Pethokoukis

Julia’s mother: Why a single mom is better off with a $29,000 job and welfare than taking a $69,000 job

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The U.S. welfare system sure creates some crazy disincentives to working your way up the ladder. Benefits stacked upon benefits can mean it is financially better, at least in the short term, to stay at a lower-paying jobs rather than taking a higher paying job and losing those benefits. This is called the “welfare cliff.”

Let’s take the example of a single mom with two kids, 1 and 4. She has a $29,000 a year job, putting the kids in daycare during the day while she works.

As the above chart  – via Gary Alexander, Pennsylvania’s secretary of Public Welfare — shows, the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income & benefits of $57,045.

It would sure be tempting for that mom to keep the status quo rather than take the new job, even though the new position might lead to further career advancement and a higher standard of living. I guess this is something the Obama White House forgot to mention in its “Life of Julia” cartoons extolling government assistance.

216 thoughts on “Julia’s mother: Why a single mom is better off with a $29,000 job and welfare than taking a $69,000 job

  1. Without a doubt welfare was crated to keep the poor poor and the needy needy….when you have a group eating out of your hands then promising them the world they will vote for you every time…prior to welfare blacks stayed married kept jobs and had medical insurance..but they also voted republican.

  2. This also is an enormous disincentive to marry. If parents cohabitate but do not formally marry then they are better off financially than otherwise. If the father is a low income worker then the benefits of staying single are even greater.

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