We know that to avoid poverty, it is essential to get a high school diploma, maintain a steady job, and marry before having children (see research from the Brookings Institution and Harvard University on these points). Not only are they key to avoiding poverty, upward mobility and financial stability are closely tied to this family-education-work sequence, as well.
That is why our recent reports are so disturbing. They show that most of our welfare programs are systematically undermining two of the three keys to avoiding poverty and are doing so for some of the most vulnerable groups in our society.
In the first paper, Disincentives for Work and Marriage in Georgia’s Welfare System, we show that many of our welfare programs – alone or when combined –actually penalize earning more and create dramatic “welfare cliffs”.
For many parents on public assistance, receiving a raise or working longer hours can result in dramatic reductions in welfare benefits, often completely erasing what they gain by working more or receiving a raise. Even worse, there are times when earning more money through additional work or a pay raise can result in less income to the family because government benefits are reduced so much all at one time.
When families find themselves in this position, they are effectively locked into dependency, unable to work themselves into self-sufficiency without having to endure sometimes long, crippling periods of financial hardship.
To make matters worse, a similar set of perverse incentives exist when a parent on welfare decides to marry.
For many moms on public assistance for example, deciding to marry a boyfriend or the father of their children can mean that family income is dramatically reduced due to an immediate and steep loss of benefits. In many cases, the disincentives to marriage only go away if the potential husband is earning much more money than would be expected or likely under the circumstances. The result is that these moms must choose between forming a family (and the financial and relational stability it can bring in the long-term) or the short-term financial health of their families.
For a parent in this position, it is easy to see why many would simply choose to stay single and cohabit rather than marry. Unfortunately, research also shows that cohabiting couples struggle with relational instability in ways that married couples do not, so the welfare system ends up encouraging people to enter into relationships that are less likely to last and less likely to provide the stability that would allow them to escape poverty.
While the welfare system was not intentionally designed to work this way, it is unjust nonetheless. If it worked as it should, the system would encourage work and family formation at every turn – as the surest antidotes to poverty.
That is why in our next report, we will be setting out a suggested set of reforms that the state and federal governments can adopt to reform the system in a way that creates a sustainable safety-net that encourages the behaviors that we know are needed for individuals and families to escape and stay out of poverty. We will also be providing a plan for a how a state can implement these reforms on the ground if it chooses to take on reforming the system.
If you want to see how the welfare cliff works for different family types and in each of Georgia’s 159 counties, visit www.welfarecliff.org.