Opinion: Help on the way for Georgians stuck below ‘welfare cliffs’

Imagine Congress created a new tax that didn’t just take a portion of each additional dollar you earned — it took more than that dollar, so that earning a higher wage left you with less take-home pay than before. Now imagine this tax applied mostly to single mothers earning as little as $26,000 per year.

People across the political spectrum would be outraged. Yet, that scenario is essentially what millions of Americans already face. It just happens through the welfare system, not the tax code.

For years, economists have talked about “welfare cliffs”: sharp decreases in a family’s overall income when a small rise in wages causes them to lose a larger amount in welfare benefits. But less is known about how these various cliffs stack up — a family receiving one benefit likely gets others, too — and what specific income levels trigger them, for specific types of families, in particular parts of a state like Georgia.

Now we have a clearer picture, thanks to the Georgia Center for Opportunity. The local non-profit commissioned economist Erik Randolph to create a computer model weighing factors such as family size, location and benefits. The range of outcomes is practically innumerable, and you can play around with them at WelfareCliff.com. But an example should tell the story quite clearly.

Consider a single mom with two kids (the typical welfare family in Georgia, per census data) who receives the federal Earned Income Tax Credit along with subsidies for housing, food, health care and child care. When she earns $26,000 a year, or $12.50 an hour, her overall income including welfare benefits peaks at more than double her wages: over $53,500.

From there it’s all downhill. As she earns more at her job, her net income slowly falls: by $1,300 a year if she accepts even a 25-cent-per-hour raise at work, for example. For her net income to actually rise, her hourly earnings would have to leap from $12.50 to a whopping $30.50. Unless she can jump all the way to that level, a practical impossibility, the welfare system encourages her not to earn more money at work.

“What we’ve discovered in general is, the more welfare programs that an individual receives, the greater the likelihood they’re going to have disincentives for earning more money,” Randolph told me in a recent phone interview. “The more urban the setting, also the more likely they’re going to have more disincentives for earning more money.”

That last bit should ring true for anyone who’s read about the stark income divide in Atlanta. Studies of income inequality tend not to include welfare benefits, which makes them somewhat unreliable for judging how life really is for a lot of people. But to the extent true inequality exists, we exacerbate it by forcing low-income workers scale welfare cliffs to improve their lot.

One obvious question is why the programs were created this way. The answer, Randolph says, is they weren’t — at least, not intentionally.

“It is partly poor design, but people also have to remember these (programs) were kind of haphazardly put together,” he said. “You have somebody (in government) sponsor a program, then later on Congress decides to build a different program, and they’re not necessarily in sync. They’re different programs, overseen by different committees in Congress, implemented by different agencies. So they don’t work as a system.”

Getting these programs to function in concert so they encourage more work, not less, is essential. Randolph and GCO plan to offer specific recommendations for Georgia in the coming months, but Washington will need to do much of the work. Fortunately, meaningful welfare reform is a topic to which Speaker Paul Ryan has devoted much attention in recent years.

The people stuck at the bottom of the cliff have waited long enough.

Reader Comments 0

294 comments
efcdons
efcdons

What a weird thing for conservatives to be concerned about. Since the reason these "cliffs" exist is because of their fear that someone, somewhere is receiving a penny they don't deserve. The obvious solution is to make the benefits universal and remove means testing so an extra dollar of work income won't impact how much one receives in benefits. 


But clearly the underlying reason for this "concern" on the part of the right is to slash assistance payments and somehow make it seem like this is being done to help recipients rather than hurt them (which is the obvious result of decreasing benefits).

JohnnyReb
JohnnyReb

@Finn-McCool

The Liberal mind is a curious thing, unable to separate the wheat from the chaff, void of common sense.

All those feel good things that taxpayers fund COULD be used by the 62 year old man.

Not the maternity coverage.


JohnnyReb
JohnnyReb

@Finn-McCool

One more.

Why don't we have just one car insurance policy.

That way you Yugo drivers could supplement my Mercedes policy.

Hedley_Lammar
Hedley_Lammar

@JohnnyReb @Finn-McCool He could use the maternity coverage too.


Especially if it was his grandson being materned. 


The CON mentality of I gots mine f everybody else is not a good way to run a society.

Doom a classical liberal
Doom a classical liberal

@Finn-McCool


It appears that Finn McFool can't understand the difference between a public good and a private good. There are plenty of public goods that many of us won't use but for which the cost must be shared by all. 


Private insurance is an individual good and requiring a 62 year old man to purchase an individual good for which he has no purpose is beyond stupid. 


It doesn't surprise me in the least that your mind cannot understand the difference between public and private goods. 

Doom a classical liberal
Doom a classical liberal

@JohnnyReb @Finn-McCool


Finn McFool needs to take a refresher course not just in common sense but in basic economics. Individual health insurance is a private good- public works like bridges, libraries, sidewalks, are public goods. 

rdh
rdh

I am not going to read all 278 comments, but consider the person making $53000.   How is it fair to him/her that a mother of 2 with two kids half as much nets just as much after benefits?    Or, how about that a family of 4 making $90,000 pays $24000 for health care, while that SAME $53000 family pays virtually no income tax and  comparatively nothing for healthcare after federal subsidies???  T


What I am getting at is that our system is engineered so that if a family of 4  makes from $25000 to $90,000,  they ALL end up with a net bout $50000 -$60000 . The welfare cliff is HUGE, and is designed to lock people into a range. 

Manman
Manman

The Republican Solution to the cliff is to get rid of all welfare. PROBLEM SOLVED, pay no attention to the impoverished dying in the streets, citizens

DerekGator
DerekGator

Thank you Kyle for bringing this subject some attention.  I don't know how many times we have heard from our workers "I can't work more hours because I will lose my....".  There are a lot of part time workers that won't take full time jobs because if they make any more money they will lose their Section 8, Food Stamps, etc.  This is something that absolutely needs to be addressed, I have always thought that we need to devise a system where they actually get to rewarded for earning more money and end up with slightly more than they would have had if they stayed on welfare. 

Kamchak
Kamchak

@DerekGator 

I don't know how many times I have been standing in line at the Whole Foods behind this huge __________ lady and her grocery cart filled with cigs and beer....

DerekGator
DerekGator

@Kamchak @DerekGator Please don't try to put words in my mouth.  If you choose to ignore that this is a serious issue or pretend that it doesn't happen is naive.  My company has about 600 low wage workers in the $12 - $22/hour range and I can assure you that this is a real issue for many of them. 

Visual_Cortex
Visual_Cortex

@Kamchak @DerekGator

Well look, Kam--the issues raised by Kyle's piece are real. there shouldn't be any disincentive to earn more. I think we're all agreed on that.

What I find extremely hard to believe is that any solution that'd have any prominent elected Republican's name on it wouldn't find some way to screw poor people out of aid they already receive. I'd love to be wrong about that.

I also think that $53K figure was but so much red meat for the Stupids, even though it's quite possible Kyle didn't intend it as such.

DerekGator
DerekGator

@Kamchak @DerekGator How many of them refuse extra shifts or stay part time instead of going full time because they don't want to lose a benefit?  I you seriously trying to say that this is not a problem?

Kamchak
Kamchak

@Visual_Cortex

Yes, the issue is real, but the anecdotal evidence stories are laughable and a variation of the Reagan welfare queen. 

Kamchak
Kamchak

@DerekGator

I[sic] you seriously trying to say that this is not a problem?

Did I seriously assert that?

Please don't try to put words in my mouth.

Visual_Cortex
Visual_Cortex

Wow, I knew Classilib wasn't real bright, but he's actually defending drug-testing for aid recipients down below.

That's a whole 'nother level of idiocy.

Doom a classical liberal
Doom a classical liberal

@Visual_Cortex @Eye wonder


So VC makes the leap that "ogling beauties" now means paying for sex. Sheesh. That's a level of stupid that I thought was beyond even VC. 


You not only need better translation ability but you need a better understanding of plain English. 

JohnnyReb
JohnnyReb

Rubio says he spoke to a person in the Trump/Ruskie meeting who vehemently denied anything wrongly stated in the meeting.

Hate is a strong word and should be used sparingly with considerable forethought.

I'll continue to think if it should be written of MSM and the Left.

JohnnyReb
JohnnyReb

Isn't this special?

Obama commuted Bradley Manning's sentence before exiting the White House.

Manning....Bergdhal....seems Obama never met a traitor he did not like.

Could there be a Snowden pardon we don't know about?

JohnnyReb
JohnnyReb

And, Bradley stays in the military, full benefits including gender reassignment surgery on the taxpayer's dime.

You Libbies looking for outrage, here it is, not some bogus charge against Trump.

I can hear them now....

But oh, oh, Obama was the greatest president ever.

AndyManUSA#45
AndyManUSA#45

Oh yeah, and the monkey media sees the word "wiretapp" as only having one single solitary meaning, attaching two wires to a rotary dial telephone line, and then they see the word "hope" as having multiple meanings that they apply anyway they want to, like "you shall" and "you'd better."


whackjobs

AndyManUSA#45
AndyManUSA#45

So what was comey's clinton email press conference other than comey asking himself "I hope you can let this go, james." 


"I know you got a lot of evidence but she's a good guy."


LOL


Some people can influence investigations with no problems and some people can't and the monkey media get's to decide who is who.

TheCentrist
TheCentrist

A review of a CATO Institute study showed that in one state that used this theory showed the conclusion benefited 260 people, or 1/200 of 1% of that state's population.

AlisonD.Montenegro
AlisonD.Montenegro

my Aunty Kendall got a stunning yellow BMW 5 Series Gran Turismo Hatchback just by some part-time working online with a cheap laptop... check out here............. www.smart-job5.com

Queen of Ctown
Queen of Ctown

The Georgia Center for Opportunity is a right wing group.   None of the numbers above has any basis in reality.

DerekGator
DerekGator

@Queen of Ctown While you may debate the exact numbers, this issue is definitely a real problem.  We constantly have workers refuse more hours because they don't want to lose a benefit. 

smith here
smith here

google jobs..!!!!!!!! I am surprised that any one able to profit $8300

                                            in a few weeks on the computer . 

                                         why not try here.............     https://tinyurl.com/google-jobs-online


Dumporangebuffoon
Dumporangebuffoon

Looks like Johnny Reb and  Andy Man will keep blowing their horns and trying to entertain us as the SS Trump slowly dips into the water bow first and the tail raises up in the air

JohnnyReb
JohnnyReb

@Doom a classical liberal

Add to the mix the DNC refused to let the FBI investigate their server and, instead, used a private firm and the questions multiply.

Unless the FBI is holding the information secret, they never touched the server and all those "multiple agencies" the MSM likes to reference as concurring it was Russia who hacked the DNC server is based on a single report from a private company.