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State Watch
Welfare’s Failure Amid Red Ink
What happens when welfare spending outpaces poverty growth?
A slideshow presented by Pennsylvania’s Secretary of Public Welfare, Gary Alexander, “Welfare’s Failure and the Solution,” graphically illustrates the cost and unsustainability of the state’s anti-poverty programs.
Starting with the big picture, a “Pennsylvania Growth Trends” graph shows 10-year expansions, 2001 to 2011, adjusted for inflation, in four categories.
First, the economy in Pennsylvania expanded by a total of 7.4 percent in that 10-year period, while general fund revenues to the state increased by 1.3 percent.
Next are two big jumps in growth in Pennsylvania during that same decade. Poverty was up by 29.9 percent and the Pennsylvania welfare budget ballooned by 36.5 percent.
Note that the welfare budget was up significantly more than the percentage increase in poverty. Additionally, remove the adjustment for inflation and the Pennsylvania welfare budget expanded during those 10 years by 80 percent.
Another slide shows the “Example Household Receiving Welfare Benefits” — “Single mom, two children, lives in Pennsylvania, no disabilities, children are 1 and 4 years old and placed in a Star 4 childcare center.”
The “Star 4” refers to the Keystone Star ranking system in which pre-kindergarten programs earn a Star 1 to a Star 4.
To get the Star 4 designation, “at least half of lead teachers have a Bachelor’s degree in early childhood education, and all have at least an Associate’s degree.”
Additionally, Star 4 teachers follow the “PA Early Learning Standards to development curriculum and assessment,” and provide “daily updates” on a child’s progress, and have demonstrated a willingness to jump through a prescribed sequence of centrally designed hoops.
To obtain and maintain the Star 4 stamp of approval, the staff has to “complete continuing education each year” and “receive at least four employee benefits, such as health insurance, which helps to reduce staff turnover” — and helps to reduce the take-home pay of taxpayers who are picking up the tab.
Pennsylvania has two free pre-kindergarten programs: “Pre-K Counts” for households earning up to 300 percent of the federal poverty level, and Head Start for the “most at risk” who earn 100 percent of the federal poverty level or less.
A “Welfare Cliff” slide illustrates how subsidies for energy, food, day care, tax reimbursements, medical assistance, housing, etc., are cut as earnings increase, thereby delivering a strong and obvious disincentive for upward mobility and work.
A specific example from Pennsylvania’s Secretary of Public Welfare shows how the state’s assistance programs have become a powerful deterrent to work: “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 and benefits of $57,045.”
So why go to school or work harder when the net result is no more money? And less leisure. Who’d work for nothing, aside from some uncommon folks like Mother Teresa?
It was often argued during the recent tax debates in Washington that “the rich” will work less and create fewer jobs if the top marginal tax rate on income is increased from 35 percent to 39.6 percent.
If that’s true, how then can any of us be surprised if people at the other end of the income range “work less” when the government imposes an effective tax of 100 percent on increased earnings?
The result, nationally, as reported by Pennsylvania’s Secretary of Public Welfare: “For every 1.65 employed persons in the private sector, 1 person receives welfare assistance.”
About the Author
Ralph R. Reiland is the B. Kenneth Simon professor of free enterprise and an associate professor of economics at Robert Morris University in Pittsburgh.
Letter to the Editor View all comments (23) | Leave a comment
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Appleby| 2.7.13 @ 7:16AM
I been tellin' ya. Ain't I been tellin' ya?
It's interesting that the people so assiduously promoting abortion for the poor never think that having a baby or two might be their stepping stone to a comfortable place in the middle class, provided they have the right navigator to steer them to the peaceful lagoon funded and worshipped by the Great God Gimmee.
Nancy in NC| 2.7.13 @ 8:07AM
The Dims like to give the most to those who do the least...they earn their living by voting and nothing else. How can that kind of thinking work out well?
Pecos Pete| 2.7.13 @ 9:07AM
Works out pretty well for the Big Government Ruling Class, be they democrat or republican.
KennesawJack| 2.7.13 @ 10:45AM
One would have to say the Marxists have won in Pennsylvania. From each...to each....etc., etc.
TLP| 2.7.13 @ 1:39PM
What, exactly, is Welfare, of not a form of Communism. A form of Marxism.
To each, according to their needs. from each, according to their abilities.
Believe it, or not? This is not the first time this has been tried in this Country. Not even close.
When the Pilgrims first arrived here, they all worked the fields, and the Bounty was Distributed Equally between all of the Settlers. Unfortunately, not everybody put in the same effort (thinking that others would pick up the slack) and the Pilgrims almost starved.
Marxism 101.
The following year, each Home was given their own plot of land, that they were responsible for. All of a sudden, it was like what The Bible said: If you don't Work? You don't Eat.
Everybody understood this, and they worked hard and grew their crops, until the Bounty was such that, they not only had enough fornThemselves, they had enough to Trade amongst themselves, and even with their Indian Neighbors.
Capitalism 101.
Go Figure.
KennesawJack| 2.7.13 @ 1:50PM
And it was for Capitalism 101 that they gave thanks.
Bob K| 2.7.13 @ 9:33AM
Excellent article, Professor Reiland!
This is driven by Federal Government policies and politics!
It should be noted that Pennsylvania's welfare regulations are written to benefit Philadelphia (Philadelphia Co.) and Pittsburgh (Allegheny Co.) which combined have 60% of all the states welfare recipients. Both cities have been losing population at a steady rate over the years.
The rest of the counties in the state "benefit" from them too.
In addition the Northeast and Southeast parts of the state (Berks, Lehigh and Luzerne Counties---3 of the states largest counties.) have been subjected to a huge immigration of poor hispanics; a great many of them are from the Dominican Republic and Central America south of Mexico. These people are for the most part very poorly educated; near illiterate in Spanish, to say nothing of English. Costs of educating these people have skyrocketed and have caused School Taxes to rise. An example of the Law of Unintended Consequences; a Law of Economics which is seldom discussed.
These 2 factors are probably the major reasons for the rise in Welfare costs.
It's not likely to get any better with the Federal Government's open door policy to Immigration and giving cell phones to everyone.
Bob K| 2.7.13 @ 2:07PM
Here is an example of the Law of Unintended Consequences at work.
Mission Foods has a large manufacturing plant in PA located in a large Manufacturing complex built to attract large manufacturing concerns.
Mission Foods is a subsidiary of Gruma Corporation from Monterrey, Mexico. Grumma is the largest manufacturer of corn flower and tortillas in the world.
Since the opening of the Mission Foods plant 10 years ago it has been gradually replacing PA workers with immigrants until they are now in the majority. Their children attend local schools. Traditionally the mothers in their families do not work and wages are low enough so that many families can qualify for Food Stamps and Medicaid.
This trend will continue for another 10 years or so until the 20 year mark arrives when the State and Local dispensations from paying taxes runs out. After that Mission Foods will relocate somewhere else for tax advantages and the the welfare roles will be further burdened by the immigrant workers left behind.
Government and so called "capitalists" who would insist that they are conservatives are seen here as complicit in increasing the costs to maintain the welfare state.
Harry the Horrible| 2.7.13 @ 10:02AM
At some point we 're going to have admit that we can't continue to pay the people simply to exist. The Welfare state needs to come to an end. There simply is no right to food, shelter, clothing, and medical care at the expense of others.
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: "If you don't work you die."
sickofit5| 2.7.13 @ 11:00AM
http://www.thenewamerican.com/.....how-for-it What is really sickening is the contempt the right is shown, in the face of overwhelming evidence, when they argue that what we are doing hasn't worked. The left, through a complicit media, demonizes the right in the face of the overwhelming evidence that we need to change. Their response is clear evidence that they ignore this evidence purely to gain political advantage and not to do what they were sent to Washington to do, and that is help their constituents thrive on their own.
Al Adab| 2.7.13 @ 11:21AM
Welfare and social services do not seek to end poverty, they institutionalize it. Instead of showing people how to end the cycle, those very people the system proposes to help become "pets" of the system. Dependency is so profitable that the incentive to become self-sufficient is nowhere to be found. This is false compassion and charity under compulsion is no charity at all. Fifteen percent of the population on food stamps is despicable yet the agencies involved claim what a great job they are doing in reaching the needy. Is our intention to provide subsistence or to lift our fellow citizens from a condition of need?
TLP| 2.7.13 @ 1:40PM
End it?
They encourage it.
TLP| 2.7.13 @ 1:41PM
They perpetuate it.
cicero| 2.7.13 @ 11:23AM
We on the right keep stating the obvious, all to no avail. The left simply doesn't believe it because this nonsense has been going on for more that the period most of them have been alive, and it works for them. Those who know better - the liberals in power - profit handily by these programs, as 72% of all money allocated for welfare stays in the welfare beaurocracy. These are the "What, me worry?" guys who believe their world will go on forever. They will not be hurt by the collapse, as it will not come as an avalanche, but as a trickle. They are betting that they will be above the high water mark when it happens.
The conservative movement has to keep hammering away at this, and fighting every battle as if it counted. If the war must be won on the state level, so be it. No more state bail outs of cities who spend themselves ionto bankruptcy. No more raising of taxes to pay for this nonsense. The only remedy is a return to reality.
Al Adab| 2.7.13 @ 1:18PM
People on The Left use the welfare system as a method of passing the buck to relieve themselves of the personal obligation to care and to act. By institutionalizing a system of "charity" they believe they have removed from themselves any obligation of personal involvement.
Riff Raff| 2.7.13 @ 12:25PM
Discussing Welfare from an economic standpoint is rather useless. Welfare does not exist to help poor people. Welfare was created and expanded specifically to buy votes for Democrats, and from this viewpoint the program is a rousing success. It is axiomatic that Welfare programs consume wealth while helping virtually no one to actually exit poverty. Welfare is designed to make people poor, keep them poor, and guarantee than almost all of these people will never be able to work and support themselves. Thus they are a lock to vote for Democrats, the Patrons of their very existence.
Socialists tell us that History is a series of struggles between the very rich and the very poor, but this is a lie. Historically, the very rich in government and the very poor have had a symbiotic relationship, as the very rich support the very poor economically, while the very poor support the very rich in government politically, and the middle class is taxed to pay for it. Welfare programs are unconstitutional at the Federal level (the States can do what they want in this regard) and at all levels fundamentally immoral. The Bible teaches that we should "give alms to the poor," that is give of our OWN wealth to help others. It does not teach that government should TAKE from other people's wealth in order to give it to the poor who then vote for more of the same. This is the very definition of corruption.
Bob K| 2.7.13 @ 1:42PM
There is a Federal Welfare Program.
SSI, Supplemental Security Income, is funded by the Federal Government's General Fund and is a Welfare Program.
States, in order to save money on their own welfare programs have established agencies to determine if Welfare Recipients qualify for this Federal Program and can be removed from the state's welfare roles. In PA it is known as the Bureau of Disability Determination.
Riff Raff| 2.7.13 @ 4:17PM
Yes there is a Federal Welfare program. There are in fact several. But all such Federal programs are flatly unconstitutional, since the Constitution, the Supreme Law, does not delegate any power to Congress provide a Welfare program. Per the 10th Amendment, this is a power reserved to the States, which can act or not act as they see fit. The reason for this should be obvious, the larger the program, the more removed it is from the people it claims to "serve," the more easily it is corrupted. That States are dumping Welfare claimants on to the Feds is not surprising.
All Federal Welfare and Welfare-like subsidy programs should cease. They are illegal. Government Welfare programs in general are also immoral, as they degrade and demean people, not help them.
markenoff| 2.7.13 @ 3:59PM
That's it. I'm moving to PA, divorcing my wife and abandoning her and my kids.
cicero| 2.7.13 @ 4:19PM
Way back when, when I was but a young lawyer, just as the welfare state was really ramping up, I had a client who had made his living, and surported his family of wife and 5 kids as a day laborer. His wife was approached by the state welfare counselor who told her how much money she would get, if only her husband were gone. Needless to say, he was soon gone.
Not too long later, he was hauled before the court because he did not (could not) pay the state back for the money the state was expending on his family.
I informed the court that my client could not compete with his wife's new husband, Uncle Sam. The court paused, looked at me, and quietly stated, "No one ever expained it to me in quite that manner. Case dismissed." And, as they say, the rest is history.
Riff Raff| 2.7.13 @ 5:37PM
Hmmmm.... I can think of one State Welfare Counselor who should be tarred and feathered. Breaking up a family for politics. 5 kids with no dad, just so some schmuck Welfare worker could FEEEEEEEEEL good about herself. Disgusting. Leftists are scum.
aware| 2.7.13 @ 5:06PM
Quite right, Professor, but you cannot stop it. Political impossibility. For now a thin wall of debt is hiding reality. The reality is that everything is a fraud.
The "recovery", the law, the courts, the "government", the banks, the schools, the "leaders", the economy. All frauds.
The "problem" is a fraud and so is the "solution". The same people are in charge of both.
markenoff| 2.8.13 @ 11:08AM
Wait until the EBT cards stop working.