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This phenomenon is well known and usually called a "Poverty Trap" or a "Welfare Trap". http://en.wikipedia.org/wiki/Welfare_trap http://en.wikipedia.org/wiki/W
by mdemare 13y ago
This phenomenon is well known and usually called a "Poverty Trap" or a "Welfare Trap".
http://en.wikipedia.org/wiki/Welfare_trap http://en.wikipedia.org/wiki/Welfare_trap
One of the things that can mitigate this is the Earned Income Tax Credit (http://en.wikipedia.org/wiki/Earned_income_tax_credit http://en.wikipedia.org/wiki/Earned_income_tax_credit)
Also, it is misleading to claim that "the poor don't work". This article only discusses people below the poverty line ($11,490 for an individual). If you work 1600 hours per year at the federal minimum wage, you earn $12,000. That's definitely poor in my book.
- dllthomas 13y agoAlternatively, move from a means-tested welfare system to Basic Income.
- southpawgirl 13y agoOr make jobs paying Walmart-style salaries pay somewhat more... ? Although I disagree with the conclusions of the article (it doesn't take lots of complexities into account, education level, family issues, disability, etc), the logic behind choosing welfare over a dismally paying, soul-crushing menial job is totally sound.
- mdemare 13y agoYes, raising the minimum wage would help, but part of the problem is that when the very poor start working, they're no longer eligible to all kinds of subsidies (food stamps, medicaid). Greg Mankiw explains it very well here: http://gregmankiw.blogspot.nl/2009/11/poverty-trap.html http://gregmankiw.blogspot.nl/2009/11/poverty-trap.html