Despite declining poverty rates for the past 30 years, some policymakers and commentators have described America’s social safety net for low-income families as inadequate to address the pandemic-induced economic crisis.
In response, progressive lawmakers want to expand government programs for low-income families even more. But the safety net’s main problem is not that it is insufficient, it is that by discouraging work it traps people in the very conditions that make the current crisis so hard.
Rather than expanding existing programs, we need reforms that encourage employment and give low-income people a realistic path to a more prosperous life.
The federal government sends billions of dollars in aid to low-income households each year to help them meet their food, housing and other basic needs. The result is dramatically lower poverty than even a few decades ago, especially among children.
While the government’s safety net successfully reduces material hardship, it also discourages employment, reducing the chance that a low-income person can work their way up the economic ladder and enjoy economic security. We should be happy that the current safety net has reduced the number of households in poverty, but we shouldn’t take too much comfort knowing that it also means fewer employed low-income people.
The best example of this dynamic is how the safety net discourages employment by “taxing” away increased earnings, and then assisting people in poverty by doling out government-provided benefits.
A team of economists recently found that over half of low-wage workers take home less than 55 cents of each extra dollar they earn because of our tax and transfer system. Single mothers face the worst of it.
A 2019 government study found that a low-income working mother would only be able to take home $1,300 from a $5,000 annual pay raise because the extra pay would cause her to lose childcare assistance.
When I worked for New York City’s social services department, I frequently heard from people who were receiving government benefits that they didn’t want to get a job or a pay raise if it meant they wouldn’t be much better off financially.
It is no wonder that four in 10 people in poverty believe that welfare benefits encourage people to stay poor according to a 2016 AEI/Los Angeles Times survey.
Yet, congressional Democrats want to use the pandemic as an excuse to expand safety net programs even more, and Democrat-led states are using it to justify a lawsuit aimed at weakening work incentives for benefit recipients.
House Democrats requested a 15 percent increase to the maximum SNAP benefit (formerly Food Stamps), even though Congress already increased benefits to deal with the fallout of the pandemic. Receiving SNAP leads to less employment, and expanding it will make this problem worse.
Additionally, 19 states and Washington, D.C., sued the Trump administration’s Department of Agriculture earlier this year to prevent a new rule on work requirements for childless adults receiving SNAP after the pandemic ends.
This goes against what low-income people want for themselves. In the AEI/L.A. Times survey, 87 percent of adults, including 81 percent of people in poverty, supported work or job training expectations in return for government benefits.
Mindlessly expanding safety net programs in the wake of COVID-19 reinforces a broken approach that weakens the connection between government supports and work, impeding economic mobility for our country’s most vulnerable residents.
Instead, we need to redesign government programs to reduce steep “taxes” on low-income families as they earn more from work, and enact policies that expect work in exchange for benefits.
