Some Thoughts on the Cato Study

See, I thought I was going to be able to write about nonsense and filler…then this Cato study came up. I’m just going to go through the entire study* and post some thoughts.

(*Ed. note: after a certain point it became redundant: this is expressed later.)

“Welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job”

Whose fault is that?

“The current welfare system provides such a high level of benefits that it acts as a disincentive for work. Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.  If Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening work requirements, removing exemptions, and narrowing the definition of work.”

I included that whole section because my response would be pretty much the same for each individual statement therein that I wanted to highlight. First, there are very few people who’d rather get welfare than work – and for most of those people, no policy change is going to affect that.

Second – and this may be the most important point I make in this entire piece – if you have a problem with welfare being advantageous to the minimum wage, raise the minimum wage. If you want to reward work – which the authors specifically state – then you reward work. Reducing welfare dependence and rewarding work are not the same thing. The processes are totally different.

Lowering welfare benefits doesn’t even reduce dependence, but let’s just say it does. That is not the same as rewarding work. Raising the minimum wage rewards work. Don’t people have to have some work to be rewarded in order for “us” to reward work? Where does the work come from when lowering benefits? I mean, something has to be rewarded…right?

“There is little doubt that one of the most important long-term steps toward avoiding or getting out of poverty is taking a job. Only 2.6 percent of full-time workers are poor, as defined by Federal Poverty Level (FPL) standard, compared with 23.9 percent of adults who do not work. Even part-time work makes a significant difference; only 15 percent of part-time workers are poor.”

I’m going to stop right here because the next sentence of the report is a doozy. First, we’re using the poverty level to define ‘poor’. I work in a place where the FPL figures in heavily, so I can promise you that if you make $11,941 a year…you are poor (FPL for an adult living alone is $11,490). There’s no getting around that. The number of people I know who make that in a month is in double digits. It’s an intellectual disgrace that someone would try to purport a salary of less than a thousand dollars a month as anything other than that of a poor person.

Moving on…”only” 2.6 percent of people who work full-time are ‘poor’, by their definition? Let me put it this way: if I go anywhere – to the store, to the mall, to the club, wherever – I’m going to run across 40 people. The odds are that one of them is going to be poor…by their definition. But they say “only” as if that’s a point of pride. If I see someone who works more than I do and makes that little, I’m not thinking “glad it’s just you and not the other 38”. Same line of thinking with the part-time statement: if I look at seven people who work part-time, one of them makes that miniscule amount. You’ve got to be kidding me.

Now, while I have a little bit of sanity left...let me go on to this next sentence so my head can explode and I can come back to this later.

“And while many anti-poverty activists decry low-wage jobs, a minimum-wage job can be a springboard out of poverty.”

Just in case anyone’s missing why this one has me on the other side of enraged: for them to point out the presence of anti-poverty activists so blatantly, that tells me that ‘someone’ has to be a pro-poverty activist. One more time: for them to point out the presence of anti-poverty activists so blatantly, that tells me that ‘someone’ has to be a pro-poverty activist.

That’s why I’m fuming.

“Contrary to stereotypes, there is no evidence that people on welfare are lazy or do not wish to work. At the same time, however, the evidence suggests that many are reluctant to accept available employment opportunities.”

First, they’re right. Second, who’s responsible for those stereotypes in the first place? Third and most importantly, doesn’t that first sentence contradict the entire point of the piece (that welfare is advantageous to work)?

To refute the second sentence, I will go back to something Tommy Vercetti once said: “I work for money”. Those ‘available opportunities’ most likely didn’t pay enough for one to be self-sufficient. I know the retorts: ‘beggars can’t be choosers’ and ‘that’s what steers them to welfare’. There’s a difference between knowing one’s worth (and/or understanding one’s responsibility, especially if there’s a family involved) and a beggar being choosy, and there are quite a few poor people who don’t “go on welfare”. That is not the causal relationship the authors would like you to believe it is.

“Although it would be nice to raise the wages of entry-level service workers, government has no ability to do so – attempts to mandate wage increases, such as increases in the minimum wage, primarily result in increased unemployment for the lowest-skilled workers.”

The government part is completely false, as government on all levels has raised the minimum wage. Groups like Cato should know this well: they’re fighting the raises in legislatures annually. As far as wage increases and their resulting in increased unemployment, whose fault is that?

“In particular, this study seeks to determine the approximate level of benefits that a typical welfare family, consisting of a single mother with two children, might receive, and to compare those benefits with the wages that a recipient would need to earn in order to take home an equivalent income.”

Nothing wrong with this sentence whatsoever.

“The most generous benefit package was in Hawaii, although that may be distorted by the state’s high cost of living.”

Wow, an actual mention of cost of living. They get credit for this.

“In fact, in 39 states, the combination of those tax credits exceeds the amount of taxes that the individual would have to pay. Because these credits are refundable (that is, payable even if they exceed the value of taxes paid), they would enable an individual to take a job paying slightly less than the value of welfare benefits without a loss of overall income. However, in 12 other states, taxes still exceed the value of any tax credits available, meaning the worker would actually have to earn more than the value of welfare in order to receive an equivalent level of income.”

This idea that there’s a value of welfare is bad enough. The fact that the authors can’t count is worse.

“For purposes of this study, we assumed that our profile family receives the following benefits: (TANF, SNAP, Medicaid, Housing Assistance, Utilities Assistance, WIC, TEFAP).”

Well, if you cherry-pick enough; I imagine you will get the results that you want.

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The rest of the study has a bunch of tables (some of which are rather interesting) and verbiage which repeats the same points from above. It amazes me how people can…no, it doesn’t. I’ve studied politics too much to be amazed now. Anyway, that’s the piece and those are my comments.