States Where Welfare Recipients Are Paid More Than Minimum Wage

Is a low income or prolonged unemployment truly cause for financial stress? According to one study, not really. In some states, public assistance programs, or welfare, could pay more than full-time, minimum-wage jobs.

Cato Institute’s 2013 Work Versus Welfare Trade-Off study totaled the welfare benefits offered in each state and compared that value with the wages workers would need to earn in order to have an equivalent take-home income. Cato found for long-term dependents, welfare actually pays pretty well. The study examined the package for a single mother with two children, who could use programs such as Temporary Assistance for Needy Families; Supplemental Nutrition Assistance Program (food stamps); Medicaid; housing assistance; utility assistance; and Women, Infants, and Children.

The results? Recipients of this assistance earned more than the average pre-tax, first-year wage for a teacher in 11 states and more than the starting wage for a secretary in 39 states. This means welfare beneficiaries could make a better living off public assistance programs than they would working full-time jobs at minimum wage in many states — prompting the study to infer that many are likely to choose welfare over work should this trend continue.

But we took the results of this report a bit further to see which states have the biggest gap between the hourly minimum wage equivalent welfare recipients get and the state-mandated amount. When broken down into an hourly wage equivalent, we found the welfare package exceeded minimum-wage jobs in 34 states, as of their 2017 minimum wages. On the other hand, in states, such as Maine, Texas, Florida, and Mississippi, working a minimum-wage job was more profitable than a welfare package. But they’re really just outliers.

Unfortunately, the pay gaps are larger than you could ever imagine. Here are the top 15 states where welfare recipients are paid more than minimum wage. (Alabama, Louisiana, and South Carolina were omitted from The Cheat Sheet’s analysis, as they do not currently have state-mandated minimum wages.)

15. Pennsylvania: $6.53 per hour difference

protester and police

Welfare actually pays pretty well in some states. | David McNew/Getty Images

  • Total welfare benefits package: $29,817
  • Pre-tax wage equivalent: $28,670
  • Hourly wage equivalent: $13.78
  • State hourly minimum wage for 2017: $7.25

Imagine if your employer gave you a $6 per hour pay increase for your time and effort on the job. It’s safe to say that raise would be pretty significant. Pennsylvania residents see the same discrepancy between hourly welfare payout equivalents and the statewide minimum wage. In fact, those who receive public assistance are paid $6.53 more than those working full-time, minimum-wage jobs, according to Cato and the National Conference of State Legislatures wage data.

Next: One of the Dakotas pays a lot in welfare-assistance programs.

14. North Dakota: $6.61 per hour difference

Fargo, North Dakota, United States

The pay difference in North Dakota is significant. | iStock.com/Ben Harding

  • Total welfare benefits package: $30,681
  • Pre-tax wage equivalent: $28,830
  • Hourly wage equivalent: $13.86
  • State hourly minimum wage for 2017: $7.25

North Dakota has seen success as a state with one of the highest gross domestic products per capita and a low unemployment rate of 2.5%, as of May 2017. Even those on welfare seem to benefit financially from the state’s success, as the hourly welfare payout equivalent is $6.61 per hour higher than the statewide minimum wage of $7.25 per hour.

Next: A Western state where welfare recipients are paid over $7 more than minimum wage

13. Nevada: $7.09 per hour difference

A view of the Las Vegas Strip seen before Earth Hour from the House of Blues Foundation Room inside the Mandalay Bay Resort & Casino March 26, 2011 in Las Vegas, Nevada. Hotel-casinos in Las Vegas turned off marquees and non-essential exterior lighting to participate in Earth Hour, a global initiative by the World Wildlife Fund to focus attention on the threat of climate change. (Photo by Ethan Miller/Getty Images)

Nevada is one of the states with the biggest welfare payout. | Ethan Miller/Getty Images

  • Total welfare benefits package: $31,409
  • Pre-tax wage equivalent: $29,820
  • Hourly wage equivalent: $14.34
  • State hourly minimum wage for 2017: $7.25 ($8.25 with no health benefits)

We continue our westward journey to the next state with the biggest welfare and minimum wage pay gap. Nevada’s statewide minimum wage is no higher than the national wage of $7.25 for jobs with health benefits. But welfare recipients are receiving over $7 more in wage equivalencies than those earning minimum wage. Does this substantial assistance benefit deter recipients from ever entering the workforce? Only time will tell.

Next: This state has a high minimum wage that’ll just keep rising.

12. California: $7.37 per hour difference

Minimum wage protest

California is working on raising its minimum wage. | Scott Olson/Getty Images

  • Total welfare benefits package: $35,287
  • Pre-tax wage equivalent: $37,160
  • Hourly wage equivalent: $17.87
  • State hourly minimum wage for 2017: $10.50

California was one of 19 states to raise the minimum wage in 2017. It currently resides at $10.50 and will increase until it reaches $15 in 2022. Much to the chagrin of other low-wage fully employed workers, residents who are on welfare in this Western state see a $7.37 hourly difference between welfare and minimum wage payouts.

Next: An East Coast state where welfare outweighs work

11. Maryland: $9.10 per hour difference

Maryland state capitol

Maryland pays out a lot of money in public assistance. | Jim Watson/AFP/Getty Images

  • Total welfare benefits package: $35,672
  • Pre-tax wage equivalent: $38,160
  • Hourly wage equivalent: $18.35
  • State hourly minimum wage for 2017: $9.25

Maryland is the first of many New England states to appear on this list where welfare pays more than minimum wage. And even though its unemployment numbers are keeping close tabs on the national rate at 4.2%, Cato’s theory that collecting welfare is easier than working could be accurate in this instance. Here, there is a $9.10 discrepancy between money earned by working a minimum-wage job and receiving a welfare package.

Next: Even Vermont’s higher minimum wage doesn’t cut it.

10. Vermont: $10.36 per hour difference

Montpelier, Vermont

People on welfare could make more than double those working minimum-wage jobs in Vermont. | City of Montpelier City Government via Facebook

  • Total welfare benefits package: $37,705
  • Pre-tax wage equivalent: $42,350
  • Hourly wage equivalent: $20.36
  • State hourly minimum wage for 2017: $10

Vermont offers a minimum wage higher than most of its neighboring states, so why would some choose not to work? Americans on welfare in Vermont can earn over $20 per hour based on the pre-tax wage equivalent of their assistance benefits. That equates to a $10.36 per hour difference — more than double — the earnings for residents working minimum-wage jobs in the state.

Next: Wyoming is stingy with the welfare, but it still makes a difference.

9. Wyoming: $10.53 per hour difference

Jackson, Wyoming

Although the state has one of the lowest welfare packages, Wyoming residents on welfare still make bank. | Town of Jackson via Facebook

  • Total welfare benefits package: $33,119
  • Pre-tax wage equivalent: $32,620
  • Hourly wage equivalent: $15.68
  • State hourly minimum wage for 2017: $5.15

Wyoming offers one of the lowest welfare benefits packages on this list. However, residents here can still earn more than the proposed $15 national minimum wage many Americans want. Wyoming’s minimum wage is a low $5.15 ($7.25 federal minimum wage applies), but welfare payouts still provide over $10.53 more than those who work full-time, minimum-wage jobs.

Next: A tiny state with a big welfare gap

8. Rhode Island: $11.23 per hour difference

protesters with a "we work hard" sign

Low-wage workers demand pay increases. | Spencer Platt/Getty Images

  • Total welfare benefits package: $38,632
  • Pre-tax wage equivalent: $43,330
  • Hourly wage equivalent: $20.83
  • State hourly minimum wage for 2017: $9.60

The tiniest state in the country has one of the biggest differences between welfare and minimum wage payouts — an $11.23 per hour difference to be exact. To put the wage gap in perspective, those on welfare could earn more per hour than median hourly wages for auto mechanics and human resources assistants.

Next: Connecticut is in a similar situation.

7. Connecticut: $11.23 per hour difference

money and gavel

Welfare pays more than minimum wage in Connecticut. | iStock.com

  • Total welfare benefits package: $38,761
  • Pre-tax wage equivalent: $44,370
  • Hourly wage equivalent: $21.33
  • State hourly minimum wage for 2017: $10.10

In terms of pay gaps, Connecticut and Rhode Island are pretty similar. They both have an $11.23 per hour difference between welfare and minimum-wage payouts. However, Connecticut’s unemployment rate is higher than the national average at 4.9%. It also offers a slightly larger welfare package, making it the state with the seventh largest welfare and minimum wage discrepancy.

Next: The pay difference in the Big Apple is substantial.

6. New York: $11.31 per hour difference

Breaking Bad characters lying on a pile of money.

Is it worth it to find full-time work in New York? | AMC

  • Total welfare benefits package: $38,004
  • Pre-tax wage equivalent: $43,700
  • Hourly wage equivalent: $21.01
  • State hourly minimum wage for 2017: $9.70

New York’s minimum wage varies across the state, depending on geographic location and employer size. Residents in New York City can earn a minimum wage as high as $13, where others only earn $9.70 per hour. Regardless, welfare recipients in the state could earn $11.31 more than minimum-wage workers.

Next: Yet another New England state

5. New Hampshire: $11.86 per hour difference

New Hampshire scenery

New Hampshire has the fifth largest pay gap between welfare and minimum-wage payouts. | Darren McCollester/Getty Images

  • Total welfare benefits package: $37,160
  • Pre-tax wage equivalent: $39,750
  • Hourly wage equivalent: $19.11
  • State hourly minimum wage for 2017: $7.25

Although its neighbor to the north, Maine, is the only New England state where welfare recipients are actually paid less than minimum wage, New Hampshire residents are another story entirely. In fact, the Cato data shows this state has the fifth largest pay gap between minimum wage and welfare at $11.86 per hour.

Next: The nation’s capital

4. Washington, D.C.: $11.93 per hour difference

Donald Trump

The nation’s capital pays a lot of money to welfare recipients. | Win McNamee/Getty Images

  • Total welfare benefits package: $43,099
  • Pre-tax wage equivalent: $50,820
  • Hourly wage equivalent: $24.43
  • State hourly minimum wage for 2017: $12.50

Washington, D.C., is no stranger to financial “best of” and “worst of” lists. With such a high cost of living, its welfare package for a single mom with two children is one of the top in the country. But when accounting for the difference between the welfare and minimum-wage payouts, those receiving public assistance can earn nearly $12 more than those working full-time, minimum-wage jobs.

Next: What’s with New Jersey?

3. New Jersey: $12.45 per hour difference

cash

New Jersey pays higher per hour rates for welfare. | Mark Wilson/Getty Images

  • Total welfare benefits package: $38,728
  • Pre-tax wage equivalent: $43,450
  • Hourly wage equivalent: $20.89
  • State hourly minimum wage for 2017: $8.44

New Jersey cracks the top three states with large welfare and minimum wage gaps. The state has dealt with its fair share of financial woes, yet its public assistance pay gap remains untouched. Minimum-wage workers earn $8.44 per hour, but those on welfare could receive $20.89 per hour. This equates to a whopping $12.45 per hour pay difference.

Next: A significant pay gap in Massachusetts

2. Massachusetts: $13.30 per hour difference

Worcester, Massachusetts, USA

Massachusetts has generous welfare packages. | iStock.com/Sean Pavone

  • Total welfare benefits package: $42,515
  • Pre-tax wage equivalent: $50,540
  • Hourly wage equivalent: $24.30
  • State hourly minimum wage for 2017: $11

We round out our tour of the Northeast with Massachusetts. Its $11 minimum wage is one of the higher wages on this list, but both Cato and the national wage data make it pretty clear welfare pays more than minimum wage here. And while a $13.30 payout difference is quite substantial, it’s nowhere near the discrepancy in our No. 1 state.

Next: The state where welfare recipients earn the most money

1. Hawaii: $19.88 per hour difference

barack obama

Hawaii is the No. 1 state where welfare pays more than minimum wage. | Jewel Samad/AFP/Getty Images

  • Total welfare benefits package: $49,175
  • Pre-tax wage equivalent: $60,590
  • Hourly wage equivalent: $29.13
  • State hourly minimum wage for 2017: $9.25

The biggest discrepancy between welfare and minimum-wage payouts is seen in Hawaii with an astonishing gap of $19.88. Not only do residents receive nearly $50,000 in welfare aid, the hourly equivalent is comparable to the national median salary of an electrical engineering technician. But it’s best to note that the high cost of living in this state could distort the data. Regardless, such a high discrepancy between working and welfare is pretty hard to dismiss.

Follow Lauren on Twitter @la_hamer

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