4 ms·

Means testing actually increases the disincentive to work. Working usually results in greater income which can diminish the benefits. This amounts to an effecti

by jvm 11y ago

Means testing actually increases the disincentive to work. Working usually results in greater income which can diminish the benefits. This amounts to an effective higher marginal tax rate, when benefits are removed as you earn more. It's hard to imagine a system that disincentivizes working more than means tested welfare. A few examples from SNAP can be found here [1], CBO study showing up to 80% marginal tax rates on the poor here [2]. This is precisely the insight driving basic income: by removing means testing, we can avoid perverse disincentives to work: higher income always results in higher pay. [1] http://taxfoundation.org/blog/high-implicit-marginal-tax-rates-make-life-difficult-poor http://taxfoundation.org/blog/high-implicit-marginal-tax-rat... [2] https://www.cbo.gov/publication/44621 https://www.cbo.gov/publication/44621

pluma 11y ago
In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference. This not only means you're working for the same money you would have if you didn't work, it also means there's pretty much no way for you to improve your income unless you can change jobs to a significantly better paid one. Even a raise or bonus wouldn't change your bottom line as the welfare is adjusted 1-to-1 for every cent you make. This is IMO the greates disincentive of our welfare system. There's no advantage to finding an actual job when you're on welfare and don't qualify for jobs that pay significantly more than welfare. It's unsurprising that some game the system by intentionally failing job interviews and doing ludicrous amounts of trainings instead of finding and getting a (low-paying) job. I don't know whether a blank check is the right solution here, but a frequently mentioned alternative for the skeptical is basically a negative income tax: for every two cents you make on top of basic income, you pay one cent (or whatever fraction -- the actual percentage is irrelevant to the idea as long as it's below 100%). This avoids the financial "dead zone" created by the 1-to-1 adjustments of the current welfare system.
- clavalle 11y ago
  But then you have the problem of businesses catering to 'gap people' and scraping profit from those subsidized positions.
  - pluma 11y ago
    Yeah, these exist. They're called "1 Euro jobs" and the government likes to pretend they're a good thing (probably because they keep people busy so they can't complain about not actually having a real job). The funny thing about most of these social reforms is that they were introduced by the more social of the two major parties -- although at this point they're social in name only. They also legalised temp agencies creating an entire market of quasi-but-not-really employed people who don't show up in unemployment stats even if they're sitting around not getting paid.
- mason240 11y ago
  >In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference. For as much as people say that the US "far to the right" social programs compared Europe, something like this would be a political nonstarter in the US.
  - pluma 11y ago
    To be fair, you merely have to prove that you keep applying for jobs and go to interviews arranged by the agency if you couldn't find anything. Also, these reforms are relatively new (historically speaking) and were justified with economical arguments (because the economy is always a good justification if you can't think of anything). But I have heard about postgraduates having to take on so-called "1 euro jobs" (i.e. busy work like collecting trash in parks) in order to maintain unemployment benefits while working on their theses.

by jvm 11y ago

pluma 11y ago

In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference. This not only means you're working for the same money you would have if you didn't work, it also means there's pretty much no way for you to improve your income unless you can change jobs to a significantly better paid one. Even a raise or bonus wouldn't change your bottom line as the welfare is adjusted 1-to-1 for every cent you make. This is IMO the greates disincentive of our welfare system. There's no advantage to finding an actual job when you're on welfare and don't qualify for jobs that pay significantly more than welfare. It's unsurprising that some game the system by intentionally failing job interviews and doing ludicrous amounts of trainings instead of finding and getting a (low-paying) job. I don't know whether a blank check is the right solution here, but a frequently mentioned alternative for the skeptical is basically a negative income tax: for every two cents you make on top of basic income, you pay one cent (or whatever fraction -- the actual percentage is irrelevant to the idea as long as it's below 100%). This avoids the financial "dead zone" created by the 1-to-1 adjustments of the current welfare system.

clavalle 11y ago
But then you have the problem of businesses catering to 'gap people' and scraping profit from those subsidized positions.
- pluma 11y ago
  Yeah, these exist. They're called "1 Euro jobs" and the government likes to pretend they're a good thing (probably because they keep people busy so they can't complain about not actually having a real job). The funny thing about most of these social reforms is that they were introduced by the more social of the two major parties -- although at this point they're social in name only. They also legalised temp agencies creating an entire market of quasi-but-not-really employed people who don't show up in unemployment stats even if they're sitting around not getting paid.
mason240 11y ago
>In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference. For as much as people say that the US "far to the right" social programs compared Europe, something like this would be a political nonstarter in the US.
- pluma 11y ago
  To be fair, you merely have to prove that you keep applying for jobs and go to interviews arranged by the agency if you couldn't find anything. Also, these reforms are relatively new (historically speaking) and were justified with economical arguments (because the economy is always a good justification if you can't think of anything). But I have heard about postgraduates having to take on so-called "1 euro jobs" (i.e. busy work like collecting trash in parks) in order to maintain unemployment benefits while working on their theses.