Computational model exposes severe problems with the welfare system
Previously, it was shown how a single mom with two kids in Gwinnett County could lose welfare program benefits by earning more money. This explained why $9 + $1 can equal negative $6,000.
The Gwinnett county example showed only two wage levels. However, the computer model provides results for a large range of wage levels and family structure. This enables policymakers, administrators and interested citizens to see a more complete picture of the challenges facing a family in poverty.
The computer model can generate scenarios in any of the other 158 counties in the state of Georgia.
No matter the county welfare cliffs (that unintended consequence of the current welfare system whereby an individual or family loses by earning more) can be found – essentially trapping families into a level of income.
These cliffs can be clearly seen on the chart below. Wherever there is a drop in a line, there is a loss in benefits that exceed the gain in earned income.
Also clearly seen, the benefit levels are very high and the severity of the cliffs significant. More surprisingly, there is not just one cliff but a series of cliffs that cascade down.
The chart shows that when government benefits are taken into account, it is financially better for a single mom to earn an hourly wage of $9 than an hourly wage three times as much, or $27 per hour.
Of course, it is important to point out that the severity of the cliffs and the income levels where they drop off change depending on the county, the characteristics of the family, and other factors.
These findings underscore the need to undertake fundamental welfare reform beyond the various reforms already being implemented. The system needs to become more rational so not to punish families who try to get ahead by earning more money.
A forthcoming study will highlight other examples.
Chart showing welfare cliff for typical family in Gwinnett County:
How to read the chart: The chart above illustrates the scenario highlighted in this and the prior posts , that is, a single mom with two children in Gwinnett county. The horizontal axis is gross earned income, and the vertical axis is the sum of net earned income plus the various welfare assistance benefits. The first line on the bottom is net earnings. The next line above is net earnings plus refundable tax credits. Each line stacked above adds another government benefit in the following order: TANF Cash, food benefits (Food stamps, free school meals and WIC food packages), housing (Section 8 Housing Choice Vouchers), subsidized child care (the CAPS subsidized childcare program), medical assistance (Medicaid and PeachCare), and Affordable Care Act subsidies.
Computational model exposes severe problems with the welfare system
Pop quiz: When does $9 + $1 equal –$6,000?
This may look like new math, but it is not.
This seemingly nonsensical equation illustrates the challenges faced by families who receive assistance from means-tested welfare programs.
In fact, these exact numbers come from a computer model I designed, which was sponsored by the Georgia Center for Opportunity. It evaluates financial incentives, or more precisely, disincentives embedded in our nation’s welfare system.
This computer modeling examined the potential case of a single mom with two children in Gwinnett County, Georgia. Using 2015 data, if she were offered the opportunity to earn $10 per hour instead of earning $9 per hour, she would lose nearly $6,000 in welfare benefits within a year’s time.
The reason for the loss is not due to her earned income. By increasing her earnings from $9 per hour to $10, she nets an additional $1,820 a year. The reason for the loss has to do with the way the welfare system is designed, or more accurately, the way it has been haphazardly put together over the past fifty years. At $9 per hour, the single mom would be eligible for the following means-tested programs:
the earned income tax credit ($5,419),
additional child tax credit ($2,000),
food stamps ($2,772),
free or reduced-cost school meals ($502),
WIC food packages ($480),
Section 8 housing choice voucher ($9,805),
subsidized childcare ($8,918), and
When added together, this single mom has a benefits package—courtesy of the taxpayers—estimated at $34,467. So instead of bringing home $17,266, her estimated income is actually $51,733 after government subsidies are included. To state it differently, for every $1 she earns in net income, she is eligible for nearly $2 in welfare benefits.
Now consider the case if she would earn $10 per hour. She would still receive means-tested benefits, but the benefit amounts will change as follows:
earned income tax credit ($4,977),
additional child tax credit ($2,000),
food stamps ($2,352),
free or reduced-cost school meals ($502),
WIC food packages ($480),
subsidized childcare ($8,658),
Medicaid ($4,570), and
Affordable Care Act credits and subsidies ($3,152).
In summary, her benefits drop to an estimated value of $28,938. When combined with her take-home pay, she is worse off by nearly $6,000 from earning $10 per hour than earning $9 per hour.
What this example demonstrates is the infamous welfare cliff, that unintended consequence of the current welfare system whereby an individual or family loses by earning more.
Unfortunately, this example is not an isolated incident. It represents what’s happening everywhere.
On April 27th, Governor Deal signed into law the most recent round of criminal justice reforms in Georgia. Senate Bill 367 enacts many of the recommendations of the state’s Council on Criminal Justice Reform.
Among the reforms are a number that will improve the ability of returning citizens to obtain employment, a key to reducing recidivism, including:
– Allowing first-time offenders to meaningfully shield their criminal record under the state’s First Offender Act,
– Providing greater access to occupational licensing, provided that the offense was not reasonably related to the license being sought,
– Reinstating driver’s licenses for those convicted of drug-related offenses that did not involve a motor vehicle,
– Expanding funding for Parental Accountability Courts that are problem-solving courts designed to reduce incarceration and constructively encourage parents to support their children. See our 2015 report on PACs here.
GCO is pleased that the reforms included recommendations we first made in 2013.
In March of 2015 state Rep. Ron Stephens (R- Savannah) introduced legislation that would allow six casinos into Georgia’s borders. While the legislation did not gain traction in the 2015 session, there is a renewed and aggressive effort by casino interests to bring gambling to Georgia through a ballot – by changing the Georgia State Constitution, which currently bars nearly all gambling.
Some believe that by having its own casinos Georgia will recover money currently going out of state. They also project that 3,500 jobs will be created and significant new revenue will be provided for the HOPE scholarship. At face value, this seems like a win-win for Georgia; however, the economic costs that accompany gambling will do more harm than the new jobs and HOPE funding will do good.
Gambling addictions create problems for individuals, their families and, by extension, society at large. Many people in Georgia are already being affected by the economic and social challenges that are brought on with gambling. With several casinos within driving distance, many have chosen to go out of state to gamble with their money. Some have returned to Georgia with a gambling addiction. According to the Georgia Council on Problem Gambling, “The hidden social and economic costs of gambling addiction in Georgia is $1,200 annually per gambler, while problem gambling costs the state $715 per gambler. Total costs: over $357 million annually.” This is the price tag on gambling already plaguing the state and that’s before Georgia even has its own casinos.
Bankruptcy is common among gambling addicts, with a national average of 20-30 percent of addicts filing for bankruptcy. According to the National Bankruptcy Research Center in July of 2013, Georgia had the second highest amount of people filing for bankruptcy. By allowing casinos to come into the state, more people will fall victim to a gambling addiction, which will increase their odds of filing for bankruptcy. The Georgia Council on Problem Gambling found that each bankruptcy filing costs creditors an average $39,000.
The impact to families of problem gambling can be catastrophic. Approximately 90 percent of pathological gamblers use family savings to continue their addiction. The Georgia Council on Problem Gambling found “over 60 percent of pathological gamblers reported borrowing money from friends/relatives to avoid credit problems; while 20 percent borrowed money from loan sharks.” Money problems are notorious for adding stress to families; gambling addiction magnifies and exacerbates this source of conflict in families. Not surprising, then, is the fact that families face a greater risk of suffering from a divorce when one of the spouses has a gambling addiction. While non-gamblers have a divorce rate of 18.2 percent, the divorce rate for pathological gamblers is a staggering 53.5 percent.
While the promises of jobs and HOPE scholarship funding sound appealing, the costs of bringing casinos to Georgia – in terms of the human suffering they will cause – far outweigh any potential benefit they will have.
By now, almost everyone who isn’t a Democratic United States Senator has seen at least one of the five macabre videotapes released by the Center for Medical Progress, a pro-life investigative group. The videos are ubiquitous in social media, so I won’t provide links to them here.
In a recent post, AJC columnist Jay Bookman has provided a nice example of the arguments offered by those who continue to defend Planned Parenthood in the face of these—to say the least—embarrassing revelations. Here are his five points, together with my responses.
1. Nothing in the tapes provides evidence of illegal, let alone criminal, behavior. Planned Parenthood is allowed by law to recover its costs in collecting, preserving and transporting that tissue, and there is no evidence it violated that law. Tellingly, and despite the melodramatic complaints of conservatives, the videos have so far resulted in no criminal investigation or prosecution by state or federal authorities. Yelling and the beating of chests doesn’t alter that basic fact. Fabricated outrage doesn’t change that. Simply put, in legal terms there is no “there” there.
Not so fast, Mr. Bookman. The Planned Parenthood representatives are indeed cagey and circumspect and there is, to be sure, no straightforward smoking gun, but like all bureaucrats, they seem to know that there are expenses and then there are expenses. It may take a lot of trouble to untangle what’s a genuine “cost” and what amounts to a profit over and above costs. That the Department of Justice or a federal prosecutor hasn’t yet commenced an investigation doesn’t mean that the DOJ or a D.A. won’t, though given the track record of this Administration with respect to abortion, I’m not holding my breath. A real federal investigation may have to await a new Administration, or a Congressional investigation that forces the current Attorney General’s hand. So there is nothing at all “telling” about the lack of federal action so far. And if I’m not mistaken, at least twelve states have commenced investigations.
2. The law making such research legal was passed in 1993, and among those voting in favor of that bill was one Mitch McConnell, the same man who now claims that videos documenting what he voted to make legal “absolutely shock the conscience.” Other current GOP senators who backed that ’93 law were Richard Shelby, John McCain, Dan Coats, Chuck Grassley, Thad Cochran and Orrin Hatch, many of whom are now backing a shutdown.
Even if the research is authorized by law, it’s one thing to consider that research in the abstract, another altogether to confront graphically what it means and requires (the dissection of a recognizably human body). Perhaps the law needs to be changed. And even if we decide not to change the law that permits the research, there’s no reason why we have to fund either it or the organization that provides the human organs on which the researchers work.
3. Those receiving the fetal tissue are not ghouls of some sort, and the tissue is not being put to inappropriate or disrespectful use. To the contrary, the tissue is crucial to research into treatments to extend and improve human life, research that would be impossible to conduct without that material. As the New York Times reports, “the National Institutes of Health spent $76 million on research using fetal tissue in 2014 with grants to more than 50 universities, including Columbia, Harvard, the Massachusetts Institute of Technology, Stanford, Yale and the University of California in Berkeley, Irvine, Los Angeles, San Diego and San Francisco.”
While we aren’t necessarily talking about Dr. Josef Mengele here, why must we assume a congruence between the demands of science and “democratic” morality? A careful reading of Francis Bacon’s New Atlantis—the great work on science and politics written by the greatest and most perspicuous thinker on that subject—makes it clear enough for anyone who has eyes to see that there’s a pretty significant disconnect between science and ordinary morality. Curiosity and the ambition to master nature can take one pretty far from what’s decent and respectful. The more powerful science is, the greater mastery of nature it promises us, the more attention we must pay to it and the less we should avert our eyes from its practices. There may be benefits—which, by the way, are at the moment for the most part simply speculative—that aren’t worth the cost.
4. All tissue used in that research is donated by clinic patients, who receive no compensation for doing so. Their sole motive is to help fellow human beings. If we ban the use of such material in research, we accomplish absolutely nothing except to halt that potentially life-saving research. So which is the true “pro-life” position?
As C.S. Lewis argues in The Abolition of Man, there’s a moral cost in treating human beings as meat, or of denying the humanity of a being that is recognizably human. In so doing, we run the palpable risk of dehumanizing ourselves, of numbing our moral sense. Indeed, Lewis’s work ought to be absolutely required reading for anyone who wishes to comment intelligently on these issues.
5. None of the $500 million in federal funding going to Planned Parenthood is used to finance abortions. It is used instead to give low-income women access to contraceptives, maternity care, breast-cancer and ovarian-cancer screenings, and vaccinations against sexually transmitted diseases. If we strip Planned Parenthood of funding for such programs as punishment for the “crime” of following the law and providing tissue for medical research, no other organization has the infrastructure, personnel and training to provide those health-care services. In effect, those women and their children would be the innocent victims of a successful effort to defund Planned Parenthood.
While there may not be a single national organization capable of picking up the slack of PPFA’s arguably overstated non-abortion business, the federal funding that it receives can be put to precisely the same use by a myriad of community health centers and nonprofits in the health, not the abortion, business all over the country. Indeed, the proposed Senate bill preserves every penny of women’s health funding, mandating simply that it go to health clinics, not abortion clinics.
I’ve mentioned two pieces of what I regard as required background reading. Let me close with a third, Dr. Leon Kass’ classic, “The Wisdom of Repugnance”:
Revulsion is not an argument; and some of yesterday’s repugnances are today calmly accepted-though, one must add, not always for the better. In crucial cases, however, repugnance is the emotional expression of deep wisdom, beyond reason’s power fully to articulate it. Can anyone really give an argument fully adequate to the horror which is father-daughter incest (even with consent), or having sex with animals, or mutilating a corpse, or eating human flesh, or even just (just!) raping or murdering another human being? Would anybody’s failure to give full rational justification for his or her revulsion at these practices make that revulsion ethically suspect? Not at all. On the contrary, we are suspicious of those who think that they can rationalize away our horror, say, by trying to explain the enormity of incest with arguments only about the genetic risks of inbreeding.
Watch a recording of the event here.
Georgia Center for Opportunity was privileged to partner with the American Enterprise Institute (AEI) in co-hosting an event on the issue of prisoner reentry at AEI’s headquarters in Washington, D.C. on Tuesday, July 28th.
The event featured two panels: The first consisting of non-profits leaders who have faced challenges and successes in helping former prisoners successfully reintegrate into society, and the second featuring government leaders who have similarly faced challenges and successes in working to reform the criminal justice system itself.
GCO’s Executive Vice President and General Counsel, Eric Cochling, moderated the first panel that featured four non-profit leaders, including Craig DeRoche of Justice Fellowship, Harriet McDonald of The Doe Fund, Bryan Kelley of Prison Entrepreneurship Program, and Harold Dean Trulear of Healing Communities. The panelists discussed such themes as the importance for Americans to view prisoners and people with a criminal record as a valuable asset to society, the importance of work and its role in promoting human dignity and successful reintegration, the necessity for returning citizens to experience a change in attitudes and values to avoid recidivating, and the role of the community in embracing returning citizens and “walking with” them in their journey.
The second panel was moderated by Robert Doar, Morgridge Fellow in Poverty Studies at AEI, and featured three government leaders: Georgia’s own Jay Neal, former state representative and current executive director of the Governor’s Office of Transition, Support and Reentry, Gary Mohr, commissioner of the Ohio Department of Rehabilitation and Correction, and Chauncey Parker, special policy advisor in the Manhattan District Attorney’s Office. This panel highlighted specific approaches that states have taken to improve prisoner reentry as a means of promoting public safety, including instilling the mindset that reentry begins at the point of arrest, basing decisions on data instead of knee-jerk reactions, facilitating better connections between family members and incarcerated loved ones, and instilling the importance of viewing offenders as human beings among the criminal justice workforce.
Watch the event and gain a better understanding of how effective collaboration between families, faith communities, service providers, and the government, as well as a changed perception of the ones they are serving, is essential for promoting successful reintegration among returning citizens.