Tag Archives: Dependence

Commentary

Jay Richards explains how welfare forces people into dependency

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Christian philosopher Jay Richards writing for the Heritage Foundation.

Excerpt:

More than 77 government welfare programs—which are spread across several federal departments and provide cash, food, housing, medical care, and targeted social services to poor and low-income persons—are “means-tested.” That is, beneficiaries qualify if they are below a specified income level.

Regardless of their intention, means-tested programs by their very nature pose disincentives for households to increase their incomes and risk termination of their benefits. Thus, the welfare system effectively set up roadblocks to the two main avenues for economic progress: marriage and employment. A single mother would be ensured of her benefits package as long as she did not take a job or marry an employed husband. Given this scenario, it’s not surprising that dismal societal trends have followed.

Unwed childbearing is the major cause of child poverty in America. Since 1965, the rate of unwed births has soared from 7 percent to 39 percent (and among blacks, to 69 percent). Children born and raised outside marriage are nearly seven times more likely to live in poverty than children born to and raised by a married couple. Moreover, unwed childbearing is concentrated among low-income, less educated women in their early 20s—those who have the least ability to support a family by themselves.

Low levels of parental work is the second major cause of child poverty in the United States. In a typical year, only about one-fourth of all poor households with children have combined work hours of adults equaling 40 hours a week. The typical poor family with children is supported by only 800 hours of work during a year, an average of 16 hours of work per week. If work in each family were raised to 2,000 hours per year—the equivalent of one adult working 40 hours per week through the year—nearly 75 percent of poor children would be lifted out of poverty.[6]

Marriage and one parent working = no child poverty. Why is government undermining that? Because broken homes produce children that require government intervention = more government = higher taxes = greater “equality” of wealth through government-run redistribution.

The article explains several government policies that would reduce dependency on government.

Richards explains:

The Welfare Reform Act of 1996 reduced some of these damaging incentives in one major program, Aid to Families with Dependent Children. Under AFDC, states were given more federal funds if their welfare caseloads increased, and funds were cut whenever the state caseload fell. In other words, states were basically encouraged to swell their welfare rolls.

Welfare reform replaced AFDC with a new program, Temporary Assistance to Needy Families (TANF), which provided incentives to move recipients toward self-sufficiency. Funding to each state remained constant regardless of the size of caseloads, and states were allowed to retain savings from caseload reductions.

In addition, states were required to have at least half of their welfare recipients engaged in work or activity that would prepare them for employment. Rather than anticipating depending on the government indefinitely, recipients were limited to five years on the welfare rolls. (Under the old AFDC program, recipients spent an average of 13 years on the rolls.) These reforms in funding structure and incentives made a substantial difference.

Despite dire predictions by opponents of reform that work requirements and benefit limitations would lead to a surge in poverty, just the opposite occurred. States had the flexibility to design programs that best fit the needs of their constituents. State welfare agencies were transformed overnight into job placement centers, while social workers helped recipients access child care, housing, transportation, or other support that was necessary to move them into jobs and toward self-sufficiency.

Within 10 years, welfare caseloads shrank by more than half: 2.7 million fewer families were dependent on welfare checks. As the welfare caseloads fell, the employment of single mothers surged upward, and 1.6 million fewer children were living in poverty.[7] In 2001, despite the recession, the poverty rate for black children was at the lowest point in America’s history.[8]

Unfortunately, Obama rolled back welfare reforms in order to incentivize people to go back onto government dependence.

Keep in mind that Arthur Brooks of the AEI has shown that the amount of wealth a person has (over the poverty level) is not what makes them happy. What makes a person happy (above the poverty level) is that a person is making their own way and earning their own bread by their own work. That’s what makes people happy.

Commentary

Should Christians pray for the economy?

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This article from John Piper’s Desiring God blog was sent to me by Mary.

Excerpt:

A healthy economy serves people in multiple ways. Here are two.

First, it is better for people to be able to work for their living than to have to depend upon others to provide for their needs. For example, Paul exhorts the Thessalonians to work with their hands so that they “will not be dependent upon anyone” (1 Thessalonians 4:12; see also 2 Thessalonians 3:6-12).

In addition to this, as Wayne Grudem has pointed out in his book Business to the Glory of God , economic productivity is the only long-term solution to global poverty. We have seen this manifestly demonstrated over the last several hundred years as economic freedom has, through God’s grace, lifted millions out of poverty, and it remains true for the future.

Second, a healthy economy more effectively allows for the wide-scale implementation of proactive initiatives for the good of others. This is where I want to spend my time—focusing on things that do good for people on a large scale, both physically and spiritually. The multi-faceted creative initiatives that are enabled by a healthy economy include both the initiatives of for-profit businesses as well as the social and spiritual good that non-profit organizations are able to do.

It is absolutely true that God does good through times of hardship and not just health. This is not just true, but glorious. Yet this does not give us reason as Christians to be nonchalant about whether hardship comes. We are to guide our actions and desires by God’s will of command, which is to seek our nation’s (and the world’s) welfare, just as God commanded Jeremiah: “But seek the welfare of the city where I have sent you into exile, and pray to the Lord on its behalf, for in its welfare you will find your welfare (Jeremiah 29:7).

Economics is something that all Christians should care about. Read the Bible first, then think about how the Bible can be applied to economics. What is your plan to serve God, and how does the state of the economy help or hurt your plan? What can you do to make the economy stronger? How can you convince others to share that goal?

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Commentary

Do unemployment benefits encourage people to avoid working?

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This is from the radically-leftist New York Times. (H/T ECM)

Excerpt:

Before this recession, most economists probably thought that some amount of unemployment benefits were just and compassionate, and offered a sense of security even to people who were lucky enough to retain their jobs, despite the fact that the program would raise unemployment rates and reduce both employment and economic output.

In other words, unemployment benefits shrink the economy to some degree, but shrinking the economy a bit may be a price worth paying.

Unemployment benefits were thought to reduce employment and output because, by definition, working people were ineligible for the benefits. In particular, an unemployed person who finds and starts a new job, or returns to working at his previous job, is supposed to give up his unemployment benefits. Economists had found that a large fraction of unemployed people delay going back to work solely because the unemployment insurance program was paying them for not working.

Fewer people working means a lower employment rate, and less output because unemployed people are not yet contributing to production.

The recession has seen a number of economists ignore prior findings on unemployment insurance, at least as long as this recession continues. For example, in evaluating the stimulus law economists at the nonpartisan Congressional Budget Office assumed that the law would raise gross domestic product, and took no account of the fact that the unemployment insurance and other provisions of the stimulus law give people incentives to work less.

Here’s a new study explaining how the “generosity” of the radical left actually encourages people to avoid working, and to remain dependent on the government for their income.

A study published by two labor economists, Stepan Jurajda and Frederick J. Tannery, looked at employment histories for unemployment insurance recipients in Pittsburgh in the early 1980s. Unemployment rates got quite high in Pittsburgh in those days, reaching 16 percent at one point, and staying over 10 percent for two and a half years.

The chart below summarizes their findings for Pittsburgh.

The chart displays the fraction of persons (in Pittsburgh) receiving unemployment benefits who began working again, as a function of the number of weeks until their unemployment benefits were scheduled to be exhausted. For example, a “hazard” value of “0.04″ for week “-14″ means that, among unemployed persons with 14 weeks remaining until their benefit exhaustion date, 4 percent of them either began working a new job or returned to their previous job.

The chart:

Unemployment offers a disincentive to find work
Unemployment offers a disincentive to find work

That chart basically shows the breaking down of the American working spirit by the radical left – making large segments of the American population dependent on government. This isn’t good for the producers, and it isn’t good for unemployed people to be out of work by choice. (Although to be sure, many many unemployed people are not unemployed by choice).