Tuesday, December 31, 2013

Perspectives On Welfare

I think we'd all agree that Debra is in a rotten, uncalled-for situation; we just might disagree as to the cause of it.

Slate Magazine correspondent Katy Waldman interviewed Debra from D.C. to find out how she would cope with the recent cuts to the food stamps program — cuts that reduced Debra's intake from $203 to $135 a month. Debra said that her and her daughter's already-meager diet would be "much worse" with the cuts. The interview, titled "Meat is the First Thing to Go: What it's like to have your food stamps cut", is presented in such as a way as to blame the "largest cuts in the history of our country's food stamps program" for Debra's ongoing hardship. I contend that the root of the problem is the fact that such programs penalize finding a job.

Debra, a single mother and disabled veteran, is currently unemployed and receiving food stamps, rental assistance, Social Security, and VA compensation. She uses these benefits to provide not only for herself but also for her 21-year-old daughter, who is also unemployed.

When Debra was asked point-blank whether she has considered getting a job, her answer was clear-cut and very revealing: "Yes, I've thought about it... But my food stamps, rent, VA compensation, and social security would be affected. I'd have to make a lot of money to overcome all the reductions, something like $15 to $20 an hour." In other words, Debra has done the math and determined that if she were to take a full-time job that pays anywhere up to $15 an hour, she would lose more in benefits than she would gain in compensation. So she'd make more money by not working than she would by working even for $15 an hour, or around $30,000 a year. This means that if Debra were to take just about any of the jobs that she's currently qualified for, she'd have to get by on even less than she makes now!

Debra's 21-year-old daughter faces similar incentives. According to Debra, her daughter "wants to help and get a job, but it's a catch-22. I'm on rent assistance, and if she gets a job, my rent goes up and my food stamp money goes down." Pointing out that her daughter "can't apply for her own benefits until she's 22" seems to suggest that applying for benefits is her very plan — and can you blame her?

Our country's food stamps program is called the Supplemental Nutrition Assistance Program, or SNAP. This program, which by its name seems to have been intended merely to assist people by supplementing their incomes, is in reality part of a collection of benefits that has become a way of life for Debra, her daughter, and many others.

People respond to incentives, especially to short-term ones. In a system of benefits where recipients are effectively punished for choosing to work, many will choose to remain unemployed. And that's why this system is perverse; the right financial decision for recipients in the short term deprives them of the work experience that would improve their prospects for the future.

Unemployed recipients, lacking the opportunities for advancement that come with being employed, are liable to feel stuck in a lifestyle of subsistence and dependence. When Debra was asked whether she sees a way out of her situation, she said, "I've been on food stamps for two years. It is really tight. And right now, no, I don't see a way out. Unless I get a job that really pays a lot of money, but that's what everyone is looking for. There's a way to do it but I don't know what it is."

Fortunately, there are ways to help those in need without counteracting their natural incentive to work. For one, benefits programs could be reconstituted: anyone who loses their job could be given a fixed amount of money, regardless of when, or if, they return to work; and able-bodied people could be required to work or participate in a job training program in order to receive food stamps. There's also private charity, which Debra and her daughter receive through their church, food banks, and Meals on Wheels. Debra herself is charitable, regularly volunteering to help the mentally ill. Americans are the most charitable people in the world.1 And because the amount of charity a person receives isn't based on whether he's employed, private charity doesn't discourage people from seeking a better way of life.

Any extension or expansion of benefits programs that penalize recipients for working will result in more and more people choosing to remain unemployed, leaving them less qualified for quality jobs and likely in need of additional assistance, and thus continuing the vicious cycle of dependence.

1. Charities Aid Foundation. "World Giving Index 2013: A global view of giving trends."