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Column: 'Welfare hammock' theory has holes (w/video)

Rep. Paul Ryan’s report said federal programs discourage the needy from working.

EPA

Rep. Paul Ryan’s report said federal programs discourage the needy from working.

A little kernel of truth can be a very dangerous thing.

This week, the House Budget Committee, led by Republican ideas man Paul Ryan, published a 204-page report cataloging just about every conservative complaint about the federal government's antipoverty efforts. The report's grand, familiar theory is that the American welfare state has grown too sprawling and complex, and when combined, its overlapping programs discourage the needy from working.

"There are nearly 100 programs at the federal level that are meant to help, but they have actually created a poverty trap," Ryan, a Wisconsin Republican, told the Washington Post.

Some of the academics cited in Ryan's report have complained that their work was misquoted or ripped out of context. (For instance, it ignores data about the first two years of President Lyndon Johnson's war on poverty, which happened to be its most successful.) But in a very narrow sense, Ryan's big idea is sort of, kind of correct. Because poor families lose government benefits as they climb up the income ladder, there are some select circumstances where it can stop making sense for them to work harder or longer hours. Earning an extra $1,000 by pulling extra shifts at McDonald's might not be worth it, for instance, if it means saying goodbye to your Medicaid coverage.

It's the sort of dilemma that policy types sometimes call a "poverty trap" or "welfare trap." However, Ryan is using this idea as the enticement to a large and harmful fiction — that by giving the poor incentives not to work, we're turning the entire "safety net into a hammock," as he's put it. While it's true that poverty traps are out there, they just don't snare that many families.

Ryan cites a CBO report to make his case, but that same report also estimates that, after taxes and lost benefits, the median household living around the poverty line still takes home roughly 70 cents of each additional dollar it earns, not unlike many middle-class families. In other words, relatively few people reach a point where it's no longer worth it to pull extra time on the job.

The hammock theory truly begins to fall apart once you look at the relatively short periods of time the poor actually remain poor. Americans tend to think of poverty as a chronic condition — the financial equivalent of acute and crippling arthritis. But it's largely more like a broken bone: something many of us suffer and most recuperate from.

Mark Rank, a professor of social work at Washington University in St. Louis, and his collaborators have found that between the ages of 25 and 60, almost 40 percent of Americans will spend a year living under the poverty line, but only 11.6 percent spend five years or more of their adult lives impoverished. Likewise, Rank finds that 45 percent take advantage of the safety net at some point, but only 16.4 percent do so for more than five years.

Since the 1960s, Rank says, poverty has become a more common experience, thanks to a boom-bust economy and the ubiquity of low-paying jobs that leave many families living at its edge. But typically, poverty is still a short-lived experience. "The grip of poverty is not as strong as some people think," Rank told me in a recent interview. If the safety net is a hammock, relatively few are napping in it.

Ryan is right that the government should try to fix the perverse work incentives that the welfare state creates for a fraction of poor families. But his report is meant to lay the intellectual groundwork for an overhaul that would more likely result in the same sorts of draconian cuts contained in his previous budgets, all in the name of aiding the needy. If anybody is setting a trap, it's Paul Ryan.

Jordan Weissmann is Slate's senior business and economics correspondent. Before joining Slate, he was an editor at the Atlantic and staff writer for the National Law Journal. His writing has also appeared in the Washington Post.

© 2014 Slate

Column: 'Welfare hammock' theory has holes (w/video) 03/06/14 [Last modified: Thursday, March 6, 2014 5:15pm]
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