It is untrue that most people on public assistance are too lazy to work. In truth, if by expending the energy to work a job for forty hours at minimum wage their lives could be better than it is using welfare, they would work. But, with the current minimum wage of $7.25 an hour, for many of these adults, their lives and the lives for their families would be the same, if not a lower quality of life would be had, if they worked. By using Section 8 housing vouchers, Medicaid, food stamps, LiHeap, and cash assistance the same or perhaps slightly better, quality of life can be made for these poorest Americans. If minimum wage was raised to $10.10 an hour, and the earned-income tax credit was also expanded to further help these same adults and families, many of these so-called “lazy” Americans would become full-time, gainfully employed, self-sufficient, tax-paying Americans.
There are ways that the poorest paid families in the United States can make a wage where they can earn a living and not need in-kind benefits from the government to sustain themselves. It is possible for America’s poor to work and earn enough to pay their own way, just by raising minimum wage to $10.10 an hour and keeping I adjusted for inflation after that. That is a true, working minimum wage. That means a 40 hour a week employee would earn $404 a week, $1616 a month in a four pay month if paid weekly or two pay month if paid bi-weekly, and $21,008 for the year. Granted, one can’t live luxuriously on $21,000 a year, but definitely better than the $7.25 an hour pay, or $15,800 that minimum wage pays now. If there are two adults working in the home, a decent living can be made on $42,000 if a family lives a modest lifestyle (Tax Policy Center, 2013).
Too many adults in the United States are encouraged to not work because they have a better lifestyle using in-kind government benefits than working minimum wage jobs. If the minimum wage gets raised, and the requirements are enforced limiting how long benefits are received, more adults would be forcefully encouraged to work full-time and sustain themselves rather than the government, and indirectly the other, tax-paying, working adults will not be supporting and carrying families other than their own.
Other changes and provisions will need to be made for this system to work. It will also take a generation for it to be accepted. The current system is the accepted way of life for those that use it as their means of support and these people that have accepted in-kind benefits as their means of survival are going to resist the need to be gainfully employed in a full-time position and basically be kept at the same standard of living but have to give the work effort to be there. A minority of these adults like the system the way it is, using benefits for support and not needing to work. Most adults will be willing to work if they are receiving a pay in which they can actually support themselves (Sawhill & Karpilow, 2014).
Some of the additional requirements that will need to be set into place for this system to work include raising the amount people can earn to receive the earned-income tax credit, provide some tax benefits to individuals and families who do not have children, eliminate the marriage tax penalty, and essentially eliminate in-kind benefits to healthy workers without children.
The minimum wage of the 1960’s had 20% more purchasing power than the present minimum wage does when numbers are adjusted for the current prices of goods and services (Sawhill & Karpilow, 2014). Additionally, 71% of Americans are in favor of this increase in the minimum wage. In a true democracy, if that great a percentage of the people speak and support a measure, changes should be made to support the wishes and desires of the populace. There have been hundreds of research articles to support the fact that an increase in the minimum wage to this extent would benefit the economy and not hurt any particular group of people (Sadd, 2013).
The key for the increase in the minimum wage to be most effective is that it be coupled with raising the ceiling on the earned-income tax credit. With this combination, the families that have been relying on in-kind benefits and now would be self-sustaining would see their standard of living improve with their efforts of gaining and maintaining full-time employment. This will help to mold the attitudes of their children, the next generation of laborers, who will be raised in households where it is evident that adults work to earn a living and families are expected to be self-sufficient, even if some of that comes from an earned-income tax credit.
For the calculations to be most accurate, the credit should be made based on individual earnings rather than the current system of household earnings. By applying the credit per individual rather than household, married couples are not penalized, thus more adults might get married knowing they will not lose the benefit of this credit by doing so.
Studies show that increasing the tax credit to those up to 200% of the federal poverty rate, but on a graduated basis, would be the most effective use. This would enable many workers who are childless to receive some of the benefits that currently do not yet are still working and struggling financially. The tax credit would be most generous to families with a child(ren) ages 0-2, lessen for those with child(ren) 2-4, lessen again for those ages 4-6, and drop again for those with older children. The reason for the changes is the younger the children, the more the cost of child care. The increase in minimum wage and reduction of dependence in use of in-kind benefits increases the number of working parents with young children, therefore adding the cost and burden of child care that they do not have if they are home and relying on welfare for support. The greatest benefit would go to full-time workers over part-time workers.
If increasing the eligibility of the earned-income tax credit along with increasing minimum wage to $10.10 an hour, about 3.4 million would no longer be living in poverty, including 800,000 children. Poverty overall in the United States would decrease by 7% and there would be a 5% decrease in childhood poverty (Sawhill & Karpilow, 2014). What cannot be measured is the attitude about work that this next generation of children will have. These children will benefit from being raised in a household where adults work, earn a paycheck, and the family lives on that earned money. Too many children today see adults who are capable of working but see that they do not because they cannot find a job that pays them enough to support a family. So, instead, the adult stays home, and uses Section 8 housing vouchers, Medicaid, food stamps, LiHeap, and cash assistance to support a family. The child sees that jobs do not pay enough to support a family so why bother to go to work. Lifestyles living on in-kind benefits are not glamorous, but why work if one can do no better expending the energy of having a full-time job than one can sitting home and living on public assistance? The positive changes will be seen years later, but the benefits will be felt for decades.
Reference
Holz, J. & Scholz, J. (2003). The earned income tax credit, In Means-Tested Transfer Programs
in the United States. Chicago: University of Chicago Press.
Sadd, L. (2013) In U.S., 71% back raising minimum wage,” Gallup Politics.
Sawhill, I. & Karpilow, Q. (2014). A no-cost proposal to reduce poverty & inequality. Center
On Children and Families at Brookings.
Tax Policy Center (2013). Tax benefit of the earned income tax credit; distribution of federal tax
Change by cash income level, 2015, Washington: Urban-Brookings Tax Policy Center.
