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The Trade-Off Between Work And Welfare

WELFARE benefits are far more generous than commonly thought and substantially exceed the amount a recipient could earn in an entry-level job, according to a new study.

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The study, conducted by the Cato Institute, a Washington-based think-tank, examined the combined value of benefits - including Aid to Families With Dependent Children, food stamps, Medicaid, and others - for a typical welfare recipient in each of the 50 states. The authors then compared the value of those tax-free benefits with the amount of take-home income a worker would have left after paying taxes on an equivalent pre-tax income.

The study concludes that if Congress or state governments are serious about reducing welfare dependence and rewarding work, they must cut benefit levels substantially.

Among the study's findings:

*To match the value of welfare benefits, a mother with two children would have to earn as much as $36,400 in Hawaii or as little as $11,500 in Mississippi.

*In New York, Massachusetts, Connecticut, Washington, D.C., Hawaii, Alaska, and Rhode Island, welfare pays more than a $12 an hour job.

*In 40 states, welfare pays more than $8 an hour. In 17 states, welfare is more generous than a $10 an hour job.

*Welfare benefits are especially generous in large cities. Welfare provides the equivalent of an hourly pretax wage of $14.75 in New York City; $12.45 in Philadelphia; $11.45 in Baltimore; and $10.90 in Detroit.

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