How “Unemployed” = Over $100,000 per Year?

Back in 2012 I mentioned how in Pennsylvania a single, healthy mother earning $29,000 a year in gross income and two healthy children ages 1 & 4 in daycare had more net income and benefits than if she was earning $69,000 a year.

In other words, that single mom had an excellent chance of being caught in a “Welfare Trap” unless she could instantly increase her salary from $29,000 to $69,000 per year.

What might be worse than a “Welfare Trap”? Perhaps a “Welfare Grant”: Imagine getting at least $100,000 tax free, with a minimum of requirements to qualify, and without any need to pay it back? And, getting housing assistance on top of that?

Well, no need to imagine: According to a February 25th, 2021 article in the Wall Street Journal by University of Chicago Professor Casey Mulligan “How Many Jobs Will the ‘Stimulus’ Kill?“ (subscription required, but listen to an interview by the author here for free) that’s exactly what the Biden* COVID-19 Stimulus Plan provides.

So, if you’re a married couple with two children, each of you made the US Median income before COVID-19 struck, and you’re both unemployed now, you could collectively earn as much as $163,000 in stimulus income. Stated another way, each of you would get $40 per hour tax free for a year, or, $81,600 for not working. And, if my math is correct, a working person would have to make about $91,000 to make $81,600 after paying federal income tax.

Now obviously if the married couple didn’t work during the COVID-19 shutdown they may need that money, and raising those kids is a full time job. But consider the hopefully unintended consequences: If you’re getting $40 / hour to not work then how will companies who pay less than that find workers? If those companies then automate or  eliminate those jobs, or fill them with cheaper labor from Mexico and other foreign countries, what will happen when the stimulus runs out and all those people rush back into the jobs market to find no jobs available? More welfare?

Anecdotal wisdom says when trying to get someone addicted to something it’s a good idea to give them the first dose for free. In a time where the United States should be focusing on reopening and rebuilding her economy so that all who can work can find work, we need to make sure that the stimulus plan proposed by Biden* and his fellow Democrats doesn’t become that “free first dose” towards giving more Americans a “Welfare addiction”.

Note: In the interest of full disclosure I have personal knowledge of one women who, after getting pregnant at 15 and then again at 17 – by two different men, who then abandoned her – managed after much effort and the help of welfare and her family to go to school, become a nurse, and make the leap from welfare to self-sufficiency and personal responsibility by the time she was 24. Her painful lesson made her far more mature and successful today, but I would consider her an exception, not the rule.

Thanks for Reading!

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