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Yeah I can illustrate a personal example. I lived with my dad who'd been ill for years and on welfare. His income was supplemented to about 950 euros or so a mo
by IkmoIkmo 10y ago
Yeah I can illustrate a personal example. I lived with my dad who'd been ill for years and on welfare. His income was supplemented to about 950 euros or so a month, however, if I had a part-time job making 350 euros, he'd only receive 600, because the household income was 950.
So here I am, a poor student paying my own way through college with no support from my parents, working part-time and going into debt, and they slam this on me. So I was forced to financially support my parents because there's no way to pay rent, food, insurance etc on 650 bucks. After many calls it turns out there was no solution, the -benefits was 1:1 with the +income I was earning.
This created an incentive for me to stop working. If I earned 100, my dad got 100 less, if I earned 600 my dad got 600 less. It'd only make sense for me to work if I quit college and got a job that paid more than he'd get in benefits, such that if I made 1k a month, my dad would get 0, I'd give him 950, and keep 50 bucks a month for working full-time at minimum wage.
So I stopped working and started desperately looking to move out (so that my income was no part of the 'household' income of my dad's place). Eventually did, got a job again and finished uni.
Anyway it's just one of many bad policy planning examples that look sensible in general... which is, if you're working, you don't need benefits anymore. And if you're living with people who are making all kinds of money, there's no need to depend on the state anymore, so they're counted as part of your income that the benefit requirements are tested against.
Then there's indeed examples where benefits are replaced quicker than income. Worse than 1:1. Like when you make 900 bucks, you get an exemption from a municipality tax of 150. But if you make 901, you pass the threshold, such that your effective income dropped to 751 by earning 1 euro extra, which puts you in a nasty situation in a country where rent, insurance puts you at 750 already and there's nothing left for food, culture or connectivity.
- amazon_not 10y agoThis also creates a really, really strong incentive to look for a job that pays you under the table. Each unreported euro earned is effectively worth two euros (the euro earned plus the euro lost to clawbacks) in addition to any unpaid taxes. Not the kind of incentives a rational policy maker should strive for exactly.
- allendoerfer 10y agoWhy didn't you take Bafög?
- IkmoIkmo 10y agoThis is just an example of welfare policy issues in general, when edge cases creep up that cause all kinds of problems. It's not a German example however, never lived there. I did receive cheap student loans by the way, but I don't want rack up lots of debt so I liked to work part-time where I could. And even with loans covering tuition fees, for the two of us to live on 950 euros a month (or even 3 when my brother lived with us) is not a great deal even if I didn't have any college costs, or had all of them covered by a state program.
- eru 10y agoI don't know about IkmoIkmo, but I think there are some cases where it's hard to get for some silly reasons.