Florida welfare programs are not a disincentive to work, according to Cato study

in Uncategorized by

Welfare benefits continue to outpace the income that most recipients could expect to earn from entry-level jobs, according to a study released Monday by the Cato Institute.

In 1995, Cato published a widely circulated study, The Work vs. Welfare Trade-Off, which estimated the value of the full package of welfare benefits available to the average recipient in each state and DC, and which found that the value of welfare benefits greatly exceeded the poverty level. Further, Cato found that because welfare benefits are tax-free, their dollar value even more dramatically exceeded the amount of take-home income a worker would receive with an entry level job.

Yet over the past nearly 20 years, state welfare programs have changed significantly, including through the 1996 welfare reform program that replaced AFDC with TANF.

Cato’s 2013 study states that while there is no evidence that people on welfare are lazy or do not wish to work (and in fact, the contrary), the balance between welfare and work may actually have grown worse in recent years, and may act as a disincentive for work.

From Cato data, however, this does not seem to be the case in Florida.

Florida is among 18 states where the total value of welfare bene­fits has declined in inflation-adjusted terms since Cato’s 1995 study, while it has risen in the other 32 states and the District of Columbia.

The authors write that, “far from condemning welfare recipients to a life of poverty, welfare actually exceeds the federal poverty level (FPL) in 42 states and the District of Columbia.” 

Yet Florida is one of just eight states where welfare benefit dollars leave a recipient receiving below the FPL.  On average, Floridians receiving benefits remain at 92.8% of the FPL.  

Florida ranks 46th in the nation for welfare benefit packages, and is among the 18 states that have seen a decline in inflation-adjusted dollars since Cato’s last study in 1995. In 1995 inflation adjusted dollars, the total value of welfare benefits for Floridians, on average, was $26,092. Today, this has decreased by $7,971 to $18,121. If taken as equivalent to wage, these welfare benefits average to $6.06 per hour — lower than Florida’s minimum wage. Compared with median state salary, Floridians receiving welfare benefits bring in just 41% of what they would if employed full-time.  In 35 states, welfare currently pays more than the minimum wage, even after accounting for the Earned Income Tax Credit.

When factoring in housing assistance, Florida fares a bit better relative to other states, ranking 26th in the nation, and showing an inflation-adjusted increase of $3,262 in total benefits since 1995.

In all but two states (Maryland and Nevada), TANF dollars per recipient have declined since 1995. In Florida, 2013 TANF benefits are 34% lower than they were in 1995.

At the same time, Florida provides the 3rd highest SNAP benefits in the nation, providing $526 per year and $6,312 annually, consistent with many other states.

According to the Cato analysis, Florida’s Medicaid program provides an annual expenditure per household of $6,000 — making it the fourth lowest in the nation; with an equivalent insurance premium value of $6,408.

Cato finds that despite work requirements in the 1996 welfare reforms, nationwide less than 42% of adult welfare recipients are working — and less than 20 percent of recipients have unsubsidized private-sector jobs.

Karen Cyphers, PhD, is a public policy researcher, political consultant, and mother to three daughters.