Study: Welfare pays more than minimum wage in 35 states

National/World News
This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

DENVER — Welfare pays more than a minimum-wage job in 35 states creating little incentive for Americans to take entry-level work and likely increasing their long-term dependency on government help, according to a new study by the libertarian think tank Cato Institute.

According to, the findings come 17 years after the Clinton administration, with bipartisan support from Congress, passed landmark welfare reform legislation that was supposed to move Americans away from entitlements and into the workforce.

However, “welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job,” the study authors said. “And the balance between welfare and work may actually have grown worse in recent years.”

Among the other findings is that welfare in 13 states pays more than $15 an hour, compared with the federal hourly minimum wage of $7.25.

Colorado, however, is one of the states where minimum wage pays more than welfare, according to study author Michael Tanner.

“Colorado actually has one of the lowest packages in terms of welfare benefits in the country,” Tanner said.

In Colorado, the a single mother of two earned $20,750 a year on welfare. But Tanner said, someone one minimum wage would make more than that “in large part because of the earned income tax credit and the fairly large child tax credit available.”

Tanner also added that 48 percent of welfare recipients in Colorado are working, which is higher than the national average.

The disparity was even higher in nine states in which welfare pays more than the average first-year teacher’s salary and in the six most-generous states, which pay more than the entry-level salary for a computer programmer.

The 52-page study, titled “The Work Versus Welfare Trade Off,” points out a full package of welfare benefits often exceeds take-home pay in part because benefits are tax-free.

The study’s author argues that if Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare-to-work requirements, removing exemptions and narrowing the definition of work. This could include reducing benefit levels and tightening eligibility requirements.

Cato senior fellow Michael Tanner, who did a similar study in 1995, told on Wednesday that the problem goes beyond legislative changes and that the country needs to reform its education system to better prepare Americans for the workforce.

He also repeated the argument that entry-level workers don’t stay at that level, arguing just 2.6 percent of full-time worker are poor and only 42 percent of Americans are engaged in work activities, which includes job training and looking for employment.

“We need to get people to think long term,” Tanner said.

The study was also released amid a renewed standoff in Washington and elsewhere over whether to increase the minimum wage.

Fast-food workers in at least seven states have recently gone on strike to demand higher wages.

And President Obama last month again called to increase the minimum wage to $9 an hour for those who don’t get tips, saying “No one who works full-time in America should have to live in poverty.”

However, Congress appears to be in no hurry to fully address the issue. contributed to this report.

EDITORS NOTE: Previous versions of this story incorrectly stated that welfare recipients in Colorado earned more that a worker making minimum wage.

Most Read

Top Stories

More Home Page Top Stories