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
- 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.