4 ms·

Many people are unaware of the huge impact of the welfare cliff, especially when it comes to families with children: https://www.learnliberty.org/wp-content/up

Many people are unaware of the huge impact of the welfare cliff, especially when it comes to families with children: https://www.learnliberty.org/wp-content/uploads/2016/08/welfare-e1471458574375.png https://www.learnliberty.org/wp-content/uploads/2016/08/welf... If you are a single parent with two children you get the same net income at $30,000 as at $80,0000 due to benefits getting cut off above $30,000/year income.

kaveh_h 8y ago
That’s ridicilous. The system has clearly been setup to fraud the majority who needs welfare and is a political virtue signaling. I bet the mean salary was right in the Middle of the ”cliff” (around 55k$) when this was decided to ensure very few would get the benifit and cost on government would be minimal. The logical policy would perhaps be to equalize income to a certain treshold depending on available funds and budget on a particular year. This would also make investments in transits and housing more stable for everyone involved, simplyfing business decisions and quite possibly increase long term profitability.
- usaar333 8y ago
  > The system has clearly been setup to fraud the majority who needs welfare and is a political virtue signaling. It has this effect, but I'd blame the need to simplify over malevolence. SF's below market rate housing is a great example of a huge welfare cliff. Make under $60k? You can get a 1 bedroom for $1600/month. Don't? Join everyone else fighting at $3k/month or what not. So yah, it's a bit ridiculous that we have a system where someone making $59k does better than $70k. But it's really hard to administer everything as a phase-out system, especially with non-cash benefits. (currently the apartments are required to charge X rent.. so what should happen to the person making $70k/year?) Hence, these blunt-edge qualifications.
  - sampo 8y ago
    > so what should happen to the person making $70k/year? They should ask they employer to only pay them $59k?
  - kingaillas 8y ago
    >Make under $60k? You can get a 1 bedroom for $1600/month. Don't? Join everyone else fighting at $3k/month or what not. Sounds like SF should experiment with marginal rent, based on how marginal tax rates work. Something like: landlords charge a base $x rent, if you make above $50K a bit more is added one, make above $60K a bit more is added, etc. That was the person making $1 over some arbitrary cutoff isn't much worse off.
lazyasciiart 8y ago
That doesn't match other numbers I've seen, and doesn't show any sources. Do you know more about it? (Edit: I'm familiar with the welfare cliff in general, just curious about this analysis of Chicago programs).
AlexandrB 8y ago
So I foolishly read the original sources[1][2]. The image comes from a blog with an obvious libertarian/conservative agenda. For example, another article[3] on the site decries non-discrimination laws for businesses as if red-lining never happened or would have been resolved by market forces (against all historical evidence). This site does not make any explicit recommendations but seems to imply that welfare, as a whole, should be eliminated. Replacing a cliff with a gaping chasm where we can leave our poor to try to scramble their way out. The original paper[2] is interesting for a few reasons. First, it identifies the problem on page 15 as steep drop offs in some welfare programs, instead of a more tapered reduction in benefits. Second, it's apparent that the linked image is the most extreme scenario - which applies to only a small segment of the population. Indeed, once you look at the 2-parent household example on page 30, the cliff is much less severe. In the end the paper recommends giving individual states more power to set benefits in a way that tapers off the benefit received and removes the welfare cliff. What neither of these sources mention is the other, tried and true way to address the problem: making many of these benefits universal. The obvious example is healthcare, where those making 30k/year and 120k+/year get access to the same public system. But other public benefits like public childcare are not unheard of[4]. [1] https://www.learnliberty.org/blog/the-welfare-cliff-and-why-many-low-income-workers-will-never-overcome-poverty/ https://www.learnliberty.org/blog/the-welfare-cliff-and-why-... [2] https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2014/12/Welfare_Report_finalfinal.pdf https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2014... [3] https://www.learnliberty.org/blog/the-sweet-cakes-case-let-the-market-give-discrimination-its-just-desserts/ https://www.learnliberty.org/blog/the-sweet-cakes-case-let-t... [4] https://eric.ed.gov/?id=ED367491 https://eric.ed.gov/?id=ED367491

kaveh_h 8y ago

That’s ridicilous. The system has clearly been setup to fraud the majority who needs welfare and is a political virtue signaling. I bet the mean salary was right in the Middle of the ”cliff” (around 55k$) when this was decided to ensure very few would get the benifit and cost on government would be minimal. The logical policy would perhaps be to equalize income to a certain treshold depending on available funds and budget on a particular year. This would also make investments in transits and housing more stable for everyone involved, simplyfing business decisions and quite possibly increase long term profitability.

usaar333 8y ago
> The system has clearly been setup to fraud the majority who needs welfare and is a political virtue signaling. It has this effect, but I'd blame the need to simplify over malevolence. SF's below market rate housing is a great example of a huge welfare cliff. Make under $60k? You can get a 1 bedroom for $1600/month. Don't? Join everyone else fighting at $3k/month or what not. So yah, it's a bit ridiculous that we have a system where someone making $59k does better than $70k. But it's really hard to administer everything as a phase-out system, especially with non-cash benefits. (currently the apartments are required to charge X rent.. so what should happen to the person making $70k/year?) Hence, these blunt-edge qualifications.
- sampo 8y ago
  > so what should happen to the person making $70k/year? They should ask they employer to only pay them $59k?
- kingaillas 8y ago
  >Make under $60k? You can get a 1 bedroom for $1600/month. Don't? Join everyone else fighting at $3k/month or what not. Sounds like SF should experiment with marginal rent, based on how marginal tax rates work. Something like: landlords charge a base $x rent, if you make above $50K a bit more is added one, make above $60K a bit more is added, etc. That was the person making $1 over some arbitrary cutoff isn't much worse off.

lazyasciiart 8y ago

That doesn't match other numbers I've seen, and doesn't show any sources. Do you know more about it? (Edit: I'm familiar with the welfare cliff in general, just curious about this analysis of Chicago programs).

AlexandrB 8y ago

So I foolishly read the original sources[1][2]. The image comes from a blog with an obvious libertarian/conservative agenda. For example, another article[3] on the site decries non-discrimination laws for businesses as if red-lining never happened or would have been resolved by market forces (against all historical evidence). This site does not make any explicit recommendations but seems to imply that welfare, as a whole, should be eliminated. Replacing a cliff with a gaping chasm where we can leave our poor to try to scramble their way out. The original paper[2] is interesting for a few reasons. First, it identifies the problem on page 15 as steep drop offs in some welfare programs, instead of a more tapered reduction in benefits. Second, it's apparent that the linked image is the most extreme scenario - which applies to only a small segment of the population. Indeed, once you look at the 2-parent household example on page 30, the cliff is much less severe. In the end the paper recommends giving individual states more power to set benefits in a way that tapers off the benefit received and removes the welfare cliff. What neither of these sources mention is the other, tried and true way to address the problem: making many of these benefits universal. The obvious example is healthcare, where those making 30k/year and 120k+/year get access to the same public system. But other public benefits like public childcare are not unheard of[4]. [1] https://www.learnliberty.org/blog/the-welfare-cliff-and-why-many-low-income-workers-will-never-overcome-poverty/ https://www.learnliberty.org/blog/the-welfare-cliff-and-why-... [2] https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2014/12/Welfare_Report_finalfinal.pdf https://d2dv7hze646xr.cloudfront.net/wp-content/uploads/2014... [3] https://www.learnliberty.org/blog/the-sweet-cakes-case-let-the-market-give-discrimination-its-just-desserts/ https://www.learnliberty.org/blog/the-sweet-cakes-case-let-t... [4] https://eric.ed.gov/?id=ED367491 https://eric.ed.gov/?id=ED367491