Perhaps it’s because, while poor people are not lazy, they are not stupid either. If you pay people more not to work than they can earn at a job, many won’t work.
A new study by the Cato Institute found that in many states, it does indeed pay better to be on welfare than it does to work.
Most reports on welfare focus on only a single program, the cash benefit program: Temporary Assistance for Needy Families. This focus leaves the misimpression that welfare benefits are quite low, providing a bare, subsistence-level income. In reality, the federal government funds 126 separate programs for low-income people, 72 of which provide either cash or in-kind benefits to individuals.
Because there are so many categories of welfare recipients and so many different types of benefits, it is extremely difficult to determine how many people get what combination of benefits. For the purposes of this study, we assumed a hypothetical family consisting of a mother with two children, ages 1 and 4, and calculated the combined total of seven benefits that family could receive in all 50 states.
If that mother received Temporary Assistance for Needy Families, it is almost certain that she would also receive food stamps and Medicaid as well. Roughly 87% of Needy Families do.
Approximately 61% of all Needy Families fitting our profile also receive aid from the Women, Infants and Children program, or WIC, so we included that benefit. (If the children were older, they would not be eligible for WIC but would receive other benefits such as subsidized school lunches and breakfasts.) We also included utilities assistance, given that half of welfare recipients are on that program.
Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.