Weaning Wyoming Off Welfare

by Charles Katebi

Welfare was originally created as a safety-net of last resort for those unable to help themselves. But all too often it traps otherwise productive individuals in government dependency, sapping their potential and life prospects.

According to a report by the Cato Institute titled The Work Versus Welfare Tradeoff, low-income individuals can receive up to $33,119 worth of benefits through Wyoming's welfare programs. Wyoming's annual per-recipient welfare benefits include:

• Temporary Assistance for Needy Families:$6,924
• Supplemental Nutritional Assistance Program: $6,312
• Housing Assistance: $9,044
• Medicaid: $9,612
• Woman, Infants, and Children (WIC, food assistance): $799
• Low Income Home Energy Assistance Program: $128
• The Emergency Food Assistance Program: $300

These programs cover roughly 63,000 adults and children and cost $780 million every year. Wyoming splits their costs 50/50 with the federal government. But it's the federal government that determines who is eligble, how much in benefits they receive, and how benefits are administered. Wyoming has virtually no say over these programs but still has to pay for them.

While these benefits are a major drain on taxpayers, welfare's true victims are its recipients. Wyoming's welfare programs discourage recipients from entering the workforce, trapping them in dependency. If an individual on welfare wants to work without losing income, he or she would need a job (or several) that pays at least $33,000 in after-tax income. If you had to choose between enjoying guaranteed government benefits and taking a job, would you say no welfare?

This is known as "welfare cliff." When welfare benefits become so lucrative, they encourage able-bodied people to stay poor rather than earn extra income. A study by the Congressional Budget Office found that households on welfare stand to lose 60 cents for every additional dollar they make through work due to benefit cuts and higher taxes. In the CBO's own words, welfare incentivizes beneficiaries "already in the workforce to put in fewer hours and be less productive."

Should we completely abolish welfare? Of course not. But Wyoming needs a safety net that both rewards work and provides targeted support to those in need.

We can start by encouraging welfare recipients to reenter the workforce. The fastest way out of poverty is a full-time job. Less than three percent of fulltime employees live in poverty, compared with 25 percent of those without a job. President Ronald Reagan was right when he said that the best social program is a job.

Work requirements are an effective measure for lifting people out of poverty. Starting in 1996, the federal government added work as a condition of receiving TANF cash benefits. They also encouraged low-income mothers to reenter the workforce by earmarking TANF funding for child care services. In ten short years, the number of individuals on TANF fell by two-thirds nationwide, from 12.6 million in 1996 to just 4.6 million in 2006. Wyoming in particular cut its rolls by 97 percent, reducing the number of individuals on TANF from over 12,000 in 1996 to 711 by 2014.

TANF's reforms were especially beneficial for single mothers in poverty. Studies show that parents who work are far more likely to stay out of poverty than those who don't. Yet for decades, welfare programs encouraged low-income mothers to stay on welfare rather than provide for their families.

TANF's new emphasis on work reversed this trend. According to the Brookings Institute, the share of single mothers that worked increased by 30 percent and employment among never married mothers grew by 50 percent. By introducing work, welfare reform put mothers and their children on the path to prosperity.

Unfortunatly, Wyoming can't apply these lessons on other welfare programs. 71 other federal welfare programs still lack work requirements and encourage families to stay poor. And states have no say in how they're run.

Congress should send welfare dollars back to states through block-grants and let them decide how best to provide for the less fortunate. Speaker of the House, Paul Ryan, recently proposed block-granting funding for food stamps, housing assistance, and other programs into an Opportunity Grant. States would then be free to spend them as they wish as long as they require recipients to work.

These reforms would unshackle Wyoming from the federal government's welfare mandates and give those on welfare an escape route out of poverty.