Welfare Isn’t Too Generous—Wages Are Too Low

NPR recently published a story that gives undue credence to a Cato Institute study lamenting the generosity of US safety net programs. In reality, welfare benefits are not nearly as generous or accessible as the study claims. The NPR piece provides useful stories from actual welfare recipients, whose experiences more faithfully represent reality.

An important part of Cato’s assertion is that these programs offer a higher level of income than do many low-wage jobs. The real problem here is that wages for the vast majority of Americans are too low, and haven’t kept up with the increased productivity of the labor force.

When the study was first released, we pointed out some of the problems with their analysis. Here’s a quick summary of why their study was so misleading:

The Cato Institute recently released a wildly misleading report by Michael Tanner and Charles Hughes, which essentially claims that what low-wage workers and their families can expect to receive from “welfare” dwarfs the wages they can expect from working. Using state-level figures, their paper implies that single mothers with two children are living pretty well relying just on government assistance, with Cato’s “total welfare benefit package” ranging from $16,984 in Mississippi to $49,175 in Hawaii. They then calculate the pretax wage equivalents in annual and hourly terms and compare them to the median salaries in each state and to the official federal poverty level. Tanner and Hughes find that welfare benefits exceed what a minimum wage job would provide in 35 states, and suggest that welfare pays more than the salary for a first year teacher or the starting wage for a secretary in many states.

So what makes this so misleading?

For one, Tanner and Hughes make the assumption that these families receive simultaneous assistance from all of the following programs: Temporary Assistance for Needy Families (TANF), Supplement Nutrition Assistance Program (SNAP), Medicaid, Housing Assistance Payments, Low Income Home Energy Assistance Program (LIHEAP), Women, Infants, and Children Program (WIC), and The Emergency Food Assistance Program (TEFAP). It is this simultaneous assistance from multiple sources that lets the entire “welfare benefits package” identified by Cato add up to serious money. But it’s absurd to assume that someone would receive every one of these benefits, simultaneously, and it ignores the fact that some programs have time limits.

What’s more, their report carries the clear implication that welfare is (or should be expected to be) pulling low-wage workers out of the labor market by making life on welfare so attractive. In actuality, many low-income working families receive assistance through these programs.

Sharon Parrott and LaDonna Pavetti at the Center on Budget and Policy Priorities provide some solid evidence against some of the claims made by Tanner and Hughes. They provide detailed statistics on how little overlap there is in the assistance families receive for multiple programs, and how few eligible families actually receive any benefits at all.

What’s striking to me is that even Cato’s overblown and exaggerated welfare benefits would leave families in eight states with incomes below the federal poverty line. I’d add that it’s a bit odd to look at hypothetical data, when real data on what low income families actually receive from welfare and work is available. The Congressional Budget Office provides comprehensive data on sources of income for households by income fifths. We looked at this in some detail in the poverty chapter of State of Working America (see here). These reputable data tell a very different story about how low-wage workers live their lives. They are getting far less from government assistance than the Cato report implies and are relying much more on income gained from working.

In 2009, average transfer income for the lowest fifth of workers was $4,633 and average labor income was $12,871. (To be comparable with the Cato report, I’m not including Medicare and Social Security income.) Two things are clear here: government transfers are far less than what Tanner and Hughes claim, and labor income far exceeds government transfers for the lowest income group, meaning that real-world low-income families don’t feel so coddled by lavish welfare benefits that they don’t need to work.

Tanner and Hughes are not telling a realistic story about the lives of low income Americans and the income provided to them by transfer programs. Where they have a point is how poorly work pays for too many American families, particularly low-wage workers. If they want to insure that work pays well for single mothers with two kids, it would seem more worthwhile to push for increases in the minimum wage and affordable child care. Cato’s view instead seems to be that since work alone is failing to provide secure living standards for many Americans, we should take away other sources of income from them, too.


  • http://www.watermelonpunch.com/ watermelonpunch

    This false story is what serves to pit welfare recipients against welfare recipients. When they tell this story, and hard working low wage earners hear about coddled welfare recipients, they feel like they’re the only saps working hard & still needing benefits. Then they go and vote against their own best interests because they’ve grown hostile toward the very programs that are allowing them to survive. All the while never knowing that they themselves are that so-called coddled benefits scrounger everyone else thinks is living the high life on food stamps.

  • http://www.watermelonpunch.com/ watermelonpunch

    This false story is what serves to pit welfare recipients against welfare recipients. When they tell this story, and hard working low wage earners hear about coddled welfare recipients, they feel like they’re the only saps working hard & still needing benefits. Then they go and vote against their own best interests because they’ve grown hostile toward the very programs that are allowing them to survive. All the while never knowing that they themselves are that so-called coddled benefits scrounger everyone else thinks is living the high life on food stamps.

  • plainsimpletruth

    Thank you, Elise, for clarifying the misleading information.
    I would like to provide more information to the body of knowledge for low-wage workers.

    In Washington State, minimum wage is $9.19.
    This sounds fantastic. However, the reality is reduction in # of working hours.

    My son worked a 20-hour week.
    The reality for 1 day’s work (4 hours) = $23 net income
    (after subtracting taxes, union dues, and gasoline costs)
    This is NOT considering full transportation costs — as I bought and paid for the car, and pay for the monthly insurance.
    I AM PERSONALLY SUBSIDIZING THE CORPORATION he works for, by providing the full transportation cost.

    Furthermore, his income level qualifies him for state assistance. But we cover his costs, because we are able to.

    However, if he did go on state assistance, then THE STATE WOULD BE SUBSIDIZING THE CORPORATION he is working for.

    Many “pull-up your bootstraps” advocates would answer for him to obtain a 2nd job. How is that accomplished? His work schedule is inconsistent and varied, to-wit: Monday 6am-10am; Tuesday 6am-10am; Wednesday 6am-10am; Thursday off; Friday 3pm-7pm; Saturday 3pm-7pm; Sunday off; Monday 4pm-8pm . . .

    He had one shift that ended at 7pm, and started the next day at 7am.

    He never has 2 days in a row off.

    In my opinion this is criminal, a violation of human rights, yet the standard method of doing business for many corporations and business with minimum wage workers.

    In conclusion, there is a misconception that minimum-wage jobs are for kids. There are developmental, cognitive, psychological, and other conditions that many human beings possess, that render them in a position to work a minimum-wage job for their lifetime.

  • plainsimpletruth

    Thank you, Elise, for clarifying the misleading information.
    I would like to provide more information to the body of knowledge for low-wage workers.

    In Washington State, minimum wage is $9.19.
    This sounds fantastic. However, the reality is reduction in # of working hours.

    My son worked a 20-hour week.
    The reality for 1 day’s work (4 hours) = $23 net income
    (after subtracting taxes, union dues, and gasoline costs)
    This is NOT considering full transportation costs — as I bought and paid for the car, and pay for the monthly insurance.
    I AM PERSONALLY SUBSIDIZING THE CORPORATION he works for, by providing the full transportation cost.

    Furthermore, his income level qualifies him for state assistance. But we cover his costs, because we are able to.

    However, if he did go on state assistance, then THE STATE WOULD BE SUBSIDIZING THE CORPORATION he is working for.

    Many “pull-up your bootstraps” advocates would answer for him to obtain a 2nd job. How is that accomplished? His work schedule is inconsistent and varied, to-wit: Monday 6am-10am; Tuesday 6am-10am; Wednesday 6am-10am; Thursday off; Friday 3pm-7pm; Saturday 3pm-7pm; Sunday off; Monday 4pm-8pm . . .

    He had one shift that ended at 7pm, and started the next day at 7am.

    He never has 2 days in a row off.

    In my opinion this is criminal, a violation of human rights, yet the standard method of doing business for many corporations and business with minimum wage workers.

    In conclusion, there is a misconception that minimum-wage jobs are for kids. There are developmental, cognitive, psychological, and other conditions that many human beings possess, that render them in a position to work a minimum-wage job for their lifetime.

  • Thomas McGovern

    Assuming the author’s analysis that “wages are too low,” what does the author suggest be done about it? It’s surprising to me that the author made no suggestions to remedy the problem.

    Wages Are Too Low
    Wages Are Too Low
    Wages Are Too Low

  • Thomas McGovern

    Assuming the author’s analysis that “wages are too low,” what does the author suggest be done about it? It’s surprising to me that the author made no suggestions to remedy the problem.

    Wages Are Too Low
    Wages Are Too Low
    Wages Are Too Low

    • vanceco

      raise the minimum wage to a living wage level.

      problem solved.

      • Dan045

        The fast food places are already planning on how to eliminate “living wage” jobs through automation. If we’d let them pay their workers what they’re worth (i.e. less), they wouldn’t bother.

        • vanceco

          good for them- they’ll create living wage jobs servicing their automation.

          • Dan045

            True, but they’ll be fewer jobs and the people who hold them won’t be unskilled. You don’t give low skilled workers good jobs by insisting that bad jobs be destroyed.

            I used to work at a fast food place, I learned I didn’t want to work there.

          • http://www.watermelonpunch.com/ watermelonpunch

            We’re a long way out from completely automating all, or even most, unskilled labor.

            I know it’s getting close to Halloween, but that’s all this is right now, a scary story…

            I can’t think of a way it would be cost effective to not have a humans collect the garbage or provide the services people want at restaurants at this point.

            Just look at the self-serve lines in grocery stores. Nobody goes into those lines with a big order, because they know a cashier who does it for hours a day is going to get them through faster.

            And if the minimum wage being raised provided the incentive to come up with new technologies & methods of automation that did make it worth it… I can’t see how that would be bad for anyone. It would provide more employment opportunities for semi-skilled & higher educated people… Or you know, all those college educated workers who are now working in low wage retail & labor jobs because they can’t find jobs that use their training & education. If those people had higher skilled positions, at least they’d free up what’s left of the unskilled positions for actual unskilled people to work.

            http://yaleglobal.yale.edu/content/college-grads-may-be-stuck-low-skill-jobs

          • Dan045

            watermelonpunch: “all those college educated workers who are now working in low wage retail & labor jobs because they can’t find jobs that use their training & education.”

            The confusion between “college educated” with “usefully college educated” is a different subject, automation won’t create jobs for liberal arts.

            watermelonpunch: “I can’t think of a way it would be cost effective to not have a humans collect the garbage or provide the services people want at restaurants at this point.

            Double all the wages, and they need to run the place with fewer workers or go out of business. If that means providing less service or different services then so be it.

            Lower paid work exists because we have lower skilled workers, not the other way around. When I did mornings at McDonalds I didn’t deserve better pay. Insisting I get paid a living wage would have simply meant no job.

            This path leads to a class of people who are permanently out of work, that’s a bad thing. Ideally we’d make job creation so easy that employers would complete for employees.

          • http://www.watermelonpunch.com/ watermelonpunch

            You seem to be confused about supply & demand, and the fact that things are out of whack in our economy. Even compared to other wealthy nations.
            We don’t even pay a fair wage to people who perform useful tasks in society, let alone a living wage. It’s not kept up with inflation and certainly not with productivity.
            In the 60s & 70s people got paid more in line with productivity than now. You’re saying that whatever people did in the 60s, we Americans are incapable of doing now?? That doesn’t make sense.

            Not to mention that there have been, and still are a lot of highly paid people who add little or no value to civilization, and are not, in fact, useful.
            And no, they’re not uneducated teens working their first jobs in fast food restaurants.
            They’re in the financial sector, and they often have advanced degrees.

            ==========
            http://www.ft.com/intl/cms/s/0/f20eb888-213a-11e3-a92a-00144feab7de.html#axzz2iC3Imcng
            “The enormous power wielded by consultants is not matched by their performance,” said Jose Martinez, one of the authors of the study.
            “In US equities, one of the largest asset classes,
            investment consultants as an industry appear to add no value in fund selection,” added co-author Howard Jones.
            ==========

            Used to be they said MBAs were very “useful” degrees. Useful to who? Lots of them are having trouble finding decent work now. And did a lot of them ever actually add value to our civilization? I mean you know, by putting together & dealing in mortgage backed securities?

          • Dan045

            watermelonpunch: “In the 60s & 70s people got paid more in line with productivity than now. You’re saying that whatever people did in the 60s, we Americans are incapable of doing now?? That doesn’t make sense.”

            You’re cherry picking your data. The 60’s benefited from WW2. We and others killed an entire generation of young men and destroyed every other modern country’s infrastructure.

            Retrospectively, it was expected that labor was at a premium for decades. Then the premium ended and we spent a few decades with those trends reversing. And yes, we’re incapable of repeating the post WW2 period short of another world war.

            watermelonpunch: [rant about MBAs]

            So what? I’d think you’d be in favor of “Lots of them having trouble finding decent work now”. I’ve already said many college degrees aren’t useful, while I was talking about liberal arts you can add that one in there if you want.

            IMHO an MBA is something you get after you’re successful and after you have decided you’re headed for management. It’s a desert, not a main course.

            watermelonpunch: “[In US equities, one of the largest asset classes, investment consultants as an industry appear to add no value in fund selection]”

            Probably this is an understatement. Everyone can’t be above average, smart money is just that, smart…. and these “investment consultants” could, if their advise were worth something, make more serving smart money than dumb. Or put differently, most investment consultants are charging for a random walk.

            Thus index funds.

            Oh, and your link is to something which requires payment to view.

  • topspy

    100% on target

  • topspy

    100% on target

  • http://betamos.se/ Didrik Nordström

    Progressive liberal logic: Wages too low (productivity bla bla, capitalism bla bla) -> Complain to government -> Higher wages -> Higher prices -> “Prices are too damn high, living wage bla bla” -> Repeat.

    In the meantime the bankers high five each other

    • http://rationaldreaming.com/ Mike

      Then isn’t it kind of strange that in an era when the national minimum wage has fallen behind the cost of living by around 30%, that we’re not living in a golden age of economic prosperity?

      The bankers have been high-fiving each other ever since Reagan started getting government “out of the way.” I agree that the two sides collude with each other way too much, but when the government is out of the picture (i.e. deregulation and removal of oversight) things most certainly do not get any better. They get worse — world economic crisis level of worse.

  • http://betamos.se/ Didrik Nordström

    Progressive liberal logic: Wages too low (productivity bla bla, capitalism bla bla) -> Complain to government -> Higher wages -> Higher prices -> “Prices are too damn high, living wage bla bla” -> Repeat.

    In the meantime the bankers high five each other

  • http://www.betterstrongerfaster.com/ Mark Cancellieri

    Wages aren’t too low. The value that the workers produce is “too low,” and more of that value is being consumed as benefits. Also, the cost of taxes and regulations is causing wages to be lower than it would be otherwise. BUT, we can’t just think rationally about this. We need to let our emotions rule.

    • Rick

      This is completely false. Worker productivity has soared over the past few decades, far oustripping wages. Corporate profits have gone up and executive compensation has gone up, along with worker productivity, but real wages for the working class have gone down in spite of the increase in productivity.

      I’m going to presume the last two sentences are a self-diagnosis. Try to take your own advice.

    • http://www.watermelonpunch.com/ watermelonpunch

      Please cite what economists or other expert studies say that productivity has not risen.

  • Brian McCaslin

    First I’d like to point out that any safety net is the issue. It bludgeons the human feedback system. While people who receive welfare do not live high and mighty, it removes the possibility of death. So now the choice becomes working a menial job serving coffee, living in a decrepit neighborhood/building, to receiving welfare and living in the same building. The problem is not that wages are too low. Its that the labor value of those workers is too low. If you or I wants to increase our pay, we have to increase our labor value. Hmm if only there was an organization that could take people for 8 hours a day for 12-14 years and provide them with some sort of marketable skills or value where they would be worth more than $7/hour. Oh yes! The Government already does that! So it would seem to me that public schools are pretty much worthless in providing value. Which is true right? For the most part we spend more time on inane book reports than we do taking a basic economics class. Something like 40% of people cannot fill out a job application but to people like you that is a fault of the free market and not the government. But what do self important journalists do? They blame it on the free market and say, “see! Look how low the minimum wage is under a free market!” when in actuality there is government hands all over that problem. I’m not saying I blame you, you are bereft of any critical thinking skills as a result of being educated by government approved “teachers.”

    One final point. We wonder why the roots of traditional family are breaking. Well look right at government. You get paid if you’re single mother and have more kids. There is less of an incentive to have a child with someone who will provide for the family because hey, the government can do that. People respond to incentives. That’s a basic principle in economics. There have been numerous studies that show children who grow up in single parent households are susceptible to increased aggression, violence, crime, drug use, etc and then the government turns and says, “hey look at all the crime! Surely you guys need us to protect you! So give us half your paycheck and we’ll throw these people into cages where we’ll allow 200k of them to get raped every year.” I mean we have more citizens imprisoned per capita than Stalin had under the Gulag. Doesn’t that befuddle anyone else? Perhaps these are the issues you should be bringing to light. Not reinforcing the fear mongering that we get enough of from the government.

    • http://rationaldreaming.com/ Mike

      I mean we have more citizens imprisoned per capita than Stalin had under the Gulag.
      That’s an exaggeration, but the basic point is true — the USA imprisons five to ten times more of its citizens (per capita) than any other comparable nation. The Germans, for example, lock up nine times fewer of its citizens.

      However, your argument for why that is happening is flawed. The so-called break-up of the “traditional family” isn’t a uniquely American phenomenon. The UK has more single parent households and imprisons 5 times fewer, as does Belgium, and they imprison 7 times fewer people. Broken homes is not the reason why we imprison so many people

      The causes of the appalling incarceration rates in the US are many, but the root cause is that the voters like it that way. They elect politicians who are “tough on crime” and reject those successfully tagged as “soft on crime.” After decades of this, we have one of the most punitive criminal justice systems in the democratic world, with longer sentences, fewer parole hearings, and lower rehabilitation success rates than almost anywhere else. Only 5% of all prosecutions even reach trial these days because most defendants, guilty or innocent, are threatened with sentences that average six times longer than those on offer with a plea bargain (legalized blackmail), and given that fewer defendants are being found innocent than ever before, even the innocent are pressured to take the offer. It also doesn’t help that prosecutors are immune from being punished for prosecutorial misconduct.

      All of these conditions (and the incessant war on drugs), unique to the USA, are far more to blame than the number of single parent households.

      And if there are more single parent households in the USA, then given that lack of money is one of the main causes of family breakups, and that the US welfare system is less generous than most other modern democratic nations, then if anything, it is more likely that it’s the relatively low level of welfare spending that contributes to higher crime rates, not that welfare spending is too high.

      Indeed, some have quipped that while countries like Sweden is a welfare state, the United States is an incarceration state.

  • Brian McCaslin

    First I’d like to point out that any safety net is the issue. It bludgeons the human feedback system. While people who receive welfare do not live high and mighty, it removes the possibility of death. So now the choice becomes working a menial job serving coffee, living in a decrepit neighborhood/building, to receiving welfare and living in the same building. The problem is not that wages are too low. Its that the labor value of those workers is too low. If you or I wants to increase our pay, we have to increase our labor value. Hmm if only there was an organization that could take people for 8 hours a day for 12-14 years and provide them with some sort of marketable skills or value where they would be worth more than $7/hour. Oh yes! The Government already does that! So it would seem to me that public schools are pretty much worthless in providing value. Which is true right? For the most part we spend more time on inane book reports than we do taking a basic economics class. Something like 40% of people cannot fill out a job application but to people like you that is a fault of the free market and not the government. But what do self important journalists do? They blame it on the free market and say, “see! Look how low the minimum wage is under a free market!” when in actuality there is government hands all over that problem. I’m not saying I blame you, you are bereft of any critical thinking skills as a result of being educated by government approved “teachers.”

    One final point. We wonder why the roots of traditional family are breaking. Well look right at government. You get paid if you’re single mother and have more kids. There is less of an incentive to have a child with someone who will provide for the family because hey, the government can do that. People respond to incentives. That’s a basic principle in economics. There have been numerous studies that show children who grow up in single parent households are susceptible to increased aggression, violence, crime, drug use, etc and then the government turns and says, “hey look at all the crime! Surely you guys need us to protect you! So give us half your paycheck and we’ll throw these people into cages where we’ll allow 200k of them to get raped every year.” I mean we have more citizens imprisoned per capita than Stalin had under the Gulag. Doesn’t that befuddle anyone else? Perhaps these are the issues you should be bringing to light. Not reinforcing the fear mongering that we get enough of from the government.

  • Dan045

    Over the years three of my female relatives have decided to NOT get married to the fathers of their unborn children with the express purpose of getting (more) money from the government. They were pretty open inside the family about what they were doing and why. Two of them eventually got married anyway, one did not.

    These programs change behavior, we shouldn’t pretend otherwise.

    • WiselySaid

      Great anecdote! Got any data?

      • Dan045

        Sure. What happened the last time we reformed welfare? It was predicted that we’d see starvation, but instead they got jobs. People changed their behavior, just like basic econ suggests.

        • Rick

          Methinks that the increase in the number of people getting jobs had more to do with the general expansion of the economy, and not with welfare reform. The UK is currently trying its version of “welfare reform”, aka “austerity.” It’s a disaster.
          Economics really isn’t a morality play. If the number of people looking for jobs suddenly doubled, the supply of jobs wouldn’t magically also double. The same number of people would get hired. And the people who didn’t get the jobs they wanted would get discouraged and act like the people who are currently unemployed.

        • WiselySaid

          So…welfare now supports getting people back to work! Everyone tell your Republican friends, they still don’t get it.

    • WiselySaid

      Great anecdote! Got any data?

  • Dan045

    Over the years three of my female relatives have decided to NOT get married to the fathers of their unborn children with the express purpose of getting (more) money from the government. They were pretty open inside the family about what they were doing and why. Two of them eventually got married anyway, one did not.

    These programs change behavior, we shouldn’t pretend otherwise.

  • bigdnyc

    Minimum wage jobs are not meant to provide income to support a family. I’d like a questions answered: why haven’t adults working for minimum wage developed a skill that allows them to earn more? Why have children you cannot support?

    • http://rationaldreaming.com/ Mike

      Perhaps that used to be the case, but it isn’t anymore. In 2000, the average age of a fast food worker was 22. Eleven years later, it’s almost 30. Older people aren’t taking these jobs because they’re unqualified for better paid work, they’re taking them because they can’t get work elsewhere. Productivity gains and overseas outsourcing have contributed mightily to the bottom line of many corporations, but the American workforce is paying the price.

      • Jeremy Johnson

        Well said.

    • Rick

      “Meant to” is a fairly loaded phrase. Let’s instead consider
      a) the number of people employed at minimum wage jobs
      b) the number of people at said jobs trying to support a family.

      Your solution? To go to each one of these people and tell them to train for a better job.

      Do you know the difference between “any” and “every”? Positing that every minimum wage job holder could develop skills such that they all would get better paying jobs is magical thinking. We’re going to have people working minimum wage jobs. And many of these people are going to have families.

  • bigdnyc

    Minimum wage jobs are not meant to provide income to support a family. I’d like a questions answered: why haven’t adults working for minimum wage developed a skill that allows them to earn more? Why have children you cannot support?

  • JayJay

    Your view is to say someone’s wrong without backing up as to how they’re wrong. Calling someone ridiculous isn’t proof enough.

    I don’t think you’ve ever been in an area that receives this assistances that’s being discussed. They have government housing. They get money from the government. They really DO NOT WORK. They walk around all day, smoking, drinking and playing games.

    Come to Houston, I’ll show you exactly why you’re wrong. And guess where they put the free phone stands? Right in those areas.

    And raising minimum wage will only make things more expensive. Aulstrila already did that and they have a higher standard of living…and for what? Nohting really. They just pay more for the same things we get here. It’s not better, it’s more expensive.

    The way you improve people’s lives is to get government out of it. Less government, business can do more and pay more. Forcing people to do what YOU believe to be moral makes people do better? No. Stay out of people’s lives and things will be better for it.

    • Rick

      I take it you didn’t actually read the article. Your criticism consists of generic claims that don’t actually match what you’re responding to.

      “Your view is to say someone’s wrong without backing up as to how they’re wrong. Calling someone ridiculous isn’t proof enough.”

      This is a fairly blatant misrepresentation of what’s printed above. Try again, starting at the beginning.

      • JayJay

        No. It represents it well.

  • JayJay

    Your view is to say someone’s wrong without backing up as to how they’re wrong. Calling someone ridiculous isn’t proof enough.

    I don’t think you’ve ever been in an area that receives this assistances that’s being discussed. They have government housing. They get money from the government. They really DO NOT WORK. They walk around all day, smoking, drinking and playing games.

    Come to Houston, I’ll show you exactly why you’re wrong. And guess where they put the free phone stands? Right in those areas.

    And raising minimum wage will only make things more expensive. Aulstrila already did that and they have a higher standard of living…and for what? Nohting really. They just pay more for the same things we get here. It’s not better, it’s more expensive.

    The way you improve people’s lives is to get government out of it. Less government, business can do more and pay more. Forcing people to do what YOU believe to be moral makes people do better? No. Stay out of people’s lives and things will be better for it.

  • Howard Treesong

    I keep being annoyed by it, I can’t help it, every time I hear these people go off on how the poor are making so much money for doing nothing. The C-ranks can’t make enough money and get showered with company stock and benefits packages, the people doing the grunt work, Saint Productivity pray for us, they get the scraps and even that is too much.

    At the same time, and this is where I get angry, new people are not hired because ‘there’s no demand’. Which is surprising to the people who deny most other people a living wage. To them it’s news apparently that if you don’t have money to spend you’re not going to spend any.

    Next up is the blessed state where manual labor, a lot of it at least, can be replaced with robots. Yay! Even more productivity, even fewer costs. Even more profit. We can all rest assured that since people won’t be making any money at all anymore, we’ll leave the consumption to the robots who will be buying whatever it is they produce in perfect quantities (what gets produced gets sold). Well, as soon as we can figure out how to get robots to buy anything, at least.

  • Howard Treesong

    I keep being annoyed by it, I can’t help it, every time I hear these people go off on how the poor are making so much money for doing nothing. The C-ranks can’t make enough money and get showered with company stock and benefits packages, the people doing the grunt work, Saint Productivity pray for us, they get the scraps and even that is too much.

    At the same time, and this is where I get angry, new people are not hired because ‘there’s no demand’. Which is surprising to the people who deny most other people a living wage. To them it’s news apparently that if you don’t have money to spend you’re not going to spend any.

    Next up is the blessed state where manual labor, a lot of it at least, can be replaced with robots. Yay! Even more productivity, even fewer costs. Even more profit. We can all rest assured that since people won’t be making any money at all anymore, we’ll leave the consumption to the robots who will be buying whatever it is they produce in perfect quantities (what gets produced gets sold). Well, as soon as we can figure out how to get robots to buy anything, at least.

  • cynthia curran

    Cato supports a lot of low skilled and high skilled guest worker programs. In there eyes the recent Mexican immigrant will do the maid’s job while the Mexican American Citizen will not. A lot of Mexican American citizens do maid jobs as well. Cato is worst than many on the right that opposed illegal immigration and want an e-verify system. Cato doesn’t want an e-verify system and besides legalizing millions of people, Cato wants a lot of low skilled guest worker programs. A lot of folks on the right that don’t buy into Cato’s guest worker schemes do buy into the high welfare use and therefore you hear people on the right complain that blacks want welfare while Hispanics don’t.

    • Dan045

      “e-verify”, meaning we *want* to give the government the ability to say “no, you can’t have a job”, or “no, you can’t hire anyone”?

      Trust that with this power, they won’t find other uses for it?
      Trust that everyone they choose to black list will deserve it?
      Trust them to run it without hurting their political enemies? Like they do with the IRS?

  • KatieDash

    This is true! Although I found working even a little above minimum wage I could not afford childcare and bills while working. Being on assistance I did not have to pay child care and we did better even if it was only 700 a month. But that assistance is not listed in this article, I have never been on TANF, only food stamps, housing assistance, and ever once in awhile LIHEAP. I have never been gotten everything they have listed to say that a person on assistance makes more than the average minimum wage earner. That is almost impossible to get everything all at once. A lot of paper work to do, jumping through several hoops and more. Many times one is turned down because their is not enough money to go around and the more needy families get the assistance. There are a lot of rumors out there surrounding us families on assistance. Unless you know the whole story and walked in the persons shoes there is no room to judge a person on assistance. If this country was founded on Christian values then helping the poor is a big part of those values.

  • kpdsayle

    Bless you. I screamed at the radio during that broadcast, it was so one-sided and misleading. Only someone who has never had to make ends meet for family and self could be so deluded. Ironically, one of the greater work incentives could be the ACA because people leaving govt assistance could have independent access to health benefits for the first time.

    In 20 yrs working in legal aid office, I rarely met any individual who enjoyed needing food stamps or subsidized housing. I met mothers w small children and no child care. I met people w section eight housing vouchers but no help paying utilities in cold or hot months, and monthly bills bigger than a year’s subsidized rent. I met parents who worked opposite shifts so one would always be home w the kids. I met A LOT of disabled folks who didn’t “look sick” but were severely impaired and lacked a doctor and the transportation to get there. I met old people living in homes so dilapidated that mice ran thru the living room while you visited. I imagine you can find people of all sorts who walk around during the day smoking and playing cards. And you can find college students cutting class to play video games, and suburban housewives with kids who drink and shop. “judge not, lest ye be judged.”

  • http://www.watermelonpunch.com/ watermelonpunch

    “Among workers who do not work for the government, the majority (57.1%)
    get their health insurance from their employer, but this percentage has
    also decreased steadily since 2008.”
    http://www.gallup.com/poll/152621/Fewer-Americans-Employer-Based-Health-Insurance.aspx

    57% percent is, by most people’s standards, just barely most. It’s not an an overwhelming majority. It kinda sounds more like just over half.

    There is a study published from stlouisfed.org that claims that if you take this alternative measure of wages, then it evens out that pay has kept up with productivity… “overall”

    But even that study admits, that pretty much all of that alternative goes to high ups in corps, wall street, the financial sector, Wall Street, in the form of benefits, profit sharing, bonuses, etc.

    A lot of ordinary workers don’t get health insurance or overtime pay anymore. Let alone pensions or even crappy 401ks.

    What portion of the population actually gets bonuses & profit sharing?

    Plus, the U.S. pays so much much more for health care than any other wealthy country, that you have to assume that health care prices are overpriced and inflated in relation to their actual VALUE.

    In other words, don’t tell me I’ve gotten my productivity raise in the form of distorted inflation of one fringe benefit.
    Definitely don’t tell me I’ve gotten my productivity raise in the form of an inflated fringe benefit I’m not even getting with my job, and can’t even afford to buy on my own.

    And don’t tell me that I’m getting paid fairly by way of employer health insurance either.
    Because it looks to me like this is a case of getting ripped off from both ends. Getting employer group health insurance is simultaneously getting discounted pay and overpaying out.

    • Dan045

      watermelonpunch: “57% percent is, by most people’s standards, just barely most. It’s not an an overwhelming majority. It kinda sounds more like just over half.”

      That percentage would increase, a lot, if we took out people who aren’t serious workers, the very low skilled, and the independents by choice. Teenagers living with their parents, part timers because someone else is the breadwinner, micro companies, etc.

      watermelonpunch: “…this percentage has also decreased steadily since 2008.”

      Mostly a good thing. Getting employers out of the health care business would eliminate multiple distortions. If I want to change jobs I shouldn’t be losing my health care in the process.

      watermelonpunch: “In other words, don’t tell me I’ve gotten my productivity raise in the form of distorted inflation of one fringe benefit.”

      Then don’t tell your employer he needs to pay for it.

      watermelonpunch: “Because it looks to me like this is a case of getting ripped off from both ends.”

      Sure. We desperately need health care reform… it’s a pity obamacare was such a botch.

      • http://www.watermelonpunch.com/ watermelonpunch

        You’re mixing stuff up. I have been saying for 20+ years health care shouldn’t be tied to employment.

        You’re the one that claimed health insurance explained how wages have kept up with the times, the innuendo being that somehow they’re worth it.

        And what an awful classist thing to say that “very low skilled” people should be considered unemployed and not workers, even when employed, and already so discounted for their efforts not only does their employer not wish to pay them with health care, you seem to be saying they shouldn’t even be counted among society’s working uninsured. Do you think they should be counted at all? For anything? Or would you prefer we pretended that they didn’t exist? Or maybe worse?

        • Dan045

          watermelonpunch: “I have been saying for 20+ years health care shouldn’t be tied to employment.”

          So have I.

          watermelonpunch: “You’re the one that claimed health insurance explained how wages have kept up with the times, the innuendo being that somehow they’re worth it.”

          “Worth it” here is an ethical argument, we’re talking about economics which is math. If we increase employment costs by making an employer pay for something, then it comes out of the employees pay check. That’s why Social Security’s tax rate should be considered to be 12.4 percent and not half that (something else which comes out of your pocket).

          Taxes and health insurance have gobbled up most of the productivity increase which should have increased take home pay, and no I don’t consider them “worth it”.

          watermelonpunch: “And what an awful classist thing to say that “very low skilled” people should be considered unemployed and not workers, even when employed, and already so discounted for their efforts not only does their employer not wish to pay them with health care…”

          It’s not the employers job to provide health care any more than it’s their job to supply housing, food, or a car. What they should be supplying is money, then the worker can manage his own life.
          My expectation is that all these “productivity” gains we’re talking about have had little impact on the lowest skill rung AND that they also don’t get health insurance from their employer, which means they’re irrelevant when we talk about where the wage increases from productivity gains have gone.

          watermelonpunch: “…you seem to be saying they shouldn’t even be counted among society’s working uninsured.”

          I think we shouldn’t price them out of the market, i.e. that we shouldn’t raise the price of labor so high that they don’t have jobs. Opportunity mostly knocks at work, insisting they be unemployed through feel-good policies isn’t helpful. I’ve worked for little, for nothing, I’ve even paid to work with the idea that over the long run it would be worth it.

  • http://www.watermelonpunch.com/ watermelonpunch

    Why shouldn’t it though? Why shouldn’t the economy operate in a way that benefits the whole of society in a civilization?

    What’s the economy for?

    Isn’t business supposed to provide items & services to the population?

    Or do you think the sole purpose of a business in a civilization is just to be a cash cow for the already well off, it’s sole purpose to enrich the owners & heirs?

    The purpose in a civilization, of the financial sector, was supposed to be, and purports to be, serving as a means of providing viscosity to barter, trade, savings, and investment… in a civilization.

    But I suppose you’re of the mind that the purpose of the financial sector is just to be a gambling casino, and a free-ride generator for a select few of the population?

    • SouthOhioGipper

      The economy is based on wants of CONSUMERS not workers. They are not the same thing anymore. Most Americans work in non industrial office jobs. You progs keep pushing this myth about a blue collar America being primary demanders. They are not.

      American blue collar workers are incapable of producing products at a price white collar consumers want to pay and are obsolete.

      The typical American consumer does not want to pay for “American made”. The customer is always right. The customer wants every day low prices, even if it means destroying industrial worker jobs and forcing them into other industries whether they like it or not. Its called creative destruction. The average white collar consumer doesn’t care if Americans have industrial jobs.

      If they did, they would vote with thier dollars. You talk about only the rich bebefitting? That rich man gave you a product at a cheap price. You gave him your money.

      If you want to lessen inequality, quit buying all the rich man’s wares.

      • http://www.watermelonpunch.com/ watermelonpunch

        You seem to be confused about supply & demand.
        Workers are the consumers. The biggest consumers. And they have not enough dollars “to vote with”.

        And the consumers are not always right. Sometimes they buy into fraud. And sometimes they think a concert ticket is worth more than their garbage collection for the year.

  • benleet

    Low pay is the norm. Half of U.S. workers, 75 million workers, earn below $26,965 a year, 47% earn less than $25,000, and their collective wage income is only 7% of all income generated by the economy. The collective wage income of 47% of workers is $741 billion, according to the Social Security Administration report on wage income for year 2011. That’s about 7% of the amount of personal income reported to the Congressional Joint Committee on Taxation for year 2012, $11,468 billion. I looked up also the entire government charity expenses, it comes to $748 billion. Half of that is Medicaid, $382 billion including the $123 billion from states’ contributions, and Medicaid’s expenditures go 44% to disabled and blind, 21% to the elderly, 20% to children and 15% to adults non-elderly.
    All together, government charity programs cost all governments $748 billion per year, that’s 18% of federal government expenses, and 5% of GDP, and 1% of household net worth or net savings.
    I find it extremely puzzling that the wages of half the workers would amount to only 7% of all personal income. The collective incomes of 60% of households is less than the collective income of 1% (21.4% vs. 21.9%) according to the Citizens for Tax Justice report Who Pays Taxes in America, 2013. If we could reduce the income of the 1% by two thirds, to their income share level of 1979, and transfer that intact to the lower earning 60% we would increase by 66% the incomes of the lower 60%. So many “ifs” in these types of conversations. But why is low income so low, and how can the society increase it? That is the serious problem we confront. In Mexico, for instance, their Gini of income distribution is much worse, and we are traveling in that direction, not a good sign.

  • SouthOhioGipper

    Hahaha. If you are using France as an example of how an economy should work. I suggest you read a bit more.

    • vanceco

      what i said was that Burger King and McDonald’s (and all the other American companies operating in France) pay a living wage, (and follow all the supposedly ‘oppressive’ labor laws in France) and are STILL able to make a profit.

      go figure, huh…?

      and if you don’t like “France”, replace it with “Germany”- same story, same outcome.

      • SouthOhioGipper

        They charge 47 Euros for 2 to eat at a McDonalds in the Netherlands. In America it’s less than $15. Do you have 47 Euros to spend at McDonalds? Check the exchange rates and do the math.

        • http://www.watermelonpunch.com/ watermelonpunch

          You would if you got paid a decent wage like they are in the Netherlands!!

        • vanceco

          and the people who work in those countries obviously have enough money in their pockets to eat there, otherwise the American businesses wouldn’t bother opening up any stores.
          do some thinking for a change.

    • http://www.watermelonpunch.com/ watermelonpunch

      Norway & Sweden don’t have “minimum wage” laws. Don’t get excited. They live better as a whole, than Americans do, with reasonable fair wages.

      Basically all wages are set annually by collective bargaining negotiations between government, employers, and labor organizations.

      I would definitely use Norway & Sweden as a possible example of how an economy should work.
      I have pals in both countries, and they fully recognize their ways are working better.

      • SouthOhioGipper

        That is simply impossible. The math does not add up. The cost of living anywhere outside of Eastern Europe is astronomical. The average western European makes 10-15k a year less in annual wages, and pays 45-50% of those wages in taxes once you add up all the VATs, sales taxes, TV taxes, etc.

        There is simply no way that these people are consuming on the level that Americans do. There is no possible way they are going out to eat at dinners very often, or buying consumer goods in any major fashion. Compared to the average American they are living a threadbare existence when it comes to consumerism. They are sitting at home broke with very little disposable cash, which is why the Government has to grant “entertainment subsidies” to night clubs to pay bands to come in and play. I know how life is over there, I don’t care what those people say. They never lived an American’s lifestyle. They don’t know what it is like to be a real middle class consumer. They have been fooled into believing crap like “Live simply, so that others may simply live.” Sure that crap worked in Post war Europe, but it sounds pretty crappy in 2013.

        Now maybe leftists like YOU like that, but there are plenty of Americans who feel that mass consumerism defines America and is one of the things that makes this country great. I happen to be one of them and I say any Government that is going to force me to stop engaging in consumer spending just so it can tax me 50% and give me health care and a pension when I turn 65 in return, is not one I want to live under.

  • Dan045

    France does it by living with a shockingly high unemployment rate for low skilled workers.

    • vanceco

      i didn’t ask how france does it- i asked how burger king and mcdonald’s do it.
      making a profit even with all those restrictive labor laws.

      • Dan045

        They hire hundreds of lawyers and accountants to comply with the law, use as few people as possible, and price their good high enough to make a profit (i.e. pass their costs on to their customers).

        But just because they can do it in the context of very restrictive labor laws doesn’t mean that there’s no cost to those laws, which brings us back to my previous post.

  • L Wms

    As soon as I read “report from the Cato Institute” I knew it was filled with misleading information. Thank you Charles Koch, for once again filling the heads of impressionable people with lies and distorted information. Koch Brothers are evil, why don’t more people know this or are most people just so darned gullible ?