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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Dr. Engali's picture

No...... We work for a living.,,.. both of us, but don't worry we will succeed pulling the government, bankers, and welfare queens along with us.

Cathartes Aura's picture

your "close relative" with 5 kids AND a marriage partner getting scant mention, you should turn 'em in, may be a reward for it?

could even get her picture up here on the ZH blog - see something, say something!!

Dr. Engali's picture

Sorry I'm not going to be the uncle who got mommy and daddy arrested for fraud. It's not the kids fault their parents are taking advantage of the system. Besides I'll leave the see something say something for the nazi goons.

Cathartes Aura's picture

was merely pointing out the relative you wrote of working under the table, with 5 kids, and benefits ALSO had a partner that was barely mentioned in your post, which kinda channeled the outrage onto. . . her.

it's a popular tactic when arguing here. . . was just balancing the example by bringing in the "other freeloader" for a more complete illustration.

but yeah, "nazi goons" - I'd agree with that.

boogiedown's picture

yeah, working under the table for cash -- not such a brilliant scam to collect $$$ without working if you are actually WORKING

baldski's picture

Anything put out by the American Enterprise Institute is funded by the oligarchs and is usually full of right wingnuttery. I do not trust anything from these havens of rightwingworld, heritage foundation, AEI, Cato, etc. 

Read Supreme court justice Powell's letter to the Republican party. He started all these think tanks off.

catacl1sm's picture

I think you and I pissed off the same 4 neo-cons on this board by pointing that out.

Dawnofinsanity's picture

North American Scum... It used to be that Canada was the socialist red state above you guys.  We had fewer companies per capita and more people on social assistance per capita and far more people working in government.  With the shift away from manufacturing the US is forced to become more socialistic as many of these jobs are gone. We've seen entire neighborhoods abandoned in the US as people chase jobs across the country.  Throw in a sickness in there and it doesn't take much to land on social assistance.  At the same time people have become more lazy and less willing to do what it takes to work - the sense of entitlement that we've learned from a prior generation.  Our parents always wanted more for their kids and somehow that concept of work was lost. 

Meanwhile, Canada has had to become more inventive creating more jobs through entrepeneurship because we lost corporations long ago.  However, we have little manufacturing so we rely on resources.  When those are gone we will be lined up at the social welfare trough .   

The problem continues to be that if you add all of the government workers to the people collecting off the system so it is far closer to 1 to 1.  Factor the cost of implementing programs as a cost and the pensions given to public service workers that the private sector has been stripped of and the ratio is even worse.  Hence we need the continued printing of the monthly trillion or whatever that number needs to be for November.  Likewise, in Canada we still aren't far off and we continue to print. 

Cathartes Aura's picture


if you add all of the government workers to the people collecting off the system so it is far closer to 1 to 1.

not often mentioned, the decreasing ratio between those on benefits, and those monitoring/awarding those same benefits - particularly since those who name things started calling their peeps "customers"

and as we all have heard, "the customer is always right" and "value-able" to the corporation. . .

dexter_morgan's picture

better title might have been "1.25 Sucka's per Suckee in U.S.'

denny69's picture

I just wish the AEI would do a paper on the F-35 fighter plane. The military wants 2200 of them and I just read that each plane costs $300 million and now that the Chinese have an aircraft carrier I can't imagine how much we'll throwing down the shitter for military junk that provides us absolutely nothing as far as jobs and infrastructure maintenance goes. I'll be waiting for the outrage; but I won't be holding my breath. I love AEI - always attack the most vulnerable and weakest members of society. Shame on them!

Peterus's picture

"always attack the most vulnerable"

Are these findings lies ? Is it an attack or is it description? Anyway, defending righteous and totaly justified spending on social (left) and on "defence" (right) led to a compromise, where now both social and military spending in USA is bloated to insane levels. After cutting budget to Pentagon, will it be a healthy situation to rob productive people and subsidize unproductive to the degree that's shown in these graphs?

yogibear's picture

The Chinese already have all the designs and avionics for the F-35 through loose defense contractors and political correctness. 

The Chinese can probably produce a plane for a fraction of the price.

Cathartes Aura's picture

whoa. . . are you implying that the "defense contractors" are padding their profits??

Lebensphilosoph's picture

That falls apart mid-flight.

toomanyfakeconservatives's picture

Not every welfare recipient is a lazy bum. I've known more than one who kept busy selling drugs, selling counterfeit goods, working in the sex trade, or committing property crimes instead of just sitting at home watching T.V. and collecting a check.

Bicycle Repairman's picture

So let's look at the picture for people getting welfare plus income from the underground economy.  It's a relatively bright picture in some respects.

spooz's picture

Right. They get maybe $200 a month in SNAP, substandard health care and a good chance at getting to get the real free ride as part of the prison population, if they live that long. 

Good times.

Bicycle Repairman's picture

Not everybody knows how to play the game, I'm sure.

They also get an Obama phone.  At least.

spooz's picture

So tire of hearing the "Obama phone" meme.  You could at least check Snopes before you repeat propaganda spewed by certain corporate media outlets:



Cathartes Aura's picture

couldn't agree more.

"obamaphone" is the new ZH "bitchez" -  gonna be a tough one to shake, election year bitterness is embedded. . .

Bicycle Repairman's picture

The Obamaphone is real.  I've seen the program.  I've seen the storefront where they are handed out.  I've seen an actual Obama phone.  I was aware of it a year before Rush Limbaugh.  It's a flat out give away.  I understand people have to eat, live somewhere that is heated and have medical attention.  They do not need a free phone and the service should be terminated immediately.

spooz's picture

The only free phones are those available from the FCC's Lifeline Assistance benefit.  Read up on why Reagan thought it was a good idea when he set the program up in the 1980s (ie, it is not Obama's program, douchebag):

"Owing to the fact that people generally need phones to apply for jobs and enroll their children in school, and elderly citizens need to be able to call their families and emergency services, the government decided in the '80s (under Ronald Reagan, no less) to institute the Lifeline Assistance program. In 1996, Bill Clinton signed the Telecommunications Act into law, which offered either cell phones or landline services to low-income Americans.

Today, 38 states, one of which is Ohio, participate in the Lifeline program. If you live in one of those locales and your income is at or below 135 percent of the poverty line, or if you qualify for certain benefit programs like Medicaid and TANF, you can apply for a free cell phone that offers you 250 minutes of talk time per month. The people who are getting these phones aren't getting iPhones or other smartphones; they're often people in urban or rural areas who are being supplied with basic cell phones so they can call the hospital when they're sick, or receive calls if there's a problem with their child at school."


Bicycle Repairman's picture

The program under Reagan was far more limited.  It applied to land lines only.  Clinton and Obama and the states have expanded it far beyond the original mandate.  Looking at the federal guidelines does NOT give the whole picture.  Depending on the state, the discount can be much larger. The "discount" can be applied to any kind of phone, including an I-phone. 

Just like Afghanistan is now Mr Obama's war, not Mr. Bush's war, this program is now Mr. Obama's program, thus "ObamaPhone".

Give them a roll of quarters every month and a map of pay phones.  That should keep them in touch.

Cathartes Aura's picture

maybe it applied to "land lines" because cell phones had yet to be mass produced for market.

particularly ones with embedded tracking.

Cathartes Aura's picture

wow, thanks for clearing that up for me - I was wondering where that got started, makes sense it's the RushL's verbiage.

now whenever I see anyone using that here, I'll just *nod* at yet another ditto-head meme repeater. . .

as to the phones, how on earth is .gov gonna trace these folks for future. . . *cough*

technicalanarchy's picture

So tired of people checking Snopes before searching on youtube http://www.youtube.com/watch?v=tpAOwJvTOio

Got my 85 year old mother-in-law has had one (obama phone) for several years for emergencies. To save money on her phone bill she has Comcast which lasts about 4 hours after a power outage. The cell phone was super crappy so I called and got her a new one. Guess what! The contract is with a company that has the call center off shore. I'm guessing India. The phone is made in China so really the net benefit to the US is someone gets airtime.

That's the way it is on everything the net benefit is outgoing all the fucking time. We are going to be begging Ethiopia for dirt by the time this is all over.

Recently got her a wheel chair she beyond qualifies for one from medicare, could have got one on Ebay THIS FUCKING chair!!! New: A brand-new, unused, unopened, undamaged item (including handmade items). See the seller's listing http://www.ebay.com/itm/18-Medline-K1-Lightweight-Folding-Manual-Wheelchair-/261133684970?pt=LH_DefaultDomain_0&hash=item3cccc7d0ea $123 free shipping. I thought about it and went with medicare and medicare pays $98 a month for the $123 Ebay chair (exact same), but it is rented through a LOCAL pharmacy, I do kinda feel we won on that one cause the money does stay local.

My daughter graduated from college a couple of years ago with a dual degree in wait for it..... anthropology and French. I warned her, but she had saved and worked and help here and there from us and family and some scholarships she got out debt free. Not even a car payment. Shes still driving the same car she had in high school dragging down a cool $11.53 an hour with no benefits as an assistant at a law firm. I warned her about her choice in degree but you gotta follow your heart right? She's gonna have to get a masters or a PHD to have any hope of making either degree pay anything more. I think with a masters in cultural anthropology she could get in the CIA.

spooz's picture

Right.  Youtube is such a reliable source. Right up there with Drudge and Rush Limbaugh, one of whom probably clued you in on the Youtube video in the first place.

If you don't believe Snopes (idiot), how about Forbes? Or do you only believe what you see on Youtube, shit for brains?

"The bottom line is that there is free phone assistance available to those who qualify but it is not an Obama administration program. Taxpayers do support the program but not through federal income taxes. And despite the screaming lady in the video, eligibility doesn’t hinge on Social Security, disability or food stamps; there’s no “buy one bag of chips, get an Obama phone free” promotion. Just because a woman holding a sign gets a microphone in her face doesn’t make her statements true."



technicalanarchy's picture

I was trying to be funny asshat. You're in a worse mood than even I am tonight. I have found that Snopes isn't always correct either, just to wreck what's left of your night. 

spooz's picture

Sorry. My bad. I wasn't looking for sarcasm, but see it now. 

No excuse, but I was too exhausted from responding to "Monedas" to appreciate it, and I wasn't expecting it.

Went back and took the time to really read your response, and I get it.  Its so hard to tell kids not to follow their dreams, to get pharmacy or engineering degree, when people with those degrees can't find entry level jobs either. With the high cost of education and the burden of student loans, it no longer pays to get an education for many people. But how can college educated parents advise their kids not to bother going to college, that working a waiter/waitress job with good tips may be a better idea? I have such a bleak outlook on the future, I wish I could see some hope.  But I gave up on hopey changy around the time Obamacare was passed.

Cathartes Aura's picture

hey guys, full moon tomorrow, the grouchiness always precedes. . .

the free phones are as you'd expect - crap monitoring devices for anyone not clued up enough to avoid 'em.  just like JPMorgan's SNAP cards record all your food purchases (demographics), and USBank's EBT card does the same for other .gov pixel awards - it's all fodder for the new jobs being created to observe your every breath - we'll all have multiple human drones to babysit us 24/7. . .

sarc?  mebbe not.

take it easy dudes, truly.

Lebensphilosoph's picture

 I think you missed the part where they don't have to spend their lives working. How much is that worht in dollars?

toomanyfakeconservatives's picture

I know of an old asian lady who collects welfare and gets free housing... her huge extended family is all collecting checks. As the matriarch of the family, she drives an new Cadillac and works diligently hawking counterfeit DVD's and purses at the local laundromats and pizza shops.

lakecity55's picture

Actually, a lot of the "welfare bums" are some of the best entrepreneurs around!

They drive better cars than me, eat better, and live in nicer homes.


Ribeye's picture

We're all Euro-weenies now, my American friends,

Welcome to hell!

Where are we all gonna escape to now?

earleflorida's picture

The 'Puerto Rican's' figured out the system... and how to use it  in the late 60's--- it all started in the greatest welfare state in the country... 'Massachusetts', and metastasized exponentially throughout the country! [next up n.y., n.j., all of n.e.,...westward-ho!]

'Knowing How to Work the System'

the free-government money flowed like a faucet into the politicians money-fountains... 

Monedas's picture

People who have to work in the private sector are the new niggers !  Flee or start a slave rebellion !  Don't pay your taxes ! Don't be a chump ! Tax Genocide is upon us !

Monedas's picture

Gaza is a 50% donor based economy !  Earleflorida, I'll bet Pwerto Reeko is much higher than 50% donor based ?  Haiti makes baseballs ! Yen, do you miss me yet ?

Shizzmoney's picture

We spend 90K+ hours at work in a lifetime............


yet, median incomes are down............


No wonder govt assistance is up.

And the thing is: some of you sheep on here keep flouting the whole "takers" line from good ole Faux News....where I'd BET, most of these recieptients on welfare, medicaid, disability, and other govt assistence actually are WORKING. 

And THAT is a bigger issue than a bunch of loafers on the lam cashing checks from Uncle Sam.

yogibear's picture

Politicians know it's a cheap way to buy votes.

With more and more people getting on the government tab it's a self-enforcing voter base. The FSA votes for those that offer more free stuff. 

EVentually everyone will be on the government payroll.

Presto-chango we have the Soviet Union. Socialism wins slowly.

Beating down capitalism one public union party-member at a time.

So when does the US celebrate May Day? Obama on the podium reviewing all the union party members marching?

Waterfallsparkles's picture

Maybe they should take the children of the Welfare Moms and place them with families that can take care of them without the Government support.  That way it would not be an incentive to have children you cannot afford.  It would also be an incentive for the Women to work for a living for survival.

yogibear's picture

Put them into day care where the young are trained to be socialist.  Just like the old communist day care.

Start young when molding socialist.

Monedas's picture

Niggers have never been niggers .... even when they were slaves .... the white boss provided everything for them, the livestock and the crops .... they have atrophied under welfare .... but the working poor have fared much worse !

jomama's picture

who pissed in your cheerios this morning?