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September 10, 2013

Cato’s Misguided All-or-Nothing Worldview

A recent report by the Cato Institute arguing that the economic safety net discourages people from working is littered with flaws and founded on assumptions that are simply not true.

In The Work versus Welfare Trade-Off: 2013, Cato contends that the combined value of benefits it collectively calls “welfare” is greater than what people would make working full time at a minimum wage job. But to reach that conclusion, it assumes that poor families where neither parent is working receive every benefit on the books. In contrast, it assumes working poor families receive no help at all. Turns out both of these “all or nothing” assumptions are false.

In reality, changes to the nation’s safety net laws over the past 30 years mean these programs now do much more to promote work and support low-income working families and much less to help poor families in which parents are out of work

Overstating Benefits
Not all poor families qualify for and receive every single benefit in the safety net. That’s because each service is separate, with different purposes and different rules for who is eligible. For example, in Virginia, just 1 in 3 families living below the official poverty line receive services through Temporary Assistance for Needy Families (TANF). That means two-thirds of those living in poverty are not receiving this particular  benefit.

Cato claims that families getting TANF also get assistance from several other services that help put food on the table, pay the rent, and provide affordable health insurance. While some families might, the reality is that not all of them do. In fact, over the last few years, only a small number of families received both TANF and housing assistance or TANF and assistance with buying food at the grocery store.

Working and Still Poor
Cato also incorrectly assumes that the services it singled out are only available to people who are unemployed. But that’s false, too.

All of the safety net services Cato includes in its report are available to working families. For example, more than 86 percent of children who get health insurance through Medicaid or the Children’s Health Insurance Program (called FAMIS in Virginia) were living in working families, based on the most recent data. But the jobs those families rely on are not the kind that pay enough to make ends meet.

Likewise, more than half of able-bodied workers with children who get help putting food on the table through the Supplemental Nutrition Assistance Program (formerly called food stamps) are working.

Throughout the recession and the recovery, the safety net has helped families keep their heads above water so they can stay employed or just stay afloat until their next job. To conclude that the safety net discourages  work grossly exaggerates the benefits that low-income families receive and misrepresents who they are.

–Jeff Connor-Naylor, Program Coordinator

The Commonwealth Institute

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