Work disincentives hit the near-poor hardest (2022)

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible).

"Yeah, I made $1M last year. Here's my SNAP check for six cents."

I remember reading this book called 'The Losers' (https://www.goodreads.com/book/show/2114133.The_Losers) about a privileged man who has a car accident, becomes disabled and comes to rely on government support. The book looks at the lives of the working poor and actually poor, who rely on welfare cheques and other subsidies and highlights the social and psychological impacts of these systems of support. It was very disempowering and psychologically enslaving for the people living on these systems of support.

I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.

I come from Australia where the social welfare system has similarly degraded (Though not as bad as the US), and there are increasingly more dehumanizing aspects in engaging with the system just to receive a below-subsistence amount.

This article highlights one aspect of such disincentives, but I believe the problem is deeper and more systemic.

> In practice, however, several of the programs that seem to offer the most generous benefits are severely underfunded, so relatively few families are actually able to obtain them. For example, according to congressional testimony from the Center on Budget and Policy Priorities, 68 percent of poor families with children received Aid to Families with Dependent Children in 1996. By 2015, after the welfare reforms of the Clinton era, benefits from TANF, which replaced AFDC, reached just 23 percent of poor families with children, according to the same source. Similarly, just 8 to 12 percent of eligible families receive child care benefits from the CCDF, and just 24 percent of those eligible receive Section 8 housing vouchers.

This is complete insanity.

I always felt simplifying all this, it would probably be possible to consolidate and offer proper health care, and a real welfare, along with a supplemental program for those inapt to work, with it all costing less than the mountain of piled complexity and paper work that we have today.

It looks like in practice the most generous of these programs are not accessible to most working poor, so the charts here are more theoretical than practical. It also doesn't address income tax-free earnings (traditional 401k and IRA) - it seems like those generally don't count against your eligibility for programs and could shelter ~25k or more for the self-employed. Not that I imagine most people actually near poverty are maxing out their retirement accounts, even if it theoretically costs them nothing or even gains them value.

I cannot express the extent to which that picture at the top of the article with a baby “working” at a laptop upsets me.

I can see the beginnings of a hand of an adult at the bottom, but there is something so on the nose about such an image that it prompted a visceral response.

The real issue isn’t just the cliffs themselves — it’s that our welfare system is a set of disconnected programs that interact like poorly designed APIs. For people with zero margin for error, even a small income change can trigger huge losses in healthcare, childcare, or housing.

We ended up with a system that’s expensive, complicated, and psychologically brutal — and still fails to do what it was designed to do.

having been out of work before and going on benefits the cliffs are hilariously badly calculated, not even sure how they are determined. for someone who knows their potentially salary far outweighs the reduced subsidies it can be a needed life boat. for people at the cutoff it incentivises you to stay under it.

I usually get downvoted on any of my commentary on poverty or welfare, despite my lived and continued experience in it, but I'll punt again.

My family, from grandparents downwards (siblings, aunts, uncles, cousins, across 3 family lines) have all relied on government handouts for a majority of their lives, and had their character destroyed by the system. All rely on a meager amount of welfare to stay alive, not healthy, not productive. Just kicking along and in alcohol and drugs just to feel something. Most have died of some form of cancer from their vices.

I joke (with a semi serious tone) that my drug-induced psychosis was the best thing for me because it broke me out of the system (tied in with a move interstate) - I lost all my old friends, family was quasi-cautious of me, and I was in a new town and had to completely rebuild myself. I had a mental health nurse nurture me "back on my feet" within 6 months and it was the first time I was actually on my feet since birth.

Governments and society, in the large part, think "something is better than nothing" - but I think it's actually the opposite. Maintaining a status quo is what makes people "comfortable in misery" and not have any way out. Most can't even get a job, because the job (which might be temporary) knocks out the welfare (which is permanent, as long as they don't get a job).

I would love to see modelling or examples on my theory of the way out of this mess: reinvest the welfare system as mental health services, only give welfare to those who are in the mental health service. Incentivise for how many people transition out of the welfare system. keep it at the same dollar amount, just reallocate that money to the people who really need it.

Some cases are almost too tragic to mention and there's no positive outcome; others have "learned" behavior and can come out of it with some help (or sometimes just some positive messaging)

I also largely blame a lot of societal/government programming. I call it "poverty programming" -- the idea that people cannot do ANYTHING without help. You absolutely will not make it on your own, you NEED support you NEED this label, medication, service, benefit.

I strive to message the opposite: you can do it, release the chains. the world is not that scary. embrace the chaos, there is a lovely world out there ready to be explored.