on that. And Section 8 housing has long wait lists in many areas. Only about 30% of eligible families get this stuff.

Finally, what do you mean by this statement? 

"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"

People working minimum wage jobs are not sitting around doing nothing. And for those who are unemployed, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires:

  • Ending welfare as an entitlement program
  • Requiring recipients to begin working after two years of receiving benefits;
  • Placing a lifetime limit of five years on benefits paid by federal funds;
  • Aiming to encourage two-parent families and discouraging out-of-wedlock births.
  • Enhancing enforcement of child support. (wiki)



prains's picture

the strategy is to take the heat off the real theft going on and point it to those easist to blame. Divide and Conquer 101 by the 1%

dexter_morgan's picture

Are you new to this site? They quite frequently cover that type of theft (Jon Corzine ring a bell, Wall Street Banksters, as an small example) but we also realize the theft is not limited to the 'capitalists' or whatever you want to call them, but they are just a part is part of the crony capitalist/government incestuous thivery ring criminal environment and both parties to it are equally guilty of the theft.

waterhorse's picture

When I read the fine print "AEI" at the bottom of the report, I rolled my eyes and knew instantly it would be some sort of diversionary propaganda. 

dexter_morgan's picture


What fucking planet are you from? Oh, must be talking about public sector (ala  public unions, gubmit jobs) but I pay well over 85% of that $12K in my private sector job for my health care. 

Now my daughter, a research assistant on the Minnesota nipple, has a part time research job, pays $90/year for heathcare and gets 100% coverage....nice deal for her, not so great for Minnesota taxpayers I spose.


spooz's picture

It seems you are the one that must be from another planet.  BLS shows employee share averages about 29%. And since total family premiums average $15,745, that means add in a $11,178 subsidy, on average.


CaptainObvious's picture

How have you been a member of this blog for as long as you have been and still not know that any number the BLS puts out is the paper equivalent of unicorn shitting Skittles?  Quote some real numbers if you want to make a point.

spooz's picture

I agree BLS unemployment numbers look sketchy, but why would they fudge the numbers they get on employer provided healthcare?  No political gain to be had there.

dexter_morgan's picture

And you believe that shit? Every private sector worker I know is paying AT LEAST 50% of their healthcare cost, most much closer to 75%. Maybe we are just chumps.

It's none of my business, but I'd be curious to know what type of work you do as that may help explain some of the differeing POV's you have?

If you don't want to share that is understandable, but thought it may help in understanding.

darteaus's picture

Thanks for the link!  One little note you left out:

"In July 2012, the Department of Health and Human Services released a memo notifying states that they are able to apply for a waiver for the work requirements of the TANF program, but only if states were also able to find credible ways to increase employment by 20%.[11] The waiver would allow states to provide assistance without having to enforce the work component of the program...[12]

spooz's picture

Per Factcheck.org:

"Is Obama “dropping work requirements,” as Romney’s ad claims? No. He is allowing states to change the work requirements, but he is not dropping them. The changes could be made to a variety of federal requirements, including “definitions of work activities and engagement, specified limitations, verification procedures, and the calculation of participation rates.”

A lot will depend on what a state proposes and how it is implemented. There is nothing inherent in the waivers that guts work requirements."



darteaus's picture

"There is nothing inherent in the waivers that guts work requirements."


uno's picture

I always thought it was around 40-50k tradeoff, taking into consideration FICA, clothing expenses, car expenses, daycare, lunch etc. and then putting up with traffic, bosses, stress, late hours.

boogiedown's picture

Tell us, O Tyler, who exactly is making $60k /yr??? I would really like to know who in your magic chart is making that kind of money -- hardly anyone in my circle! As you are so fond of pointing out, the masses are working 2 part-time service jobs!

You rant on and on about US debt levels, but yet fail to mention that people's so-called "disposable income" is going STRAIGHT to pay off student loans, credit cards, and car loans. Why don't you talk about the TINY print on the bottom of that chart which defines "disposable income" and add the context of UNPRECEDENTED HOUSEHOLD DEBT to the conversation? (And please explain how RENT/HOUSING is factored into that calculation??)

"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." "

So we are ALL prostitutes  and would sell out our dignity/reputation divest all personal responsibility for an extra $342. Guess welfare whores shouldn't be such a "sensitive topic" or all that much of a "tradgedy" or "painful reality" then, huh -- in that clinical, soulless quantification,   it's just a form of barter.

minus 60k cool points for not caring that poor people have brains and read zerohedge and -- shock --don't enjoy being bent over a table for blog hits

Peterus's picture

I've read this twice and can't see anything relevant to the article. What difference does it make what you earn, or any other person? System still works like this, promoting low incomes to the point where at a few places it is in fact better to say no to a raise. Entire comment was about "how hard it is" like socialism would be implied answer to "it being hard"?

boogiedown's picture

i think that suggesting people are willing to sell their dignity for $340 is the most relevant part. the implication appears to be that poor people have less attachment to their dignity

 the rest is just context I wish the tylers would have provided, like they do in other articles about earning (usually regarding inflation/lack of purchasing power/Black Friday shoppers, etc)   They usually discuss the heavily indebted American with almost a gleeful enthusiasm, but not a peep of it here

boogiedown's picture

sheesh people, i didn't say being bent over a table was unenjoyable, just not for blog hits!

catacl1sm's picture

I read "American Enterprise Institute" and realized that it's just another divide and conquer paper.

darteaus's picture

Yup; no need to actually read or think about any content.

darteaus's picture

This has failed in America before.  When the Pilgrims landed, they tried socialism/communism.  Roughly half died the first year.

Second year: if you grew it, then you owned it.  Thanksgiving was the result.

"So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length, after much debate of things, the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before. And so assigned to every family a parcel of land, according to the proportion of their number, for that end, only for present use (but made no division for inheritance) and ranged all boys and youth under some family. This had very good success, for it made all hands very industrious."

Cathartes Aura's picture


so assigned to every family a parcel of land, according to the proportion of their number, for that end,

ahhh, land - freely assigned, once confiscated from others.

and then there was wealth. . .

darteaus's picture

And the others came into posession how?  Did they just show up, start hunting and never fight over territory?

Description of how the Powhatan Indians treated others:  "Scalping and slow death by torture were reserved for enemies and trespassers."

Cathartes Aura's picture

obviously there were hundreds of tribes, and territorial fighting.

however, there was also a completely different mind-set too,

The President in Washington sends word that he wishes to buy our land. But how can you buy or sell the sky? the land? The idea is strange to us. If we do not own the freshness of the air and the sparkle of the water, how can you buy them?  

Will you teach your children what we have taught our children? That the earth is our mother? What befalls the earth befalls all the sons of the earth.


This we know: the earth does not belong to man, man belongs to the earth. All things are connected like the blood that unites us all. Man did not weave the web of life, he is merely a strand in it. Whatever he does to the web, he does to himself.


so much myth, so little time. . .


Yen Cross's picture

 Democraps/Entitlement, campaign slogan for the "mid term elections" in 2014. "Take this job and shove it..."

mumbo_jumbo's picture

no offense to the hedge but this has been the reality for years. it's obvious to anyone that most companies don't pay more than welfare so what's the point of working?

spooz's picture

Duh. Because you can't GET welfare if you are able bodied and don't work?  Its been that way since 1996, but people are still misinformed about the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.

Oh, and if you are "lucky" enough to qualify for Medicaid, you will be stuck with substandard health care.  

dexter_morgan's picture

LOL....yeah, not hard to get around that.

spooz's picture

No getting around the substandard health care and housing (if you win the lottery/make it to the top of the list), but please expound on how you get around the workfare requirments.  Maybe you should add to the wiki, since there is no discussion of it there:

"The TANF program does not offer benefits sufficient to lift recipients out of poverty, and despite a strong economy, the majority of families who have moved off the TANF rolls have remained in poverty. Considerations of another traditional economic goal, reduction of inequality, only makes matters worse. Welfare reform has coincided with massive growth in income and wealth disparities; it has done little to slow the expansion of inequality and may have actually accelerated the trend. Has welfare reform created job opportunities for the poor? Has it promoted wages that allow low-wage workers to escape poverty? In both of these areas, the economic story remains the same: we have little evidence that reform has produced achievements that warrant the label of success." 



CaptainObvious's picture

Ahh, but soon, we will ALL have substandard health care.


Kobe Beef's picture

"You didn't [get around] that. Somebody else did that for you."


boogiedown's picture

Yes, "workfare" made it a bit harder for leeches to game the system (many still find ways around it). But of course the stereotypes persist. Most of these commenters seem be just talking out of their asses -- they do not know anyone actually on welfare


They will argue all day that the corporate welfare by the rich is hurting the middle class, govt welfare to the poor is hurting the middle class, the "I pay my taxes and everyone else is getting off scott-free" class wafare mentality. But the concept of working poor in the US escapes them -- their idea of tragedy is working hard, paying taxes and then not being able to afford something on amazon or to upgrade the car. They cannot grasp the idea of people who work for $8.50/hr, cannot afford lunch, and go home to sleep in their car.

lead salad's picture

He must have been neck deep in the One's ass to have heard about this.....

spooz's picture

If the "One" is the head of the D half of the duopoly, you are sadly misinformed.  If I saw anybody pumping him on here, I would bust that propaganda just as quickly. Here is the something I have read about O and the Ds that I agree with, written by Chris Hedges:

"The presidential election exposed the liberal class as a corpse. It fights for nothing. It stands for nothing. It is a useless appendage to the corporate state. It exists not to make possible incremental or piecemeal reform, as it originally did in a functional capitalist democracy; instead it has devolved into an instrument of personal vanity, burnishing the hollow morality of its adherents. Liberals, by voting for Barack Obama, betrayed the core values they use to define themselves—the rule of law, the safeguarding of civil liberties, the protection of unions, the preservation of social welfare programs, environmental accords, financial regulation, a defiance of unjust war and torture, and the abolition of drone wars. The liberal class clung desperately during the long nightmare of this political campaign to one or two issues, such as protecting a woman’s right to choose and gender equality, to justify its complicity in a monstrous evil. This moral fragmentation—using an isolated act of justice to define one’s self while ignoring the vast corporate assault on the nation and the ecosystem along with the pre-emptive violence of the imperial state—is moral and political capitulation. It fails to confront the evil we have become."



spooz's picture

Heritage Foundation is biased.  Read what nonpartisan Factcheck.org says about it.  Funny thing how Heritage Foundation decided that states rights weren't so important when the Ds support them.


Dr. Engali's picture

Bullshit...I know a lot of people who get around that. Then they work for cash under the table to boot.

dexter_morgan's picture

ah give spooz a break, either a troll or some kid just out of public university that doesn't know how easily the system is scammed. One person I know, schoolteacher, kept complaining of a sore shoulder and finally got a doctor to write her up for SSD. So, her shoulder is good enough to take that disability money and enrich the native Americans at their casino's. Shoulder doesn't bother her then.

spooz's picture

I consider myself a propaganda specialist.  I see it, I call it.  Doesn't matter if its D or R, if that's where you're coming from.  Its all the same.

Dr. Engali's picture

A very close relative with 5 kids makes a comfortable living working for cash under the table, in top of that she collects disability at the ripe old age of 40. They are now talking about getting a divorce so they can increase their benefits. I'll bet you I can name a dozen similar stories.

spooz's picture

Disability fraud is a state problem that needs better enforcement.  Doesn't indict the entire safety net, though.

Dr. Engali's picture

There is a difference between a safety net and a way of life which you seem to be advocating.

Colonial Intent's picture

Trust me, those of us who see it as a safety net get pissed at the corruption too.

cartonero's picture

That "close relative" wouldn't be your wife, would she?  What's keeping you from turning her in?