Since 2009, the Fair Labor Standards Act has dictated that the federal minimum wage is $7.25 an hour.
Some people think that’s too low; others think it’s too high. But it turns out that, in 35 states, it’s a better deal not to work—and instead, to take advantage of federal welfare programs—than to take a minimum-wage job. That’s the takeaway from a new study published by Michael Tanner and Charles Hughes of the Cato Institute.
“The current welfare system provides such a high level of benefits that it acts as a disincentive for work,”
Tanner and Hughes write in their new paper. “Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit,” which offers extra subsidies to low-income workers who take work. “In 13 states [welfare] pays more than $15 per hour.”
Losing ground in the war on poverty
The welfare system, at its best, is a system that gives people a way to live when they can’t find work for themselves, when they’re down on their luck. At its worst, the welfare system rewards people for not working, and incentivizes people to develop habits that make it harder for them to find work in the future, miring them in permanent poverty.
For the rest of the story: http://www.forbes.com/sites/theapothecary/2013/09/02/on-labor-day-2013-welfare-pays-more-than-minimum-wage-work-in-35-states/