When negative consequences appear to not work for children, often the reverse is used to increase positive behaviors. For instance, if parents continue to take away privileges and don’t see the results they were hoping for, they might institute a rewards program – Timmy gets an hour of extra play on his Nintendo if he improves his grade in English or Sally gets to visit her friends on Saturday if she cleans her room 4 days out of the week, etc. For some children, rewards just work better.
Now, I’m not using this simplified analogy to mean I think of people on welfare as children. They are adults (who often have children) that are living below the poverty line and are receiving some government assistance. But the statistics show that over the past 20 years the percentage of people receiving welfare hasn’t dropped significantly(1-2% drop over the past 20 years no matter which numbers you use*) – which means the welfare program isn’t working well enough or fast enough to resolve this continuing issue.
*Now for the numbers – according to Wikipedia (not a terrific source, I know) welfare is often lumped in with benefits received from work, not just those receiving government aid in the form of TANF (temporary assistance for needy families) or SNAP (supplemental nutritional assistance program). So, some figures show welfare has decreased from 16.6% down to 15.3%, but these take into account the work benefits. Stripping those benefits out, the statistics are much lower – 5.9% in 1993 versus 3.8% in 2013. Obviously, 3.8% isn’t a very large percentage. In a country of 317 million people, a little over 12 million are welfare recipients.
Some may argue that we should take away benefits since we’re not seeing the results we want to see and instead the poor should just “figure it out like everyone else.” But realistically, this isn’t going to happen. There are far too many issues involved in what makes someone sink below the poverty line.
But back to my original idea – rewarding those that show progress towards the intended results. Ultimately, the results people want to see from those receiving welfare are that they eventually become self-sufficient – have a job and earn a living wage to care for their families on their own. Yet, how the TANF and SNAP program work do the opposite. The moment a family begins earning a certain amount (there’s a complicated formula for figuring this out, but the limit is usually around $1,963 net for a family of four – so if they earn more, they may not qualify), their benefits are reduced or cut. If they save too much money (which is dependent on the state they live in and called an asset limit – it used to be $2,000 across the board but some states raised this limit), their benefits are reduced or cut. Obviously, for some families, there’s no incentive to work harder or save more money because it means losing their benefits.
Yet what if instead of seeing their benefits reduced, the state “rewarded” those that are working full-time, saving a portion of their income, continuing their education and creating a better financial future for their children? A drastic idea, I know. The reward would have to be some kind of monetary match in savings and/or continued assistance for a period of time that’s longer than now. Up front, it would cost much more to fund such a program. However, if there were goals set in place for the family to meet and a time-limit for how long they receive their “rewards”, ultimately it could cost the nation much less in the long run with the prospects that their children wouldn’t end up on welfare. Instead, they’ve learned financial lessons from their parents – work hard, save a portion of your income, become educated.
This is a very simplified solution to reducing poverty and welfare, I know there are a multitude of issues that keep people from successfully getting out of the welfare cycle – low paying jobs, lack of education, lack of available services, single young mothers, etc. But I think it would be an interesting case study to test this idea in a small sample size and compare it to our current system.
What do you think? Is welfare underfunded, run inappropriately, or abused? What are some other factors that would thwart my idea?
11 Comments
I know there is a purpose but you hear too many examples of people who manage to get on and stay on the system for life. I don’t think it’s meant for that. It is meant as a bridge so that you can get back to sustaining yourself. This gap needs to be closed.
@Money Beagle – Exactly my point. I’ve read a few stories and the running theme is that the current program really gives incentives for staying ON the program, not truly getting off. It needs to be the other way around.
I like your idea, I think it will be interesting to see how people would react. On the other hand, it might be difficult for most people to have higher income to have higher welfare with this system, but it might be a good way to change people’s way of thinking — to get out of the welfare system if they could as soon as possible.
@Poor Student – That’s sort of my reasoning, give them an incentive to get out of the system quickly by showing them they can earn more (in the long run) by working. Of course this still doesn’t solve the low wage issue unless you motivate them to strive for a management position – for example, go work at McDonalds but have your eye on becoming manager, etc. But that’s a whole other issue.
“Yet what if instead of seeing their benefits reduced, the state “rewarded” those that are working full-time, saving a portion of their income, continuing their education and creating a better financial future for their children? ”
I think this is a great idea! Even if it does not help this generation, I think children seeing their parent’s striving, and achieving some level in personal finance would help break the poverty cycle. Maybe we should vote for you for Congress. 🙂
@Ginger – Maybe someday I’ll get into politics, but not any time soon. 😉
I can’t even begin to come up with a solution. I recently read a story that told of a woman on assistance that turned down a raise at work because it meant her government assistance would be cut. In the end, she would have less money with the raise/reduced assistance than if she kept her current wages and assistance.
I like the idea of rewards, but at what point does the person think about having less money by not working? While there are many out there that use assistance for its intent, there are a lot too that are just scamming the system. I don’t know how to get them off it effectively.
@Jon -That’s why a rewards incentive program might be a good way to get people to take the job or strive for a raise and still qualify for assistance. Over time, that woman in your example will make more, but just not right away. By “rewarding” her in essence she’s motivated to work harder, not turn down a position. But it’s definitely a complicated issue.
There is actually several interesting program that does reward families for doing well. One is called the Family Self Sufficiency program.
Adults take classes on money management, credit, homeownership, etc. People who meet their small goals are helped to meet larger goals, like starting a business, returning to school, or buying a home.
The section 8 rental program also does something cool. People get help to pay a portion of their rent if they live in an area where housing is unaffordable to someone of their income (usually more than 30%.) As they earn more, they get less help to pay their rent.
But instead of losing the benefit entirely, the support they are no longer getting goes into an escrow account.
I’ve worked with one woman who came to the U.S. speaking no English. She worked her way up over the years and paid more and more of her monthly rent until she became ineligible for help. She was able to use her escrow account for a down payment on a town house for her and her son.
The truth is there are lots of success stories out there getting no recognition in the media. College cooperative extension programs often need credit and financial counselors. Perhaps getting involved as a volunteer would allow you to meet some amazing people who are doing just the kind of thing you’re proposing.
Oops, excuse the bad grammar in the first sentence. I was in a hurry. 😉
@Pamela – Thanks for adding that information. I had no idea that there were already programs designed similar to what I mentioned. You’re right, they don’t get any attention in the news and they should. I might look into volunteering, it sounds like these programs are already in the works!