How Much Do Welfare Programs Cost the U.S.? More Than You Ever Thought

 family at a distribution point by the Food Bank of the Southern Tier Mobile Food Pantry - Source: Spencer Platt/Getty Images

Spencer Platt/Getty Images

There’s a lot of push and pull between legislators and government officials as to just how much the government should get involved in public assistance. There are numerous welfare and social safety net programs, helping millions of families with housing and food assistance, child care, and education. But one of the biggest knocks against these programs is that they are costly, and at a time when government spending is under the microscope, these programs are in the cross hairs of deficit hawks everywhere.

Thanks to the results of a study from the University of California at Berkeley, we now have a more accurate idea of exactly how much funding these programs require. Many have hostile attitudes toward SNAP, unemployment insurance, and other programs, and if you’re going strictly off the price tag, it does look like there’s room to be concerned.

The total? $152.8 billion annually.

The study specifically looks at the relationship between working families — that is, “those that have at least one family member who works 27 or more weeks per year and 10 or more hours per week” — and the overarching effect of low wages. The findings show that the majority of families that are receiving government assistance in the form of one or more welfare programs are members of these families.

“Stagnating wages and decreased benefits are a problem not only for low-wage workers who increasingly cannot make ends meet, but also for the federal government as well as the 50 state governments that finance the public assistance programs many of these workers and their families turn to,” UC researchers Ken Jacobs, Ian Perry, and Jenifer MacGillvary write. “Nearly three-quarters (73%) of enrollees in America’s major public support programs are members of working families; the taxpayers bear a significant portion of the hidden costs of low-wage work in America.”

At the heart of the issue, the research finds, is the perpetual issue of stagnating wages and low-paying jobs.

Nearly $153 billion in public expenditures per year is nothing to sneeze at, and people should rightfully be concerned about the high price tag of these social programs. The problem is that the people who use these programs are in need, especially after many people were beaten back, in an economic sense, by the Great Recession.

Though many legislators conjure up images of lazy, parasitic do-nothings when discussing the costs of these programs, this study shows that that is an incorrect assessment of those receiving welfare — in fact, nearly three-quarters of them are working, and simply can’t bring in enough income to make ends meet. Now, there could be an endless debate as to whether a lot of these people should or could have made better decisions, or if they could go back to school for retraining, but that doesn’t help solve the immediate issue at hand, which is that there are millions of working families that need help.

But again, that help is coming at a rather monstrous price. For the government, and taxpayers concerned about possible abuse of these programs, what is there to do?

As you might have guessed, the Berkeley researchers suggest that the private sector — meaning employers — pick up the slack in the form of higher wages and better benefits for workers. That, they say, would allow the government to use taxpayer dollars to address other issues.

“Higher wages and increases in employer-provided health insurance would result in significant Medicaid savings that states and the federal government could apply to other programs and priorities,” the researchers write. “Overall, higher wages and employer-provided health care would lower both state and federal public assistance costs, and allow all levels of government to better target how their tax dollars are used.”

Of course, how we actually get to the point where employers are willing to extend those gratuities to employees is a different matter completely. It could involve instituting higher minimum wage laws, or simply waiting for the labor market to naturally readjust. Both of those approaches have potential downfalls, however. And getting legislators to agree on any kind of sound, agreeable strategy would be incredibly optimistic. For example, look at how far the Obama administration’s attempt to raise the minimum wage to $10.10 per hour went.

If anything, the Berkeley study gives us some insight as to not only how much welfare programs are costing American taxpayers, but also where, exactly, that money is going — with the majority headed to families who need it, and are still suffering at the hands of stagnant wage growth.

Follow Sam on Twitter @Sliceofginger

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