Thursday, August 22, 2013

Morally Wrong: How Those That Choose Not To Work Have Won

Yesterday we reviewed why many Americans that did the "morally" wrong thing, not making payments on their home, have seen their financial situation improve because of it. Today we will layer that concept with government welfare programs to show how life has become better for those that have decided not to get a job.

Imagine you are Suzanne Jones, the mother of a similar family in the housing story yesterday. Suzanne was able to collect $300,000 in home equity withdrawals during the bubble years and then live in her home payment free for 3 years after she stopped making payments.

Suzanne lost her job in 2008 and went on unemployment which lasted for two years. She is a single mother with 2 children. During this time, because she did not have to make monthly living payments, the unemployment checks were more than enough for her to take two years off and just spend time with her children.

When the unemployment was coming to an end in 2010 she had an option. She could have tried to go out in the workforce and find a minimum wage job, which is all she would have qualified for based on the availability of jobs in her area, or should could have pursued the option of welfare.

In 33 states in America, a single mother with 2 children can bundle programs together and receive the equivalent of more than $8 an hour at a full time job. Actually going to work for 40 hours a week would only pay her $7.25 an hour. 12 of these states (including the District of Columbia) bundle programs that pay the equivalent of $15 an hour at a full time job. 

If she lives in one of these states her decision is easy. If she were to go to work she would have to pay for someone to take care of her children while she is there. Collecting welfare and staying at home takes away this expense.

The immediate answer to this problem from Congress is always to force the "greedy" corporations to pay higher minimum wages. I have discussed many times how this would provide a net negative impact on the lives of residents living in that area. To understand why click here.

This mother is not a temporary welfare recipient. She is permanent. This is why the number of welfare recipients is ballooning. Is Suzanne Jones wrong for choosing this option? Many would say it is morally wrong to collect welfare if a job is available. Suzanne would say that that she has had 5 great years of spending time at home with her children collecting more money than she would have earned at a job.

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