Why Work Hard?: Min Wage Job + Welfare Beats $60K/year In 2010 America

[roo_ster]

http://www.zerohedge.com/article/entitlement-america-head-household-making-minimum-wage-has-more-disposable-income-family-mak

Title:
"In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year"

"a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year."



It is just this sort of thing that discourages work.

[Marnoot]

Those numbers assume the family is using (what I assume is) the max Medicaid/CHIP benefit, which throws the numbers a bit. Granted the benefit would contribute vs having to pay insurance premiums, but I doubt most families on welfare are also making use of $16K+/year in medicaid benefits. Any amount of Medicaid benefit = economic benefit, but Medicaid benefit != Disposable income. The article calls it disposable income to greatly exaggerate their point.

It is just this sort of thing that discourages work.

No argument there.

[MechAg94]

I also wouldn't call those benefits disposable income.

Don't they need to add in FICA and Social Security withholdings and such?  It looks like they leave that out. 

[longeyes]

In Cali a young guy and his girlfriend, both on unemployment, can get by nicely on $45K a year for three years.  Life is good.

[Northwoods]

Don't they need to add in FICA and Social Security withholdings and such?  It looks like they leave that out. 

Look at that first line again.

[BridgeRunner]

Yeah, you try living on $245/month cash and get back to me on how much disposable income you have.

The chart is misleading.  It ignores other components of the "total economic benefit" received by the $60k family, such as employer contributions to health care (including dental/vision, not covered by Medicaid), child care, and 401k.  It ignores all tax credits other than the EITC.  It ignores that Section 8 is very far from universally available to low-income families.  And, ftr, when my family had about as much income as the minimum wage family, we did not get full Medicaid or SNAP benefits: we had a $211/month deductible and received about $100 less per month in SNAP benefits--and that was for four people.  In other words, either the calculations for eligibility for these federally funded programs are vastly different state to state (I don't think so) or the chart is outright wrong about the amount of benefits allocated to a minimum wage family.

Now, I don't have personal experience with all sides of the chart, but for a couple of years, my household income was around $50k.  And for about a year, we fed and housed three children who lived with us, along with their mothers.  We didn't use $16,000/year worth of medical benefits, we didn't spend $526/month of food (we fed four adults and three children on about half that), and we had a LOT more disposable income.  

I'm not saying that a family making minimum wage should necessarily somehow get more welfare.  But I am saying that it takes a powerful imagination to state that $245 cash to cover a portion of rent, most utilities, all transportation, all clothing and personal needs, and all emergencies comes anywhere close to having any disposable income, much less more than a family making $60k/year.

[Nick1911]

I'm going to have to call BS on this too.

As others noted, several things are misrepresented here to skew the numbers.

Also, I think there's a bit of a different quality of life to me living in my 4 bedroom house vs living in inner-city section 8 housing.

[Marnoot]

Also, if we're going to compare the maximum annual medicaid benefit to someone not on welfare, and therefore likely on employer-sponsored insurance, annual or lifetime maximum (I believe generally there is no annual max, just a lifetime max) for private healthplans is often seven figures, which using the logic provided in the chart means that I potentially have a couple million in disposable income in any given year.

[MechAg94]

Look at that first line again.

What?  Am I supposed to assume that includes all those other payroll deductions?  It could have just said income tax, FICA, SS, etc.  

[Northwoods]

What?  Am I supposed to assume that includes all those other payroll deductions?  It could have just said income tax, FICA, SS, etc. 

Yes, that is what you are supposed to assume.  Payroll taxes are the same as FICA (which, incidentally, is both Medicare and SS taxes).  Kind of like how fault is the same as Fistful.

[Jim147]

I have to pay all parts of my taxes.

jim