Capitolo 4
Family Fractures: How Welfare Reshapes Relationships
During interviews, many young single mothers could precisely cite the dollar increase each child brought to their household benefits. Though teen pregnancy rates have fallen, over 300,000 babies are born to teens yearly, with 90% to single mothers. About 80% of teenage mothers end up on welfare, often unable to finish school or find employment.
Single parenthood and poverty rates are strongly linked, with mother-only families facing a disturbing 42% poverty rate. The percentage of U.S. babies born out of wedlock has steadily risen since 1970, hovering around 40% since 2008. The rates vary dramatically by demographic: 29% for white single mothers, 53.3% for Hispanic single mothers, and 72.5% for African American single mothers.
Political scientist Lawrence Mead notes that "inequalities stemming from family structure" now far outweigh workplace inequalities, while columnist Nicholas Kristof points out that growing up with just one biological parent reduces high school graduation chances by 40%.
The welfare system provides clear financial incentives for childbirth. To receive TANF and WIC benefits, applicants must have at least one child. Mothers on TANF, SNAP, and housing vouchers receive $322-$454 monthly per additional child. All welfare programs tie benefits to household size, with payments varying significantly by state.
Many couples who would prefer to live together remain in separate households because combining two adults into a family unit often reduces or eliminates welfare benefits. Rosie, a young woman from the Bronx, lived with her mother for three years after marriage while her husband lived with his mother-both in subsidized housing. Moving in together would have disqualified them from housing benefits due to his part-time job and reduced their food stamps by $28 monthly.
Child support policies further complicate family formation. While noncustodial parents (usually fathers) are legally required to pay child support, any payments they make are deducted dollar-for-dollar from welfare benefits received by the mother and child. This system creates perverse incentives-fathers resist paying since their money goes to the state rather than directly benefiting their children. As one father noted, "The money doesn't go to the kid."
Despite spending over $800 million on marriage promotion programs since the 1996 welfare reforms, these initiatives have largely failed. A 2002 University of California report concluded that "policies of persuasion alone are unlikely to substantially reduce single parenting among welfare recipients" and "educating women about the value of marriage are unlikely to have much effect."
Capitolo 5
SNAP Expansion: America's Fastest-Growing Welfare Program
The Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps, has grown from a $20 billion program in 2000 to an $85 billion federal entitlement program today. Benefits are delivered via debit cards that look like regular credit cards, eliminating the stigma of paper food stamps. Eligibility extends to households earning up to 130% of the poverty line, with a family of four making up to $30,000 annually qualifying for benefits that decrease as income rises.
SNAP has expanded dramatically to become America's second-largest welfare program after Medicaid, serving over 47 million people-nearly one-sixth of all Americans. Though there's technically a requirement for able-bodied participants to enroll in training or workfare programs, states routinely waive these requirements. The program's growth stems partly from the 2008 recession but also from aggressive recruitment efforts by both the USDA and states, which benefit financially from increased enrollment.
States compete for federal awards based on how many eligible people they can enroll, with some states hosting "food-stamp parties" and employing recruiters with monthly quotas. Despite being designed for the poor, nearly 8 million Americans with incomes over 200% of the poverty line (about $46,000 for a family of four) now receive SNAP benefits.
States draw additional SNAP dollars through the LIHEAP loophole, where they mail small checks (under $1) to individuals under the Low Income Home Energy Assistance Program. Recipients can then deduct their state's average heating/cooling costs from their income rather than actual expenses, potentially qualifying them for food stamps they wouldn't otherwise receive.
SNAP cards can purchase virtually any food or non-alcoholic beverage without nutritional requirements. Federal officials shield purchasing data from public scrutiny, claiming it's proprietary information belonging to grocers. The USDA refuses to release data about what foods are purchased or how much business is conducted through SNAP.
SNAP has become a long-term dependency for most participants, with 56% remaining on the program for over five years. Misuse is widespread-recipients commonly sell their cards for cash (typically 50 cents on the dollar, though New Yorkers report getting 70 cents), retailers make millions trading in stolen cards, and some recipients collect multiple cards by claiming to have lost theirs.
SNAP recipients are more likely to be overweight than the general population, with 72% of adult recipients and 38% of their children being overweight or obese compared to 64% and 28% respectively in higher income groups. This disparity likely stems from recipients purchasing inexpensive, high-calorie foods with poor nutritional value.
Capitolo 6
The Disability Trap: How Benefits Keep People From Working
The disability benefits system often traps recipients like Joe, a partially disabled construction manager who could work part-time but fears losing his benefits due to complex earning rules. While well-intentioned, disability programs create psychological and economic barriers to employment that prevent beneficiaries from transitioning back to work.
The number of Americans enrolled in disability programs has grown dramatically to nearly 19 million, with combined SSDI and SSI budgets increasing from $114 billion in 2002 to $171 billion in 2012. Including medical care, disability costs taxpayers $260 billion annually-almost $1,800 per working American. Applications spike during economic downturns as unemployed workers shift to this more permanent safety net, while the definition of "disabled" continues expanding despite improvements in healthcare and self-reported health status.
Both SSDI and SSI recipients can work only nine months at certain income thresholds without losing disability status. This well-intentioned rule meant to help transition to work actually creates barriers to employment. The complex rules require constant vigilance to avoid violations. For example, George, a disabled man receiving $16,200 yearly in combined benefits, takes a seasonal job at L.L. Bean earning $2,000 monthly. After working two four-month seasons, he must quit before his tenth month of work to avoid losing benefits. The calculations are so complex that many recipients simply avoid work altogether, explaining why fewer than 2% of disability recipients leave the system for employment annually.
A "Disability-Industrial Complex" profits from the system. Law firms like Charles Binder's earned $68 million in 2012 by taking 25% of back payments when appeals succeed. Companies like Public Consulting Group are paid by states (about $2,300 per case) to move people from state-funded welfare to federally-funded disability.
The number of children classified as disabled has quadrupled since 1990, with 1.3 million now drawing payments (typically $700 monthly) for their families. Nicholas Kristof reported parents in Appalachia removing children from literacy programs to maintain their disability status based on illiteracy. This creates perverse incentives, as illustrated by Jahleel in Alabama-his family depends on his $700 monthly disability check, creating tension between his educational progress and family income.
Veterans' disability enrollment has surged from 2.3 million in 2001 to 3.9 million in 2014, with the percentage of veterans receiving benefits doubling from 8.9% to 18%. The program now consumes $59 billion of the $151 billion Veterans Affairs budget. While veterans were historically more likely to work than non-veterans, since 2000 this has reversed, with a 4% participation gap. Lt. Col. Daniel Gade, himself an amputee, warns that the system traps veterans in dependency, noting "From an economic standpoint, you would be crazy to get a job."
Capitolo 7
Medicaid's Mixed Blessings: Healthcare at What Cost?
The Affordable Care Act revolutionized healthcare for the poor in 2014, expanding eligibility and mandating coverage for most Americans. Fifteen million additional people gained medical coverage, with about ten million qualifying for Medicaid. Before the ACA, Medicaid covered nearly 50 million Americans (16% of the population), primarily low-income parents, children, elderly, and disabled individuals, but usually excluded childless young adults.
The ACA has created significant work disincentives. Studies show 2.5 million Americans may quit jobs or reduce hours in the next decade due to healthcare subsidies that decrease as income rises. Workers often discover promotions aren't worth the resulting loss of health benefits. A Tennessee study suggests expanded medical coverage "may cause large reductions in the labor supply of low income adults." Ironically, states opting out of Medicaid expansion might see higher labor participation rates.
Beneficiaries carefully manage their income reporting to maintain eligibility, often working off-the-books jobs for cash. As Annie from Oregon explained, "I'm not going to find a job that pays enough to make up for the value of my Medicaid coverage... I just do babysitting out of my house, for cash." Many want to work but fear crossing income thresholds that would eliminate vital healthcare benefits.
Medicaid costs have exploded from $2 billion in 1980 to $432 billion in 2012, with federal government covering $251 billion and states paying $181 billion. Enrollment grew from 32.7 million in 2000 to 54.8 million in 2012, with ten million more added under the ACA.
Medicaid benefits vary significantly between states, leading to "benefit shopping" where people relocate to access better coverage. Bryanna moved from Georgia to Maryland to get coverage for her HIV medications: "I looked online and found the state where my health care would be covered the best." Lauren, disabled and living in Seattle's Tent City #3, left Wyoming because "here in Washington State the Medicaid coverage is really good."
Medicaid fraud costs approximately $60 billion annually-over $1 in every $7 spent. Widespread abuse includes people calling 911 for minor ailments since neither Medicaid nor SNAP covers over-the-counter medications. Many doctors avoid Medicaid patients due to low reimbursements, though the ACA plans to increase payment rates.
Despite its flaws and endemic abuse, Medicaid remains highly valued by beneficiaries and forms a critical safety net. The ACA's expansion addresses one major shortcoming by covering childless adults in opt-in states, removing the perverse incentive to have children solely to qualify for benefits.
Capitolo 8
The EITC: A Welfare Success Story
The Earned Income Tax Credit (EITC) is widely regarded as the most successful U.S. means-tested antipoverty program, praised across political lines for encouraging work while fighting poverty. President Reagan called it "the best antipoverty, the best pro-family, the best job creation measure to come out of Congress." Unlike other welfare programs, EITC requires reported earnings to qualify, directly tying benefits to employment.
The EITC's greatest flaw is its minimal benefits for childless singles or couples. While 40% of U.S. workers qualify for the EITC and owe no tax, only about half actually claim benefits. Approximately 20% of tax filers claim the EITC, with rates varying widely by state-Mississippi leads with 33% of filers receiving benefits, while Connecticut has the lowest rate at just over 12%, reflecting underlying poverty rates.
Like other welfare programs, EITC benefits increase with each additional child. Childless individuals receive a maximum benefit of only $487 annually, which phases out on income above $8,000. In contrast, a parent with one child earning $10,000 can receive over $4,000. The income ceiling for married taxpayers with three children is $49,000 before benefits phase out completely.
Research from the Center on Budget and Policy Priorities shows the EITC improves educational outcomes for children in low-income families. Studies from Harvard and Columbia found consistent patterns of better school results for children in programs providing more income through credits like the EITC. Children from families claiming the EITC performed better on standardized tests than comparable poor families not claiming the credit.
The EITC also substantially increases adult workforce participation. EITC expansions between 1984-1996 accounted for over half the employment increase among single mothers, particularly those with young children or low education. The credit contributed as much to reducing female-headed households receiving cash welfare from 1993-1999 as welfare reform's time limits.
Despite its success, the EITC has problems. The program's complexity creates barriers-many eligible low-income earners don't file tax returns, missing out entirely. Those who do often pay professional preparers an average of $100 even for simple returns, significantly depleting their benefit. The lump-sum payment structure encourages poor financial decisions-as one mother explained, "It kinda feels like Christmas... when you scrimp all year and then this big check shows up it's hard not to just blow it on something."
EITC fraud is substantial, with an estimated 21-26% of payments ($13.7-16.7 billion in 2011 alone) being improper. Between 2006-2009, beneficiaries were required to repay $2.3 billion in overpayments. Fraudulent claims typically involve reporting nonexistent children, misrepresenting earnings, or inflating withholding amounts.
Capitolo 9
Lessons from the Extremes: Dependency and Independence
What drives long-term welfare dependence versus independence? Harvey and Conyers examined specific societal subgroups that provide instructive contrasts. American Indians on reservations show particular vulnerability to dependency, while immigrants and barterers demonstrate remarkable determination to avoid government assistance.
Reservation visits revealed heartbreaking conditions where welfare systems undermine work incentives. While most American Indians aren't poor and 70% live in cities integrated into mainstream culture, the million Indians living on reservations receive welfare payments often exceeding twice what's available to other poor Americans-sometimes over $20,000 annually per person-yet these generous payments haven't solved poverty problems.
Despite qualifying for all federal welfare programs plus tribal benefits, casino revenues, and natural resource royalties, reservation Indians suffer dramatically higher rates of early death from tuberculosis, alcoholism, diabetes, accidents, and suicide. Native Americans are five times more likely to develop addictions, with alcohol abuse being particularly devastating. As one Navajo teen explained: "We're bored. Nothing is happening... our chances of finding work are low. So why not get high, get drunk, and forget about it?"
The Southern Ute tribe's natural gas wealth generates $70,000 annual payments per tribal member. However, former chief Matthew Box described unintended consequences: children lack motivation for education or careers when guaranteed middle-class incomes. Despite scholarship programs with completion bonuses, few youth participate. An elder lamented, "We didn't know we were poor then. We were happy... Now they have no skills at all. If these checks go away someday, these kids are lost."
In stark contrast, immigrants demonstrate remarkable self-sufficiency compared to native-born Americans in poverty. Research shows over 70% of income in poor immigrant households comes from earnings, versus only 45% for non-immigrant citizens. Throughout their travels, Harvey and Conyers encountered immigrants working tirelessly-driving taxis, doing lawn work, collecting recyclables, running concession stands-often refusing welfare assistance.
An Ethiopian cab driver in Chicago explained: "I take no handouts, I work to take care of myself and my family, and this makes me a man. Those people living on welfare, that is not living." A Latino father collecting recyclables with his children told them: "I show them there are many ways to make money here, if you just try."
Evidence shows people seek work more urgently when government benefits end. North Carolina's unemployment rate dropped after ending benefits, Tennessee's employment increased after removing 170,000 adults from Medicaid, and nationwide, 1.8 million jobs were created in 2014 when unemployment benefit extensions ended.
Capitolo 10
Rebuilding Work and Worth: A Path Forward
The central proposal for welfare reform is making work more profitable for low-wage earners through wage supplements and tax reductions. This includes fixing the Earned Income Tax Credit, reducing FICA taxes on low-income workers, and implementing a sliding scale wage subsidy program.
The EITC needs three improvements: first, extend similar benefits to childless workers as those with one child, reducing welfare-related incentives to have children and decreasing fraud; second, focus more on the poor by lowering the maximum income threshold from $49,000 to about $40,000; third, stop withholding income taxes from low-income workers, allowing them to keep more earnings immediately rather than waiting for refunds.
FICA taxes are described as "job killers" that penalize both employers and employees, taking 7.65% of even poverty-level workers' earnings. Eliminating these taxes for low-income workers has broad support across the political spectrum. The current system unfairly transfers wealth from younger workers to often wealthier retirees, and penalizes those who start working earlier and typically die younger.
An across-the-board wage subsidization program would increase low wages by 30-90% depending on hours worked. This would transform a full-time minimum wage job (about $17,000 in 2015) into $22,000 annually, with subsidies decreasing gradually as wages rise. The formula ensures additional work always results in more income, with subsidies paid monthly to provide immediate reinforcement of work effort.
Food stamp laws require beneficiaries to work or seek work, but this requirement is rarely enforced. All welfare benefits except for the truly disabled and certain medical costs should require work or preparation for work. Closing loopholes in TANF work requirements, enforcing SNAP work rules, and helping the disabled find employment would transform the welfare system. Recipients would literally be earning their benefits, boosting self-respect and happiness.
MIT economist David Autor recommends adding a "front end" to SSDI with workplace accommodations, rehabilitation services, and partial income support to help disabled workers remain employed, plus financial incentives for employers to accommodate them. An inexpensive private disability insurance system could help millions stay in or regain employment.
Regulations impose massive costs on American businesses, particularly small ones. In 2013 alone, Washington added $112 billion in regulatory costs and 157.9 million paperwork hours, with the Federal Register growing by over 80,000 pages. Manufacturing jobs suffer disproportionately, with the average manufacturer spending $19,564 per employee annually on compliance-nearly double what non-manufacturers pay.
Private welfare offers several advantages over government programs. Of America's 1.8 million charitable organizations, many already assist the poor, with approximately $80 billion in donations directed toward these efforts annually. Private charity is more personalized, flexible, and efficient than one-size-fits-all government programs. While government welfare might make someone wait two weeks for a check to fix a car battery (by which time a job opportunity is lost), a private charity can immediately solve the problem.
Earned accomplishment is fundamental to human happiness, with paid work being the most common path to this fulfillment. If America is to remain a nation of dreamers and thrivers, all citizens deserve the chance to earn their own success, as happiness stems from work and the pursuit of happiness is an inalienable right.
