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On Labor Day 2013, Welfare Pays More Than Minimum-Wage Work In 35 States
The thesis of the paper is that welfare is a disincentive to work at low paying (min wage) jobs.
Isn't there an argument go that, well, most of the people on min wage are teenagers or people just starting out (who will move off min wage soon)? If that's the case, then there doesn't seem to be much point in comparing welfare with min wage.
(I'm not endorsing the argument, just suggesting that one sees this one and the paper's in tandem. Even the paper refers to min wage jobs as "entry-level". Let's see where that leads us.)
The former group (people taking min wage jobs for pocket money) aren't your typical welfare recipients - they'd likely be getting a lot less than average from welfare and thus even min wage jobs would look good to them in comparison. The latter group is supposedly expecting higher than min wage jobs in the forseeable future, so again wouldn't be inclined to take welfare over work.
So it seems that there really are lots of people who are stuck in min or near min wage jobs for years, or welfare isn't a disincentive to work. Or both.
As to the validity of the paper's figures, the authors conveniently neglect the fact that min wage pays so little that lots of people receiving min wage (especially those stuck in min wage careers) also receive welfare benefits in addition to their wages. This is also in addition to the earned income tax credits (the only employee welfare they do incorporate).
So they undermine their own thesis - to be a disincentive, the total welfare package would have to exceed the total work/welfare package. Is it better (on a strictly dollars and cents basis - this is Cato, after all) to take welfare or to work? They take all the benefits of welfare and not working, but they explicitly exclude welfare benefits (like food stamps) that the working poor receive.
This study does not examine whether it is better to both work and receive welfare; however, theory indicates that would almost certainly be the case at any income level. Rather, this study simply asks whether an individual would be better off if he or she were self-supporting through work or dependent on the state through welfare.
Directly addressing Mark's question - what this says is that min wage, even after tax credits, is so low that people still need welfare. There's something wrong with this picture.
Problem is not that welfare is bigger than minimum wage. The problem is that minimum wage itself is awfully inadequate. People on minimum wage might be collecting also Welfare to survive.
Another well-constructed and tightly reasoned argument, Maurice, as we've come to expect. You seem incapable of much other than snide remarks when anyone dares to mention a subject (doesn't take a stance, mind you- merely dares to mention a subject) on your right-wing agenda. What a wonderfully open mind- as long as everyone agrees exactly with the world as you (guided, of course, by Fox "News" and ol' Rush) happen to see it.
Well, no denying that's a lot easier than dealing with reality, which frequently tends to include messy facts and such. And for the record, Maurice, I believe only in "facts" as the dictionary defines the word- noun: a thing that is indisputably the case. No such thing as a "true fact", conveniently implying that maybe there is some sort of "untrue fact".
Comments
Isn't there an argument go that, well, most of the people on min wage are teenagers or people just starting out (who will move off min wage soon)? If that's the case, then there doesn't seem to be much point in comparing welfare with min wage.
(I'm not endorsing the argument, just suggesting that one sees this one and the paper's in tandem. Even the paper refers to min wage jobs as "entry-level". Let's see where that leads us.)
The former group (people taking min wage jobs for pocket money) aren't your typical welfare recipients - they'd likely be getting a lot less than average from welfare and thus even min wage jobs would look good to them in comparison. The latter group is supposedly expecting higher than min wage jobs in the forseeable future, so again wouldn't be inclined to take welfare over work.
So it seems that there really are lots of people who are stuck in min or near min wage jobs for years, or welfare isn't a disincentive to work. Or both.
As to the validity of the paper's figures, the authors conveniently neglect the fact that min wage pays so little that lots of people receiving min wage (especially those stuck in min wage careers) also receive welfare benefits in addition to their wages. This is also in addition to the earned income tax credits (the only employee welfare they do incorporate).
So they undermine their own thesis - to be a disincentive, the total welfare package would have to exceed the total work/welfare package. Is it better (on a strictly dollars and cents basis - this is Cato, after all) to take welfare or to work? They take all the benefits of welfare and not working, but they explicitly exclude welfare benefits (like food stamps) that the working poor receive.
See p. 35 of the paper:
Since you pulled an article from Forbes, let me offer another column from there:
http://www.forbes.com/sites/janetnovack/2013/07/23/mcdonalds-minimum-wage-budget-ignores-tax-credits-food-stamps-and-reality/.
Just in case you really had any doubts about how business views their employees.
http://www.marketwatch.com/story/no-the-safety-net-doesnt-cause-unemployment-2013-08-30
Well, no denying that's a lot easier than dealing with reality, which frequently tends to include messy facts and such. And for the record, Maurice, I believe only in "facts" as the dictionary defines the word- noun: a thing that is indisputably the case. No such thing as a "true fact", conveniently implying that maybe there is some sort of "untrue fact".