Category Archives: Welfare

Welfare Reform


I don’t mind the giving – heck, I give plenty on my own without the government getting involved.  And on *some* level, I don’t mind the government getting involved.  But what I DO mind is the breaking of the social contract all while being chastised for being greedy.

If you are truly down and out – a victim of circumstance – then by all means it is the mark of a civilized people to reach out and provide a hand out and a hand up.

But when you are simply living off the labor of another man for no other reason than because you can – the time has come to end it:

…during the recession, the food stamp work requirement for able-bodied adults without dependents was suspended as part of President Barack Obama’s 2009 stimulus package. (The work requirement limits able-bodied adults without dependents to three months of food stamp benefits in a 36-month period unless they work at least part time, participate in a work program, or do community service.)

Maine, one of the most proactive states in reinstating work requirements for food stamps, saw its caseload of able-bodied adults without dependents decrease by 80 percent within just a few months after re-establishing the work requirement.

Kansas has experienced similar results, seeing its caseload decline by 75 percent. Accompanying the decline in caseload has been an increase in employment and earnings for able-bodied adults without dependents.

The Foundation for Government Accountability identified that nearly 60 percent of Kansans who left the food stamp rolls following the establishment of food stamp work requirements found employment within 12 months and, “their incomes rose by an average of 127 percent per year.”

Indiana has experienced similar outcomes. Indiana reinstated work requirements in July 2015. Six months after reinstating these requirements, the state’s caseload of able-bodied adults without dependents decreased by 68 percent.

According to Indiana’s Family and Social Services Administration, “Nearly 5,000 Hoosiers who were receiving benefits in July are no longer receiving assistance because they obtained gainful employment and now have an income that exceeds eligibility standards.”

If you CAN work but don’t, and have no dependents living with you, the time has come to admit that you are simply taking free stuff – all the while, likely receiving wages under the table in the form of cash.

The Social Contract

Social Contract

Last week I posted on the concept of the Social Contract.  Specifically on the fact that a contracts binds folks into reciprocal obligations – a quid pro quo if you will.  But rare is the liberal democrat that will agree with this simple obvious fact.

At its very core, the concept of a give and take is the argument the democrat makes; from each according to his ability, to each according to his need.  The idea that someone sits idly by while the rest of society labor for his largess SHOULD offend the liberal.

Alas, any debate that suggests those receiving ought to contribute as they can is met with labels of ‘hate’ and ‘bigot’.

As it stands, the US government spends north of $1 trillion annual on means tested welfare.  That’s a number even the most ardent Bernie supporter would find unbelievable – a massive transfer of wealth from those that have to those that have not.  In fact, if Bernie had been asked what his goal in such transfer programs were back in the 60’s, he would have been happy enough with that number to retire and call it a success.

Back to the contract.  What if we limited compliance of that contract not to those in need, caring for others and perhaps unable to care for themselves.  What if instead we went after those with no dependents and were fully capable of fending for themselves?

Poster BoyNotice: The poster child of this movement is neither female, a minority or destitute

Well, Maine did it – and it worked:

In response to the growth in food stamp dependence, Maine’s governor, Paul LePage, recently established work requirements on recipients who are without dependents and able-bodied. In Maine, all able-bodied adults without dependents in the food stamp program are now required to take a job, participate in training, or perform community service.

Job openings for lower-skill workers are abundant in Maine, and for those ABAWD recipients who cannot find immediate employment, Maine offers both training and community service slots. But despite vigorous outreach efforts by the government to encourage participation, most childless adult recipients in Maine refused to participate in training or even to perform community service for six hours per week. When ABAWD recipients refused to participate, their food stamp benefits ceased.

In the first three months after Maine’s work policy went into effect, its caseload of able-bodied adults without dependents plummeted by 80 percent, falling from 13,332 recipients in Dec. 2014 to 2,678 in March 2015.

Now THAT is a win!

North Carolina Employment – The Obama Dilemma

Glass Half FullNorth Carolina Unemployment Falls

The big headlines here in North Carolina, at least if you’re a republican, is that the unemployment rate has fallen further and faster in North Carolina than anywhere else:

“Federal jobs data shows that North Carolina’s unemployment rate dropped further in one year than any other state in the nation,” Tillis said. “We will continue to implement policies that will enable our citizens to get back to work.”

By itself, the news is good news, heck, even GREAT news.  But it rarely is “by itself”:

Economists say the fast drop in the unemployment rate could be because so many people have become discouraged, are giving up on finding a job and are no longer being counted.

The state’s population of working-age adults who are looking for jobs shrank by 111,000 in 2013.

This is, of course, the same phenomenon that nation republicans use to knock Obama.  There the big story is that the national labor force participation rate has plummeted to lows that we haven’t seen in decades.

What Do The Numbers Mean

So, what does it mean?  Are the policies in North Carolina really working?

Well, first, the policies in North Carolina really describe the new laws regarding how benefits are paid out to unemployed workers here in the Old North State.  For example, North Carolina recently revamped the laws that allowed extended benefits to 99 weeks – we now only offer benefits extending up to 20 weeks – much less than the 99 weeks being suggested by the feds.

Now, in my mind, the unemployment insurance is meant as a bridge to sustain an individual during a reasonable job search.  And if that search hasn’t produced fruit after 20 weeks,  5 months, the job search needs to be reconsidered and adjusted.  But the program should come to an end.  The insurance was not created to sustain an out of work individual for perpetuity.

Now, if after the “job search” is over or run its course, that individual in still in need of assistance then other methods should be utilized.  And, in North Carolina, that is the case:

A different federal survey that interviews households instead of businesses found the size of North Carolina’s labor force shrunk by 111,000 in 2013.

Where did all those people go? Some died or retired, others left the state and still others may have found other means of financial support, such as a family member.

More people also sought welfare or disability benefits. The number of people using food stamps in North Carolina, for example,  surged by nearly 50,000 in October, according to the latest federal figures. The 3.2% spike was the biggest in the nation and was at least twice as large as the increase in every other state except for New Jersey.

So yeah, the unemployment picture isn’t all that the republicans would have us believe it; there are people out there that are struggling.  But, BUT, without the extended benefits under the federal version, at least the incentives are in the right place.

Food Stamps – Wrong Solution

Food Stamps

It’s a little old, but this story has been in my stack for a few days:

(MoneyWatch) It is late October, so Adrianne Flowers is out of money to buy food for her family. That is no surprise. Feeding five kids is expensive, and the roughly $600 in food stamps she gets from the federal government never lasts the whole month. “I’m barely making it,” said the 31-year-old Washington, D.C., resident and single mother.

When reading that story the more interesting question regarding social policy is not, “How do we feed this family?”  Rather, the more interesting question is, “How do we prevent such family structures from forming?”

I’m a married father of two living in a two person income household.  My wife and I are both professional managers in a Fortune 50 company.  When someone in my peer group reports that they have 4 kids, much less 5, my reaction is always, “Really?  FOUR kids?  How do you do it?”

A recent post discussing the subsidies of Yale educated professionals has generated a LOT of emotional responses.  However people feel about the fact that people receive benefits, no is disputing the fact that this couple is free to live the life they choose.  I would submit that Ms. Flowers fits that same case.  Namely, if you wanna have 5 kids feel free, however, if you find that you are unable to support those children, don’t look to society to support them for you.

No one is saying that Ms. Flowers isn’t at liberty to build her family as she sees fit.  I’m just saying that I should have the same liberty as it applies to my property.

Entitlement Programs

Julia Mom

Entitlement Programs

The welfare state is a divide between the Liberal and the Conservative.  In fact, it’s one of the main fault lines that defines the two ideologies.  Imagine what could be accomplished if the two sides would try and come together.

1.  It would take the right to acknowledge that there is a place for a safety net for the nation.

2.  It would take the left to treat the problem in the same way that organizations treat problems.

First, we have to admit and acknowledge that there are folks living around us who, through the normal vagrancies and winds of life, find themselves in need.  Little or no money, food is a struggle and a home safe from the elements is a luxury.  For the spiritual, our faith calls us to come to the aid and assistance.  For others, it isn’t a matter of faith, it’s simply the mark of a moral and caring human being.

Regardless of how you get to the conclusion, the reasonable individual wants to help those in need.

The Divergence.

There are three aspects of the programs that, in my mind, create and fuel the differences between the two sides.  They are:

  1. How do we measure
  2. Do they end
  3. Are they moral and consistent with the concept of Liberty

The first divide is crucial in my mind.  Given that we are all invested and wanna help, it now becomes important to identify strategies that work and separate them from the ones that don’t.  In my world, failing ideas are shut down and thrown away allowing the resources engaged in those activities to be re-purposed into the programs that DO work.

Too often in the public sector a certain dogma exists within the programs creating an element of “faith” that becomes personal and results in long time failing programs to continue.  And, perversely,  it is never admitted that the program isn’t working.  Rather, the argument is made that not enough money has been funneled to the failed attempt.  This creates the very undesirable effect of funneling more and more money to the absolute worst ideas.

The second difference between the right and the left is the concept that, while life does present difficulties in ratios that can be difficult to manage, at some point the individual must assume responsibility for himself.  That is, any program designed to provide a “hand-up” must, by definition, end.


And the program needs to be built with that in mind.  Not only in its funding structure but in its charter goal.  Consider unemployment.  I can buy the argument that we should provide benefits. [though I wash that unemployment insurance could be managed privately] But the program must have a defined end date after which the individual leaves the program and is allowed to manage his own life again.

This isn’t just from a funding perspective, as I mentioned, but as a design element.  As part of the unemployment program, we should ask ourselves when designing it, “what is going to happen to Pino when the time is up?  Will we have prepared him or life without benefits?”

If those questions aren’t answered and addressed, we’ve not helped the man but rather delayed the inevitable condition of permanent joblessness.

Last is the concept of morality or of Individual Liberty.

I love seeing those cute pictures on Facebook from my Liberal friends.  The ones where Jesus is commanding us to feed the poor and care for the sick.  The message, obviously, is that programs like food stamps and Obamacare are explicitly our obligation.

I’ve always thought them funny though.  Because while we are required, as decent caring  human beings, to care for others, the whole concept is that WE care for the less fortunate.  It was never assumed that I would take money from my neighbor to the West and give it to my needy neighbor to the East.

In other words, while government necessarily requires the concept of a tax, there comes a time when the confiscation of wealth for my own charities shifts from proper and necessary government to theft.  No one would think it moral if 3 people to vote to “tax” of their companion’s money.

I would leave you with this.  By failing to address issue 1 we are left with a system that cannot handle issue 2.  And now it becomes a horse race every election to draw the line in issue 3.  The result?


Julia’s Mother.  A citizen who comes to the very rational conclusion that the perverse system has created incentives that are not normal:

The U.S. welfare system sure creates some crazy disincentives to working your way up the ladder. Benefits stacked upon benefits can mean it is financially better, at least in the short term, to stay at a lower-paying jobs rather than taking a higher paying job and losing those benefits. This is called the “welfare cliff.”

Let’s take the example of a single mom with two kids, 1 and 4. She has a $29,000 a year job, putting the kids in daycare during the day while she works.

As the above chart  – via Gary Alexander, Pennsylvania’s secretary of Public Welfare — shows, the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income & benefits of $57,045.

Finland – Running Out Of Other People’s Money


Finland has run out of other people’s money.

Long held by the European-Socialists as a darling of how things work, Finland is finally succumbing to reality:

(Reuters) – Finland’s government announced a long-term plan to start scaling back its welfare system, one of the most generous in the world, aiming to preserve its triple-A credit rating in the face of a slower economy and aging population.

The inevitability of the reforms is such that surprise can only be allowed for those who are surprised.  With taxes rates that are nearly the highest in the world and benefits that are seen as some of the most generous, it’s no wonder that people feel little reason to work:

Finnish taxes are already among the highest in the world at 44.1 percent of GDP, meaning changes need to come from cutting benefits or encouraging people to work longer.

OECD data shows Finland’s average job participation rate, or the proportion of active workers to the total labor force, was 75 percent last year, lower than a range of 78 to 80 percent among Sweden, Denmark and Norway.

The government’s plan also includes cutting financial benefits for students to encourage them to look for work earlier.

It is also proposing changing childcare leave policies to encourage mothers to return to work sooner.

Under the existing system, parents of children under 3 can take paid leave beyond the initial, parental leave period of 9 months. The planned change would force parents to split the second leave period, drawing mothers back to work sooner but also encouraging more fathers to take leave.

It’ll be fun to watch Finland specifically and the Nordic states in general as they begin to fail under the weight of their systems.


Entitlement Programs

I’m gonna step in the mind of a bigger state thinker for a second.

In this mind, the goal is to identify all individuals and/or families that are in some sort of need.  This need could be based on a scale of sorts; usually income based.  That is, if income is too low, programs should be created or funded in order that some definition of “basic needs” is met.

These basic needs could be supplemented by straight cash, tax breaks, food programs, rent programs, energy programs or any other such program.

Okay, I may disagree with that mindset, but for now, that’s the mindset I’m in.  Now, given this reality, the goal, as a criteria for success, would be to make sure that all qualified individuals and/or families, would be identified and enrolled.  We don’t want a shadow population of folks who are in need of assistance or care, to exist.

In this aspect, I get that the bigger state thinker would want to expand the rolls of these programs.  I get that, right?

To the point that we want to include all qualified individuals in the program, I understand why someone would want to make sure the program “grew”.  I can even see the logic behind expanding the criteria of “need” to include an ever growing population.  What I am NOT sure about, and what I really truly guard against, is, “Do our goals change when all qualified individuals are enrolled?”

In other words, when all the poor and less fortunate have been enrolled in these programs, is there any effort to get them UNqualified?  For example, give them what ever it is that is needed to be able to create a level of income that allows them to leave the program.

To me, there are two kinds of charitable giving, two kinds of programs that can be set up.  One is where resources are gathered and distributed just to make the ends meet.  Food to feed the hungry, coats to warm the cold.  Stuff like that.  I think of that as “give a man a fish” kinda program.

Me?  I’m interested in the “teach a man to fish” kinda programs.  And I just don’t see the rigor, the discipline, the will or, frankly, even the desire on part of the policy makers to craft such steps into their programs.  I don’t see a willingness to exhibit the tough love that even parents engage in with their own children.  A love that says, hell-demands, that by paying your rent and your heat and your car payment, I am not helping you in life, I am, in fact, hurting you.

Liberals often claim that the right cares more about the unborn than about the orphan or the single mom or the poor.  There may be something to that, maybe.  But given that it’s the conservative that is more charitable than the liberal, I don’t buy it.  Rather, I see it that the programs favored by the conservative more resemble the “programs” that they teach and enforce upon their own children.  Namely sacrifice, hard work, goal deferral and plain old “do the job right”.

I just don’t get how feeding and housing a person for years and years helps them.

Am I wrong?

The Advantage Of Private Charity Over Goverment Programs

I have several problems with government provided programs.  One being that I’m not sure it’s the role of government to perform those services.  Not withstanding, I don’t feel that the public programs work overly well.  Or, perhaps better said, they don’t work as well as a similar program in private hands.

Consider an example:

Donnelly is the island’s state nurse and administrator of the Mary D Fund, a charity she created to provide year-round residents with much needed financial help during the harsh winter months. Last year, the 85-year-old mother of seven gave grants totaling $50,000 to roughly 30 percent of the island’s 1,000 residents.

The charity takes no government money, relying instead on individual donations and grants. By not taking taxpayer money or having government oversight, Donnelly says she is able to better manage where the money goes.

It’s not that I doubt the nobility of such government programs, although that might be easy to do in some cases, rather I doubt the incentives to care about where the money goes and how it gets there.

I especially like how Ms. Donnelly handles two issues that have frustrated me personally:

Recipients must meet three requirements: They must be year-round residents of Block Island, they must request the help in person or by letter, and they must give Donnelly the actual bill to pay. She also tells them “they have to take a money-management course” to help mininmize future financial squeezes.

1.  They must request help in person or by letter.

2.  They have to take a money-management course.

I really think that the idea of making the assistance people receive to be invisible is a wrong one.  I think that we would have fewer folks comfortable on government programs if they had to personally go to a meeting where the money was handed to them by a member of the community.

Second, I hate the aspect of the “fixing the result” aspect of government relief.   By the time someone has no food, generally the ability to help the individual has been largely missed.  I am convinced that successful programs are ones that resolve the reason someone has a need, not ones that simply provide the need.

Anyway, what a great story.

Unemployment Benefits: A Rational Course

I’ve long been an opponent of the unemployment policy usually advocated by our government.  In my moments of most extreme Libertarian I can make the case for no unemployment benefit system at all.  People, understanding that they won’t have a program to fall back on will make efforts to protect against the downside.  This might take the form of more aggressive saving or, perhaps, not getting fired in the first place.

However, not all terminations are due to performance, many are due to economic conditions out of the control of the employee.  Further, it’s unlikely that I’d be able to prevail in my rather “draconian” response to unemployment.  So, knowing that benefits are going to be provided, how best to work within the system to create the best outcome?

Other than its existence, I have two problems with unemployment benefits:

  1. The benefit too closely approximates the typical wage.
  2. The duration of the program is too long.

The system creates the wrong incentives.  In the first place, it reduces the value of working.  For example, if I lose my $10 an hour job and can pull $325 in benefits, the marginal value of me returning to work is $75.  [Maybe $125 or so – I seem to remember the first fifty is “free.]  So the value of working 40 hours moves from $400 to $75.  An hourly rate of $1.88.  In the second place, the system is built with the incentive to delay returning to the workplace until the benefits expire.

So, what to do?

It seems to me that if I had bought into building a system that worked, that is I agreed to set aside the ideology and build a program I might not 100% agree with, I would first define the goals.  It might go like this:

  1. Provide folks assistance to get through the transition to the next job.
  2. Return folks to the workforce as soon as possible.

And the method I would use to build the program that solves both of these goals would be this:

  1. Determine the mean time to return to work without the debilitating incentive of making money while not working.
  2. Pay the unemployed a lump sum regardless of employment status.
    1. Either literally pay the individual a lump sum in the form of one check.
    2. Guarantee weekly benefits for the duration of the identified mean regardless of employment status.

This satisfies the [dubious] requirement of the government providing assistance in the face of adversity while also removing the perverse incentive not to return to the workforce.  In fact, it might actually provide the incentive to return more quickly; who can pass-up on “double dipping.”


Welfare: Socio-Economic vs IQ – The Bell Curve

We’re moving from “The Family” to “Welfare” in the latest installment on “The Bell Curve.”

The series has been focusing on various snapshots of impact that the wealth of an individual or family may have and then at the impact that IQ may have.  Long has the argument been made that much of the disparity in America is due to the fact that the rich get richer while the poor get poorer.

Perhaps it has less to do with the wealth of the family and more to do with the IQ of the family.

So, moving towards welfare.

Previously I posted on the probability of going on welfare, within one year, after the birth of the first child.  I posted on this probability using only the socioeconomic status of the family.  Here I show both the SES and the IQ of the mother:

The impact is significant.  Even more so after accounting for the fact that a woman with higher IQ would be able to avoid the condition that would result in welfare.  Yet, after accounting for age, poverty, marital status and SES, we see that IQ plays a massive role in the probability of welfare reliance.

Next, the topic of chronic welfare dependency.  The data suggests see below, that SES plays at least as important a role as IQ does.  However, the data is restricted to the point that makes it important to point out a note.  Of the women in the study that were long term recipients of welfare, none scored in the quintile of cognitive ability; only 5 were in the second quintile.

With that caveat, here is the data:

Both the economic background of the mother AND the IQ play a part.  As I mentioned in the original post, education may be the relevant influence on this topic.