The benefit to millions of people for not working has risen dramatically during Obama’s Great Recession. Staying home and collecting a government check has never been so appealing.
The picture of a desperate, straggling army of jobless poor—magnified by the lefty news media– is a distortion of reality. The benefit of not working increased from $10,000 to $15,000 a year for millions of Americans. Moreover, it unquestionably actually increased joblessness, the major political football of 2012.
Of course, some Americans are needy. Many are searching honestly for work. The monthly unemployment insurance payment on average was $864 in 2006. It jumped to $2,667, however, in 2010, economist Kevin Hassett writes. On an annual basis that would be over $32,000. That’s more money than the average annual pay for a barber, a fast-food supervisor, a teacher’s assistant, a security guard, a library technician, a nurse’s aide, a veterinarian assistant, a parking lot attendant, a home health aide, a floral designer, a diet technician, a bartender, a sports referee or umpire, and dozens of other occupations, according to the Bureau of Labor Statistics pay data.
The number of Americans in “poverty” (as defined by the government) in 2010 was 46 million. The official national poverty rate for 2010—the most recent figure—was 15 percent, according to the U.S. Census Bureau. Since 2007, the safety net for the financially needy has “expanded radically,” as Kevin Hassett, puts it. Hassett is a senior fellow and director of economic policy studies at the American Enterprise Institute. Hassett quotes Casey E. Mulligan, economics professor at University of Chicago as saying the percentage of the country’s population in poverty rose by only 0.6 percent from 2007 to 2010. Amazing, considering the hard-times economy.
Spending outlays to help the poor expanded not only because of the long economic rough patch but because the requirements for eligibility expanded so generously for most programs. Those in need can’t say they have been given short shrift when spending per person, not just total spending has increased so dramatically. Professor Mulligan developed a chart showing the average amount of assistance per unemployed or under-employed from 2006 to 2010 for individuals under age 65. It’s extensive.
The chart includes consumer loan charge-offs (of credit cards, mortgages or other debts), home retention actions (which seek to help keep borrowers in their homes while mitigating risk for banks. One type of home retention action is loan modification, in which servicers modify one or more mortgage terms. Another type is a payment plan. In this case, no terms are contractually modified, but borrowers are given time to catch up on missed payments (or are allowed to show they can meet amended terms); other government transfers, such as Supplemental Security Income, which pays limited-income people who are disabled or blind, and food stamps, plus the Child and Adult Care Program, which makes reimbursements for meals in day-care facilities.
As recently as last fall, Obama was offering mortgage relief to hundreds of thousands, following up on his previous failed foreclosure relief proposals.
The website “Benefits.gov,” option “Browse by Category,” lists 77 programs for child care and child support, 108 programs for energy assistance, 271 programs for food/nutrition, 54 programs for housing, 70 programs for living assistance, and 53 loan programs, many in various states.
Doug Besharov, a resident scholar at American Enterprise Institute and visiting professor at University of Maryland, has written that rhetoric about cutting poverty is misleadingly outmoded because, he wrote, “it implies that government income transfers can be the vehicle for achieving substantial reductions in poverty. Almost all Americans live far above subsistence poverty,” mostly because of their earnings, and the rest because of government transfer programs. “What is now called poverty is really income inequality.” Besharov was the first director of the U.S. Center on Child Abuse and Neglect.
Reducing income inequality, Besharov says, cannot be accomplished through government income transfers alone. They “cost too much, create harmful disincentives to work and marriage, and must compete against old-age pensions and health care.” Real progress in boosting income means “increasing the earnings capacity of lower-income workers and reducing the number of female-headed families.”
The poverty level that Professor Mulligan writes about refers to various resources available to families. Considering all the hammering the economy took during those years from 2007 to 2010, the poverty increase is tiny. “Measures of the poverty rate typically change more than that over any three year period,” notes Mulligan.
By now, however, many unemployed have exhausted their unemployment benefit. The Associated Press reported in November that 75 percent last year were getting a check. Now, it’s down to 48 percent. Nearly a third of the country’s jobless have not worked for a year or more.
As Mulligan writes, “Were it not for government assistance, for every seven people who would have been considered in poverty,” the safety net caught six. “Another interpretation is that the safety net has taken away incentives and serves as a penalty for earning incomes above the poverty line.” Mulligan added, “I suspect that unemployment cannot return to pre-recession levels until safety-net generosity does, too.”
Well-meaning—and always political—safety-net programs can make public assistance a life-style. For instance, a woman who begins having children while in high school can get relatively magnanimous benefits, including free family medical and dental care, groceries, transportation, rent and child care that is worth $30,000 to $40,000 a year. Obama has set aside millions in programs for single women—a favored voter group.
If, instead of living the welfare life, the woman mentioned decides to finish high school and start working, she might make only, say, $ 9 an hour ( $18,700 a year). Which course do you suppose most uneducated, single young women take in this era of Obama?
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