Listed below are prevalent issues surrounding welfare in the United States.
- The poverty rate hasn’t lowered despite welfare growth.
- Extreme poverty is often missed.
- The system is too complex and hard to use.
- There is no consistent treatment of low-income individuals regarding qualification, delivery, and benefits.
- Personal Development is missing from the system.
- The system does not “Make Work Pay” and can encourage dependency on welfare.
- The system includes a Marriage Penalty.
- In-kind benefits are not as impactful as Cash.
- Improper payments and fraud are very high.
- Welfare’s impact is poorly measured.
See the U.S. Welfare Programs Page for a summary of the Welfare System of the United States.
Poverty Rate Has Not Lowered
Welfare spending has not lowered the poverty rate of the nation. Most Americans feel that welfare to an individual or family should be temporary. Therefore, the goal should be to get people back on their feet and leave welfare behind. However, the poverty rate in the nation has not dropped in over 50 years. Does this mean welfare is a failure? It depends on the purpose of welfare. Is the purpose to lower poverty, or is it simply to make lives more comfortable for those in poverty? More.
If you believe the purpose of welfare is to lower the poverty rate in the nation, then welfare has failed. The poverty rate was 12.8% in 1968 and averaged 13.0% from 1969 through 2022. Welfare spending over that time totaled $854 per person in poverty in 1965 versus $16,421 in 2022. That is after being adjusted for inflation. So, welfare spending has increased dramatically, but poverty hasn’t lessened. More.
Personal Development is missing from the system
Education and work ethic are necessary for individuals to make enough money to leave poverty behind. However, these traits are generally not addressed in the welfare system. Individuals get resources to help with expenses like food or rent but don’t get mentoring, coaching, or teaching. Welfare doesn’t address life skills. Recipients of welfare are left on their own to improve their lives and leave poverty behind. However, this has not proved successful in lowering the poverty rate.
There are very few Conditions attached to today’s welfare system. Conditions could include work requirements, job training, school attendance, drug and alcohol testing, or simply limited time frames. The idea of conditions is to encourage personal development to leave welfare behind. The TANF and SNAP Programs have a work requirement attached to them, but the other programs in the Welfare System have no conditions. Many argue that without conditions, the Welfare System does not encourage recipients to improve. Others say that such conditions are unfair when the economy is tough and jobs are unavailable. For Conditions to be impactful, they would need to be established on the welfare system as a whole as opposed to isolated individual programs.
This issue plays out in the HUD policy entitled Housing First for the homeless population. More.
See reciprocity in welfare. See the 98% proof-positive method to avoid poverty.
Extreme Poverty
The myriad of welfare programs too often miss those in extreme poverty. Extreme poverty means individuals and families are living on less than half the Poverty Threshold. The poorest Americans are frequently the least able to navigate the complex welfare system, and many can’t find their way. Others have alcohol or drug addiction, which the welfare system inadequately addresses. That is why there are so many homeless on the street, existing outside the safety net that was built to protect them. More
Benefits to those in extreme poverty are too low, and for those in the middle class are too high. See Welfare Examples for how this occurs.
Too Complex
The welfare system was never created as a single system like Medicare or Social Security but instead as independent programs addressing a specific need. The result is a very bureaucratic system that is hard to use. The welfare system is made up of 13 large programs, many with multiple facets or stand-alone programs beneath them. For instance, housing assistance can be public housing, rent vouchers, or tenant support, and each has various facets and unique rules.
The 13 programs are generally run independently from one another and are managed by eight large agencies in Washington that generally don’t interface with one another. Most of the 13 programs have unique qualification standards. They have separate forms, rules, compliance, audits, etc. Some work in conjunction with state or local programs, which adds another layer of bureaucracy.
Marriage Penalty
Today’s welfare system often discourages marriage because a disproportionate loss in benefits occurs when two people marry. For example, a single mom with a minimum wage job could lose all of her benefits if she marries a man earning $20,000 a year. Often, the decision is made by the mom to live with the man and keep the benefits. See more information on the Welfare Examples Page.
Make Work Pay
The welfare system discourages work because, at certain income levels, benefit loss is greater than additional income earned. Many individual welfare programs, like SNAP, are correctly indexed to a participant’s income, whereby work and additional wages are encouraged. For example, benefits are lowered by $.50 for each $1.00 additional income a participant earns. The individual, therefore, comes out ahead economically if they work. However, this is not the case when benefits are examined in whole across the entire welfare system. The overall welfare system is not coordinated, and loss of benefits can exceed the income from work, therefore discouraging work. These “cliffs” inherent in the overall system can lead to dependency on welfare. More.
The marriage and work penalties within the overall welfare system encourage dependency on welfare. This is further exacerbated because the welfare system generally does not address personal development. Instead, the system pays out benefits with no conditions attached to encourage the growth of the individual.
In-kind Benefits Versus Cash
Cash is more valuable to the poor than in-kind benefits such as housing, food, or preschool vouchers. Today, a low-income single mom could qualify for SNAP, TANF, Housing Assistance, Lifeline, LIHEAP, depending on her children’s age, WIC, School Lunch, Child Care, and Head Start. These programs attach their benefits to vouchers or rules, forcing the mom to adapt. For instance, she can’t make her own preschool plans or pack a sack lunch without missing out on the benefit. Often, welfare recipients take the benefits because they are free, but if they were offered the same benefit in cash or even a lesser amount in cash, they would much prefer to have that. The poor are scrappy and hardy and often can stretch a dollar a long way. But they can’t use that skill with the bulk of the welfare system.
Milton Freidman explains this well.
Improper Payments and Fraud
Improper payments and fraud within the welfare system are estimated to be 13% of all benefits paid. This totals over $162 billion in 2022 and is a considerable sum of money. It is more than is spent on the nine smallest welfare programs. This information comes from government reports estimating improper payments. More.
The bulk of the errors stem from the inability of the federal government to police the income reported by participants. The income level of an individual or family is the main element in determining benefits in all welfare programs. This problem is exacerbated by eight different agencies managing the programs (link) and the complexity of the rules in the overall system. More.
Consistent Treatment
The 13 welfare programs of the federal government have their own unique income qualification standards. Several programs phase out around the poverty threshold, while others are phased out at almost two times the threshold or greater. The result is an overall inconsistent definition of those in need and is thus unfair. In addition, many programs fill up and become unavailable or are not offered in certain locations. There is no coordination or cap on how many benefits a welfare recipient can receive; the result is that some people get many benefits and others very few. Some are lifted way above the poverty threshold, while others remain in poverty. More.
Welfare’s Impact is Poorly Measured
If the purpose of welfare is merely to make lives more comfortable for the poor, then we need a tool to track that performance. The problem is that we don’t have a good vision of the use of welfare benefits by the poor. We know how individual programs are used and how many people are raised out of poverty by individual programs, but we know less about the collective impact of multiple programs. More.
More information on Poverty and Welfare Issues:
Book on Poverty and Welfare Issues
Why are over 10% of America’s population living in poverty? It’s hard to reconcile that fact, considering that the United States is the world’s wealthiest, most technologically advanced country.
Robert S. Pfeiffer, author of “Poverty in the United States, How We Can Wipe It Out,” answers that tough question, which has plagued economists for decades. More importantly, Pfeiffer, who has worked closely with the poor for over 40 years, offers concrete solutions for ending poverty.
We’ve experienced the Great Society, spent billions on government programs, gone through welfare reform information, formed thousands of charities, and volunteered hundreds of hours, yet “poverty remains a blight on the American psyche,” Pfeiffer said. More
Move Welfare to the States
Many people believe the federal government should make block grants to the States and allow the States to develop and manage welfare programs. They argue States are:
1) Closer to the people they serve.
2) Are better laboratories for programs and policies
3) Already spend a large sum of their own money on welfare
4) Know their needs better than “one-size fits all” federal mandates.
The improvement and cost savings ideas presented on this website would work at the state or federal level.
Block grants to the States could be calculated based on the total number of people in poverty within the state or based on the total state population. Basing the grant on the total population would better motivate the states to move people out of poverty instead of being paid more money as poverty rolls increase.
Move Welfare to Non-profit Organizations
Many people believe that state, federal, or local governments should not be involved with welfare and that non-profit organizations and the people should take over this responsibility. They argue that non-profit organizations are far more efficient in their spending programs and can work more effectively one-on-one with people. They can be flexible and nimble and are not forced to adapt formulas applied across the board. Many argue it is a conflict of interest for the government to distribute benefits to voters and pits Americans and localities against one another. They argue that the government taking over the responsibility for taking care of our fellow Americans has lessened the moral obligation of people to take care of one another.
Cost Savings
Ideas for lowering spending are presented on the cost-saving page. Our current system is so poorly focused we can get more cash to the poorest Americans and still spend far less. See Cost Savings Page.