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Government Assistance Better than Work for Many

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Many wonder why at least 3 million fewer Americans are at work today than there were in 2019.  Economic rationality is one reason.  In some states today, unemployment benefits are the equivalent of a $100,000 job when direct payments and the value of other benefits are included.  Families earning as much as $500,000 annually are eligible for ObamaCare subsidies.  These two benefits - unemployment and Obamacare -- are unusual in the sense that they are not limited to low-income people.  Unemployment benefits are limited to six months in most states, but workers may move in and out of the unemployment system and thus work enough months until they again qualify for benefits.

Some would argue that programs that discourage work benefit the families receiving welfare.  Work usually is associated with more financial security over time, and a higher level of health, happiness, and even life expectancy.  Further, the success of societies is heavily influenced by the proportion of the population working.  The fewer working, the less taxes are raised to support those not working.  In addition, the loss of productivity from those not working harms the economic success of society as a whole.

Individuals can't be blamed for making rational economic choices that are in their own self-interest.  But government policies that reward passivity and penalize industry will not promote a healthy society in the long run.  The Welfare Reform Act of 1996 was designed to promote self-sufficiency by removing barriers to employment.  It would be good for our lawmakers to consider whether other programs should be reviewed to do the same.

This article is part of our June 2023 Newsletter.

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