Welfare: A Vicious Cycle

Photo by Foundation for Economic Education

Melissa Liu, Copy Editor

Even though the federal government has spent almost $20 trillion on welfare since 1964, the poverty rate remains nearly the same as where it began because welfare not only fails to mitigate, but exacerbates three key causes of poverty: getting pregnant outside of marriage, not finishing school, and the lack of well-paying, steady employment.

There are many welfare programs that assist families with children, including Temporary Assistance for Needy Families (TANF), Supplemental Security Income, child nutrition programs, and the Women, Infants, and Children food program. The problem is that single-parent families receive most of this aid, making it easier to have children without getting married. Most of our 80 welfare programs also disincentivize marriage because when two people marry, the household income goes up, often resulting in welfare reductions. Because poor individuals typically receive assistance from multiple programs, the loss of benefits from marriage is substantial. However, single-parent families are more susceptible to poverty because there is only one breadwinner in the family, which is why 63 percent of poverty-stricken children belong to single-parent households. In this way, welfare creates a vicious cycle of poverty, where it encourages single-parenting, leading to even more poverty and an even greater need for welfare.

The second way welfare makes it difficult to escape poverty is by discouraging impoverished people from pursuing further education. Candace Vance, a single mother of two in Wisconsin, is a prime example; she is working a minimum wage job and therefore cannot save up to go to college. Even worse, Wisconsin’s welfare system prohibits her from going back to school. She is not the only one. Clearly, a lack of education is problematic, as high school dropouts are three times more likely to end up in poverty. Even high school dropouts with jobs face bleak financial situations, as this group has experienced a wage decline of almost 20 percent over the last three decades.

Because of reforms that have added strict work requirements, welfare recipients are forced to find work, and fast, but this work is often low-paying and offers no route to climb the socioeconomic ladder, leading to yet another way welfare ensnares its victims. Moreover, in today’s world, promotions for minimum wage workers and on-the-job-training for higher-skill jobs are rare, making it even more difficult for a poor individual to obtain a well-paying job. Even if welfare recipients are lucky enough to find decent jobs or receive a pay raise, they might have to turn down these offers since many programs have an income threshold at which benefits are cut. If a higher wage leaves you worse off financially than you were before, what incentive do you have to take a pay raise?

But while some claim that it is not our responsibility to address the root cause of poverty, only to make it more comfortable, it is evident that welfare programs have failed in that regard as well. Today, there are now more than 1.5 million households, including 3 million children, living on two dollars per person or less per day. Many poor families do not receive assistance due to bureaucratic obstacles. After all, how is a person with a disability supposed to get aid if he can’t afford a doctor’s visit to verify his disability? Others simply do not know they qualify. Whatever the cause, a quarter of those in poverty do not receive food stamps, and a third of those who do must visit food banks for additional food. TANF, which once served almost 70 percent of low-income families, now provides help to barely 20 percent. Only 24 percent of those eligible for housing assistance get it, and even then, recipients sometimes have to wait years. The examples go on and on.

Beyond this, the methods our current welfare programs employ are immoral. They rely on incentives and requirements to micromanage the poor and their finances, relying on the assumption that they are incapable of managing their own lives. This has created a negative perception of welfare, which causes many of those on welfare to experience shame and lower self-esteem, while many of those who qualify for benefits fail to claim them.

We need a better welfare system, one that does not strangle upward social mobility, and one that is not, as economist Lionel Robbins put it, “morally revolting.”