NCPA - National Center for Policy Analysis

Welfare Pays More than Minimum Wage in Most States

August 27, 2013

Welfare pays more than a minimum-wage job in 35 states, creating little incentive for Americans to take entry-level work and likely increasing their long-term dependency on government help, according to a new study by the Cato Institute. The findings come 17 years after the Clinton administration, with bipartisan support from Congress, passed landmark welfare reform legislation that was supposed to move Americans away from entitlements and into the workforce, says Fox News.

  • Among the other findings is that welfare in 13 states pays more than $15 an hour, compared with the federal hourly minimum wage of $7.25.
  • The disparity was even higher in nine states in which welfare pays more than the average first-year teacher's salary; in the six most-generous states, it pays more than the entry-level salary for a computer programmer.
  • The study points out that a full package of welfare benefits often exceeds take-home pay in part because benefits are tax-free.

The study's author argues that if Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare-to-work requirements, removing exemptions and narrowing the definition of work. This could include reducing benefit levels and tightening eligibility requirements.

The Washington-based Center on Budget and Policy Priorities argues the study has several flaws, including that it "lumps together" a set of safety-net programs, including Medicaid, housing assistance and food stamps, and that "all poor families in which the parents aren't working receive all of these benefits."

Source: "Study: Welfare Pays More than Minimum Wage in Most States," Fox News, August 21, 2013. Michael D. Tanner and Charles Hughes, "The Work versus Welfare Trade-Off: 2013," Cato Institute, August 19, 2013.


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