Why Welfare Can Be a Trap

Why Welfare Can Be a Trap

(LibertySociety.com) – A significant concern about welfare’s design is the possibility that long-term participation in safety-net programs inhibits self-sufficiency. Sadly, the evidence supports this unease.

Headquartered at the University of Berkeley, the Energy Institute at Hass reported in February 2020 that the concept of a “poverty trap” is real. Households at the lower end of the income chain need money to escape poverty, which creates an obvious trap — it takes money to make money.

Additionally, an expanding body of research indicates that collateral issues like the stress that accompanies poverty can lead to a lowered ability to perform work-related tasks and lower cognitive skills.

The government does what it can through its varied welfare programs administered at the local, state, and federal levels. Indeed, total government spending on welfare programs in the United States is estimated to be slightly more than $1.2 billion.

However, those figures will likely rise due to problems associated with the COVID-19 pandemic and its economic fallout. And unfortunately, social welfare programs do little more than increase the ever-tightening grip of poverty.

How Welfare Programs Trap People

The Foundation for Economic Freedom explored why it’s so difficult for individuals to escape welfare programs. According to their research, a fundamental problem is attributable to a lack of incentive systems to get people off those programs.

For instance, mechanisms to terminate assistance to people who prove themselves unwilling to improve themselves don’t exist. Likewise, systems to design to graduate people off welfare like job training and educational programs are either non-existent or insufficient.

Additionally, The Policy Circle, a non-profit think tank, reported that individuals could fall into welfare traps when the money earned from working isn’t much different than what they receive from government assistance programs.

Likewise, marginal tax rates make it difficult, if not impossible, for low-income workers to move out of the welfare system and into the working middle class.

Eradicating welfare dependency is an ever-increasing problem, and unfortunately, there is no magic solution the government can use to eradicate poverty. However, community-based programs have proven effective in the past.

Perhaps it’s time for the government to step back and encourage communities on the front line of poverty to break down economic freedom barriers instead of just throwing money at the problem.

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