Economists with the Committee to Unleash Prosperity released a new study last month highlighting our nation’s expansive welfare state. The study shows that welfare pays more than or nearly as much as a typical middle-class job in many states, making the financial incentive to return to work incredibly low.
The authors write in an op-ed announcing the study: “Did you know that families earning half a million dollars a year can receive ObamaCare subsidies? Or that in some states, unemployment insurance benefits can be equivalent to a job with annual pay of $100,000?”
Some benefits like unemployment insurance are time-limited, but that does not prevent some people from moving in and out of the unemployment system without committing to long-term work.
The government welfare safety net was made for struggling low-income families with the end goal of getting them back into the workforce. Yet benefits now are going to high-income earners in many states. In some states, families earning $500,000 are receiving benefits. Welfare benefits have expanded well beyond their designed intention.
The study focuses primarily on unemployment insurance (UI) and Affordable Care Act (ACA) subsidies.
In more than half of our states, unemployment benefits and ACA subsidies exceed the value of the salary and benefits of the average firefighter, truck driver, machinist, or retail associate in those states, according to the study. North Carolina fares better than most states on this metric, but even so, welfare is far exceeding its intended purpose.
The state with the highest benefits for not working is Washington. There you can earn an income equivalent of $122,653 from the government. In North Carolina, the income equivalent for not working is $51,352, the 9th lowest. Even so, this is higher than the average salary of a working firefighter or retail associate in the state.
When comparing just UI benefits across states, North Carolina again has the 9th lowest benefit, although the state has one of the highest UI benefits in the south. A family of four (two unemployed parents and two dependent children) in North Carolina can receive the earned income equivalent of $39,415 in unemployment insurance benefits annually. Massachusetts and Washington tie for the highest earned income equivalent with UI benefits equating to an income of $112,502.
ACA subsidies have expanded substantially since being signed into law. President Biden expanded ACA subsidies in the American Rescue plan and has extended those subsidies several times, including with the Inflation Reduction Act, which extended the expanded subsidies to 2025. A family of four (two adults aged 60 and two children ages 15 and 17) living in Raleigh can make up to $348,212 and still qualify for subsidies.
These generous benefits are, unfortunately, a handout to the wealthy. Welfare was intended to get people back into the workforce. Under progressive leadership, however, welfare has exploded.
Society’s growing entitlement culture is only too happy to accept this as a new normal. But work is good for more than just a paycheck. It promotes self-reliance, personal responsibility, health, and pride. Moreover, it creates abundance.
Former housing and urban development secretary Ben Carson in a Wall Street Journal op-ed wrote a truism I find hard to forget: “Americans believe in the safety net, not the safety hammock.” The safety hammock damages self-reliance and leaves more Americans dependent on the government and out of work. But perhaps that is the goal.