Connecticut Welfare Benefits Equal the Salary of An Entry Level Teacher

Common sense seems to indicate that, given equal pay for working and not working, an individual will tend to choose the latter. Of course, who is going to pay someone to do nothing?

A recent Hartford Courant Op-Ed by Michael Tanner provides an answer to this question: the state of Connecticut (along with every other state, although we offer some of the highest wages).

Citing an upcoming Cato Institute study, Tanner describes how welfare recipients are incentivized to not work. The article, which is worth reading in its entirety, states in part:

“Most decisions in life are the result of a cost-benefit analysis. When residents in Connecticut consider getting a job, they assume they would be better off having a job than not. They’d be wrong. Because in Connecticut, it pays not to work.

Next Monday, the Cato Institute will release a new study looking at the state-by-state value of welfare. Nationwide, our study found that the value of benefits for a typical recipient family ranged from a high of $49,175 in Hawaii to a low of $16,984 in Mississippi.

In Connecticut, a mother with two children participating in seven major welfare programs (Temporary Assistance for Needy Families, Medicaid, food stamps, WIC, housing assistance, utility assistance and free commodities) could receive a package of benefits worth $38,761, the fourth highest in the nation. Only Hawaii, Massachusetts and the District of Columbia provided more generous benefits.

When it comes to gauging the value of welfare benefits, it is important to remember that they are not taxed, while wages are. In fact, in some ways, the highest marginal tax rates anywhere are not for millionaires, but for someone leaving welfare and taking a job.

Therefore, a mother with two children in Connecticut would have to earn $21.33 per hour for her family to be better off than they would be on welfare. That’s more than the average entry-level salary for a teacher or secretary. In fact, it is more than 107 percent of Connecticut’s median salary.”

Given this information, it’s no wonder Connecticut’s unemployment rate for June 2013 was 8.1 percent, 14th highest in the nation.

As Mr. Tanner stated, deciding to work is the result of a cost-benefit analysis. The cost of working in Connecticut, according to this study, is $21.33. However, costs also include time away from children and families, lost leisure, and a plethora of other “intangibles”. The benefits from work, therefore, must ultimately be greater than $21.33 an hour in order to drag most people into the work force.

Fixing this problem is not easy. It involves fundamental changes in welfare administration and benefits, as well as a wholesale social change in attitudes toward government and work.

Surprisingly, in light of Connecticut’s legislative and administrative ineptitude, the societal change might be easiest to accomplish. As Mr. Tanner remarks, even a minimum wage job can serve as “a springboard out of poverty”. Helping people realize that they have more to offer themselves than the government can ever hope to provide, therefore, is the first step in reversing the welfare and unemployment trends in our state.