Working More to Earn Less | Why the Poor Stay Poor | Learn Liberty

Working More to Earn Less | Why the Poor Stay Poor | Learn Liberty

What if I told you that the government effectively
punishes poor people for working? Sound too sad to be true? Let me tell you a story. I once had a student
who interned at Florida’s welfare program for low-income families. One day, a distraught
mother and her teenage son came into the office. Their benefits had been cut. And they were
unable to pay their bills. And she didn’t know why. My student searched and searched to figure
out why this was the case. And he made an unsettling discovery. It turns out that the
teenage son had worked additional hours at his part-time job. He had been doing good
work. And his boss extended the number of hours. And this allowed the teenage son to
bring home more income to the family. But that little bit of extra money reduced
the public assistance that the family was eligible for. In fact, the cut was so deep
that those extra hours worked actually lowered the total income the family had to live on. This is a horrible situation, one faced by
millions of families. Instead of experiencing a gradual decline in benefits as their earnings
increase, the government abruptly strips the benefits away. It punishes them for working. Now imagine if you and your family were struggling
financially. And you had the opportunity to work additional hours or take a job. But in
doing so you would actually make your family worse off. How would you respond to these perverse incentives?
You’d likely scale back on the number of hours worked or not take the job. While individual
programs attempt to reduce benefits gradually, they often do so at the same time. And this
can result in a large, abrupt reduction in benefits. At times, individual programs also
have abrupt, sudden declines in benefits. Take, for example, the federal food stamp
program, SNAP. For a parent with two children, the benefits are gradually reduced as earnings
approach $30,000. But once the parent earns over $30,000, the benefits suddenly drop. This is crazy, whatever you think about public
assistance for the poor. We can all agree that this is the wrong way to do it. People
should be rewarded, not punished, when they work. The welfare system is so poorly designed
that it is trapping many people that it was created to help. My name is Sean Mulholland, professor of economics.
And I believe there are ways to fix the system. If you’d like to learn more about these issues
and explore potential alternatives, please join me for a free online program at Learn
Liberty Academy. Please click here to register. I hope to see you there.

100 thoughts on “Working More to Earn Less | Why the Poor Stay Poor | Learn Liberty

  1. My dad would always tell me about this. My mom is disabled and my dad is the only one working, so every time he gets a raise something bad happens and he's always frustrated about that.

  2. The question is:  Why are people so eager to take money coerced from others.  This used to be considered aiding & abetting, no?

  3. It's not just the US. The same thing is happening here in Canada. The poor get poorer and have to work even harder, and the rich scumbags that are doing this have the gall to accuse us of being "lazy bums" and "government leeches".

  4. In the UK being lazy is rewarded with benefits. So much so that it is sometimes better not to work than to have a job. Benefits are supposed to help the poor but they are too comfortable to many.

  5. How about those who receive government assistance be required to perform community service in exchange? I see a LOT of litter on our highways that isn't throwing itself away. Just one of millions of examples.

    Take away the free lunch (literally) and people will figure out another way to eat.


  7. This doesn't just apply to poor people, it applies to the entire middle class.  Once your household income exceeds various milestones, more and more government subsidies that you never knew existed fade away.  I could literally give you hundreds of examples, but here's two:  

    1) I had my first nog neutered by a local animal shelter for $40, when I tried to get another dog spayed there, they told me I couldn't because I made too much money.  Called the vet, $240… plus another $160 because they wouldn't do it without updating her shots.  I make a little more than I used to, but not 10x more.  

    2) We have this "EmergiCare" place near to my house that bills itself as a middle ground between physician and the emergency room.  I used to go there whenever I was sick and paid $75 per visit.  I went there last year and went to pay my $75 and, to my surprise, the lady told me "its $100".  I asked "it went up?" and she replied "No, $75 is what we charge people who do not have insurance, but since you have insurance, $100 is your co-pay".. so I just left.

    Granted, I'm annoyed while others are actually suffering.. and I appreciate the difference.. but its a systemic problem that is far reaching.

  8. This continues as you earn more money.  The "progressive" (which is actually regressive) income tax, punishes hard work, and incentivizes NOT WORKING.  Especially coupled with government handouts.  Essentially for not working you get rewarded.  This creates an enormous disincentive for working.

  9. "Poorly designed", instead of eliminating welfare all together. A nice choice of words that leave debates open.

    Also the anecdote does seem to show that if welfare have been eliminated altogether from the beginning the teen's parrent would not be able to afford things needed anyway.

  10. Food, adequate housing, healthcare and good education are basic human rights.  Why is Cuba able to provide this to all its citizens, but the US not?

  11. I don't see this as a trap.  You're still climbing the ladder.  Think of the overall pay cut as a tuition for climbing and get out of the trap altogether.

  12. I've combed the welfare and SNAP tables for several states looking for this "poverty trap" without success. North Dakota has a convenient calculator where you can explore this phenomenon yourself. On Learn Liberty's site, I've offered 100 points to anyone who can find the poverty trap discussed here, but no one has spoken up. I'm sure policymakers would be interested in evidence of such a silly policy, but I suspect the poverty trap is either a myth altogether or has been corrected.

  13. I AM my Net Worth

    Success breeds Self-Image…Charity breeds CONTEMPT of the hand that feeds "them."

  14. From our Soviet friend:

    "its exchange-value is determined by how much it costs society to produce the commodity."

    [The utility to them is FAR greater than the other party.]

    "The variations in desire for a given commodity, whether per individual or over time, does not effect the labour time it costs society to produce that commodity."

    The ideas behind labor theory – or even capital theory – of value are dumb.  

    Ever hear of Sunk Costs?  Why can goods be sold at a loss?  

    Value is subjective.  Commie de Canal said that exchange value has to do with COGS.  That's ridiculous.  Louie Vitton t-shirt vs. knock-off Hanes t-shirt: same thing but certainly not the same EXCHANGE value.

    Discount meat at the grocery store: the price goes down the MORE investment is made in the same cut of beef.  The longer it sits on the shelf, consuming fixed costs, the price plummets until it reaches ZERO and is tossed out. (And trash removal is paid for).  

    Commies just seem to have a blind spot to some really fundamental things.

  15. I can fix it right now.


    Herby every one gets 2000 usd per month when they become 18 or imansipated(However you spell it), and this 2000 usd will be adjusted based on inflation and deflation, and also overall market prices. (So crancking up the prices for stuff wont to jack shit)

  16. This exactly why new Seattle minimum wage haven't changed amount of public assistance distributed. People just transferred to part time to keep their handouts

  17. 100%. This is relevant to me and my family and has been for years regarding income and housing. They'll automatically snatch out the benefits from under you, potentially forcing you to live even worse off instead of working with you to encourage you to be productive to society and work and attempt to reach your full income potential to hopefully one day not only get out of welfare, but contribute to it.

  18. For as long workers work for an employer they are "modern slaves" and subject to exploitation. Thus, the only way to put an end to slavery, we should adopt the concept of "Commonwealth", as never applied before. I think I found the solution to the problem: I reason that for as long workers work for an employer they are "modern slaves" and subject to exploitation. – Thus, the only way to put an end to slavery, we should adopt the concept of "Commonwealth", as never applied before. Here's an example of it: a talented entrepreneurs enjoys the challenge to create a successful business. He then sells it to his employees, who then become owners; i.e. don't depend anymore on unions and low wages.
    The entrepreneur gets his money back with some extra bonus and starts a new venture… and again selling it to his employees etc. and every time the entrepreneur gets his money back with some extra and starts an even bigger venture… Gradually, most of us will become self-employed business owners! If then the more greedy ones own more, the less greedy ones won't envy them as much. Imagine how proud an entrepreneur then could be after having turned 3000 low wage earners into well to do business owners!
    So, why it is not happening? Because most (if not all) talented entrepreneurs suffer from sordid greed! Do they really believe that only their talents deserve all the materialistic riches in our world? Those of them who believe this failed to dismantle their inherited/ or environmentally acquired negative traits and thus, turn materialists to compensate the the loss of exchange of virtues in true love, by attempting to "force/buy" it.

    Are they not worried that their grossly selfish behavior in the long run might ignite yet another massive "Kristallnacht" type revolt?
    The fact, only few materialists seem to know, dare or dare to acknowledge, is that their intrinsic/ acquired materialistic, sordid possessiveness is a flawed fixation from which they hope to buy all the worldly happiness. In most cases they either suffered a cruel childhood or lack emotionally creative talents. Thus, their meaning of life is rather based on mutual exploitation than on exchange of virtues. Since they lack compassion, they totally ignore the suffering of fellow citizens, due to lack of basic commodities. To them their suffering merely offers them even greater opportunities for exploitation. That type of capitalist ideology is of course unsustainable and invariably leads to social unrest and chaos.
    In stark contrast stands a person, who enjoyed a wonderful, early childhood (like some noble capitalists & me), because they grasp the true meaning of life, in which they aim to continue to fulfill their ancestor's mission, in which they long to enjoy highest-possible,lasting innermost contentment.
    Isn't this what we really all long for?
    To achieve it, our capitalist system needs to firstly provide, basic, materialistic security to all citizens and then teach them the difference between once "wants and needs", as well as the true meaning of life.
    Most progressive countries introduced a social safety net, which is a positive step into the right direction. It offers the unemployed (even the lost & lazy) basic means to "exist". Thus, there's nothing for us to envy them. I'm even in favor to allow them even a bit more social care, for it might teach them that society cares for their welfare. Yet, at the moment our sordid capitalist system offers them and working poor little hope and something has to done to revise and amend our capitalist ideology for the better or it will collapse.
    Personally, I "sordidly" managed to sort out my personal philosophical mess, even wrote and wrote a few books about. (see "A Guide To Personal Contentment") – This explains why my materialistic needs are fairly basic; rather based on amassing emotional riches, such as emotional creativity. – Here's a bit of proof for it. It's a musical piece to which I perform my whistling to music:

  19. this is where I am stuck. Worked 2 jobs , paid for degree and bought a cheap house. Moved for wife's schooling. making no money , can't get loans as made too much, no benefits as previously made too much , get taxed on little income from renting out a house that may lose value due to bubble popping. if I work full time have to pay 25% for childcare , if work halftime can get more benefits and pay less in childcare if can find some.

    or stay on unemployment ( just covers and food) until if runs out. which I wouldn't do, but essentially am punished more and more for the harder I work and get the most by being lazy? terrible set up.

  20. i dont understand why this video was put up, didnt the video they uploaded about income mobility explain how this is solved?

  21. I can confirm that this is not the case in England, although our politicians may often connote it in order to justify poorly grounded attacks on welfare

  22. Say your family makes $1200 a month and you get $300 in EBT, if you make $1210 they will cut your benefits in half. Where is the benefit to work extra? If you could make an extra $200 to compensate that would be great but thats not home jobs work. It sucks if you depend on the EBT for food which you would because you are getting it.

  23. Is it possible to make all charity system to share their database? Instead of step-wise benefits, is it possible to generate the benefit amount based on a linear formula of their income?

  24. How do I get out of the trap without becoming homeless?!
    Right now I'm just going to college and saving everything I can from FASFA because I don't know what to do!

  25. It's bothersome that the modern liberty movement ignores a lot of its Georgist past in favor of Chicago school/Austrian school-lite economics. I favor Austrian school over the Chicago school (since Chicago school is just Keynesian but for the capitalist class), but to hijack libertarianism as a cohesive movement is a bit disheartening.

  26. This could be solved with a simple line to the laws saying that factors which lower the amount a person is eligible for must be discarded from calculating benefits in any case where the result would cause a person's total income to be reduced as a result of earning more money. In other words, we could just fix the law so that that gradual decline in benefits occurs instead of the current system.

  27. No one needs to be poor, capitalism can make everyone rich. It's government trying to "fix" capitalism that makes people, and keeps people poor.

  28. Work harder harder that simple. And stop making children. People with low income and poor education should never have children. Most of the time it's your own fault (parents) why people are suffering from poverty.

  29. The welfare state exists to keep people dependent. People on welfare will always vote for me welfare and more government. It exists to help the state, not people.

  30. Easy solution. Where there is an income drop caused by rollback of government benefits have the Koch brothers make up the difference to that family. Seeing as helping the poor is their only motive in producing these videos I'm sure they will oblige …

  31. As an immigrant became an American, If no phiscal address, and no kids or wives, great, it means your money is extra enough for you so bring all the rest of money!!!! what great!! isn't that person needs money to make a new family???? Many great but still there're mistakes in Capitalism. I don't want immigrates like me get allot money that way no more aliens bother USA

  32. we should lean them off the system over time to force them to go back to work. all of you are saying that its wrong to lower their benefits as they make more. isn't that the same thing with taxes? as you earn more, more taxes get taken out. so end of day we need to get people off the system and support themselves.

  33. Tell your intern to visit the person's home, my bet is there is at least 1 big screen TV, top brand cloths, and state of the art electronics. We live in a country where people are checking their food stamp balance on their 800 dollar smart phone.

  34. well in all fairness SNAP is often supplemented by food banks. My wife used to be a SNAP coordinator yes peoples benefits were slowly taken away as they gained more income but they would only go hungry if they chose to.

  35. my aunt almost became a manager at her job, but she'd lose her benefits if she did. She'd make a little more, but only like $30 more a week. with welfare, she had a shorter week by two days.

  36. How about Income tax for those earning 100K or less? Isn't that an incentive to not want to work? Why tax income in the first place?

  37. I'm always struggling me my mom and my brother we barely have food clothes we live with rats and roches we dont have no money we poor

  38. Getting rid of the virulent and greedy jews who have taken over all national institutions concerning the welfare of its citizens is a start.

  39. The wages for teenagers are not factored in to your welfare benefits as long as the child is in school. When you get a job you are eligible for transitional food stamps for 5 months, which is your current food stamp amount without your new income being counted.

  40. So true… Over Thanksgiving, my cousin shared this same story with his recently divorced daughter that went to work and lost benefits; the worst loss was health care cuts, a visit to the doctor now has her $2000 in medical debt. If it wasn't for his ex-wife able to babysit kids while she works, it would even be worse.

  41. You have hit the nail right on the head! I live around people on food stamps, many of witch want to work hard and get off of welfare. This is something that neither Democrats nor Republican party's really understand. Mostly because neither of these politicians have ever had to be on food stamps. If you want to know witch party represents the poor the best. The answer is : NONE OF THEM!!!!!!

    They just tell voters what they want to hear by giving into their preconceived notions and prejudices. That is how you get elected.

  42. Even the tax system… other than tax on tax on tax as a product moves through the system. I think if we actually knew how much tax and duties are paid on everyday items we would be very angry. Then income tax… where once you reach a certain income you can set up structures to reduce the tax you pay and get away with paying a much less percentage than people on much lower wages. None of it is fair especially to those that can't afford to take advantage of the tax breaks. Didn't the Romans tax based on your total assets? That seems a fair share: if you do well you will need to pay more.

  43. It does the same to every working person who gets a raise knocking them into the next tax bracket. Lets eliminate those as well. The kid had a job, who knows whether he could get another, hes young. Punish the non working as much as we punish the guy whos had a full time job for a decade. And maybe more.

  44. The wealthy retarded sucks society we elect to govern us, are nothing more than leeches sucking Liberty’s tits dry at the expense of our stupidity.
    A government overflowing with the finest stupidity elite money can elect.
    The biggest waste of money, is our government and 95% of the country’s problems are created and caused by the selfish sucks sitting within that government.
    The wealthy retarded governing is always a guaranteed recipe for disaster that has brought nothing, but collapse, war, and destruction to civilization throughout human history.
    This is a lesson mankind needs to learn because America can only endure, so much before it collapses under the weight of wealthy retardations greed and stupidity.
    Just like every great empire that came before us, who were all ruled by the wealthy retarded, or some version of it.
    These people, are man made unnatural disasters and history has proven them to be country killers many times over.

  45. sadly this is true i know people that if they stop working there net income will rise by 20%

  46. Here is a real story my family is considered disabled and poor and my little brother is nearly impossible to take care of without training. Anyway I am legally considered disabled so I get a disability check 750 a month but if I work more then 20 hours a week I lose it which means if I work minimum wage (like the broken college student I am) I would actually be losing money by working full time rather then 20 hours and take the check about 150 less a month for my old job actually

    It’s to the point if my mom works we all lose benefits resulting in her being the only one bring in income which she would need to pay a baby sitter which already cuts out stuff it’s almost impossible for me to move out because if I do they won’t make enough money to survive. This is going on right now and it sucks I’m 21 yes I’m autistic yes I am considered disabled due to other things but I can function like any other person if I have help but I am unable to move out due to our tight situation because the government gives more money for laziness then to trying to improve

  47. You have to work and earn money period, what's fucked up is in too many minority communities people simply don't have the knowledge or were raised with the work ethic to grind hard, its sad

  48. This is not uncommon. I had a friend with a brain injury from a car accident. Though she was still quite young, she couldn't handle working full time. Then, if she worked one hour too many, they would yank her social security. And twice a year she would be paid three times per month (every two weeks), so she would have to cut her hours during those pay periods to avoid losing her social security. It was a complete nightmare and, because of her cognitive limitations, she had a great deal of trouble managing it.

  49. Great teaser with no MEAT. Don't tell us what we already know and say there are ways to fix it. Give your better options without hiding them.

  50. The welfare system wasn’t poorly designed or meant to help poor people. The welfare system was created to keep poor people as salves for the government. First the government decreases the value of the poor people’s money so they get even more poor. Then the government (which created the problem) stick their hand in to “help” them receive benefits. But if they start to work, they will receive less money. And if they ever manage to get off that trap. The government will steal their money to pay for other people living on welfare, oh sorry I mean “keeping poor people in figurative cages”.

  51. I own a corporation. I have added up how much I can get on welfare if Bernie Sanders hands out free college and free healthcare I will be closing my company and going on welfare. It is the only thing that makes sense.

  52. If I get a raise at work by working harder I'll be paying about 50% tax on that money while working 20% more hours… mediocrity is the result of socialism

  53. what I did was get a college loan, 6k. anyone can get one. I bought an old minivan and lived in it for 3 years, on 5k a year, not long ago. I got 3k per year from selling my plasma, the rest came from day labor and odd jobs. I put 30k into the bank. I found an agreeable, trustworthy vet, who had no job and made it look like he made enough money to get his VA home loan. Such men are all over the VA hospital. The employment office there will send dozens of them to you. He got paid a real deal $100 a week. After we bought the big old house (in OK) for 50k (no money down because it was a VA home loan) he got a free room. I lived in one of the 9 other rooms and rented out the 8 other rooms for $125 a week each. I effectively cleared 30k a year, since my 5k of housing costs, utilities and wifi blended into the biz expenses. After a year, I got another such place and he became the live in tenant manager. He gets the 6k a year that 'my" old room brings in. All he has to do is watch over the place and handle the day to day stuff, calling me if it's a bigger deal. It cost me 15k to get things going. I spent as much more getting an Asian dentist here, but she pays me a tax free $600 a week. She'll either divorce me or at least, stop paying me after she becomes a citizen (3-4 years) but i wont care. Everything is in the name of a NV corporation that she can't even find out about. Anyone can do the same thing. Once you've got 2-3 such boarding houses, you can afford to pay a property management company and CPA to ride herd on your live-in (veterns) tenant managers. Then you wont be stuck in OK any more. You an live in a small RV, or even move to the third world, with your clear 40-60k of income. You are NOT stuck working for others and you do NOT need a fancy education. 2 years of college makes you a registered nurse. If you'll travel , move to the top paying area, and work overtime, an RN can clear 65k a year, grossing 100k a year. So it doesn't take long at all to be successfully retired, folks, starting with nothing. Just a bit of knowlege, grit, williingness to suffer for a couple of years.

  54. Living proof! I went through family law while I was earning about about $55k a year. Low income is classified as under $50k here. Legal aid is offered only to low income. So, being $5k/year over the low income threshold, I did not qualify. My total cost for legal fees was over $20k that year. Thus, I ended up taking home $35k, while paying tax on $55k, and not qualifying for any of the assistance programs for low income that others who earned $15k a year more were getting. In effect, big brother made me poorer than low income earners by means of their programs and incentives. Had I choice, I easily would have dropped my income down $5k a year.

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