NCPA - National Center for Policy Analysis

Why Three Million Are Still On Welfare

March 24, 2000

A few states present shining examples of how welfare reform can work. Wisconsin, for example, cut its rolls from 100,000 in 1987 to less than 10,000 today -- and the vast majority of those former benefit recipients have found paying jobs.

Nationwide, however, the number of people on welfare is still more than half the number on welfare in 1993. Experts say that is due to a wide disparity among the states regarding benefits. States which offer large benefits have, by and large, only had modest success in moving people into jobs; while states with low benefit levels have trimmed their welfare rolls. That is the conclusion of a study conducted by the Cato Institute.

  • In all but a few states the full array of welfare programs --- including Aid to Families with Dependent Children, food stamps, Medicaid, heating subsidies and public housing -- pays better than the after-tax payment from working in most starter jobs.
  • In high benefit states like New York, Massachusetts and Hawaii, the value of the full package of welfare benefits can reach $12 an hour.
  • At more than $30,000 a year, Hawaii has the highest benefit level of any state and has the worst record of any state in trimming its rolls -- with only 7 percent leaving welfare since 1996.
  • Conversely, Mississippi -- whose benefit package is the lowest of any state, at $13,033 a year -- has reduced its caseload by 73 percent since 1996.

Almost two of every three welfare recipients collect payments for eight years or more -- with the average stay being more than 10 years.

Source: Stephen Moore (Cato Institute), "Despite Progress on Welfare Reform, Mission Still Far From Accomplished," Investor's Business Daily, March 24, 2000.


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