Despite the highly controversial reform of the Aid to Families with Dependent Children program in 1996, welfare benefits actually have increased in generosity over the past 17 years. Social-services benefits for the poor pay more than minimum-wage jobs in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states they pay more than $15 per hour. So concludes a new study by the Cato Institute.
It may come as no surprise that Virginia is one of 15 states where welfare benefits do not exceed the value of an entry-level, minimum-wage job. In Virginia, means-tested entitlements add up to only $20,884 for a typical welfare family of a mother and two children — less than half the level of Hawaii, Washington, D.C., and Massachusetts, the states with the most generous welfare systems.
Although Virginia ranks among the 10 wealthiest states in the country, its welfare benefits rated 37th. That was the pre-tax equivalent of earning $7.15 an hour. As a percentage of median income, Virginia welfare bennies amounted to only 41% of the median salary — 46th in the country. Only five states had a lower ratio of benefits-to-median income.
Bacon’s bottom line. Poverty sucks in Virginia. But that means people are more motivated to find work, even in disagreeable jobs, than in many other states. That’s why Virginia also has one of the lowest unemployment rates, and one of the lowest poverty rates, in the country. Poor people may start with minimum-wage jobs that can’t support a family but if they are reasonably diligent, they won’t get stuck there. Anything that encourages people to start the climb up the career ladder is better for them — and for taxpayers — in the long run.