News Story

Study: Welfare Benefits Pay $28,872 Per Year In Michigan

'The current welfare system provides such a high level of benefits that it acts as a disincentive to work'

State and federal welfare benefits pay $28,872 per year in Michigan, according to a new study. This puts Michigan in about the middle of the pack nationwide.

The Cato Institute on Monday released "The Work Versus Welfare Trade-Off," which examines the total level of welfare benefits by state.

The study focuses on the level of benefits a single mother with two children would be eligible to receive. Benefits in Michigan are up nearly 10 percent since 1995, prior to federal "welfare reform," and pay about 77 percent of the median salary in the state.

The poverty guideline in Michigan for a household with three people is $19,530 a year, according to the U.S. Department of Health and Human Services.

"The current welfare system provides such a high level of benefits that it acts as a disincentive for work," the study said. "Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour."

In Michigan, the wage equivalent for welfare benefits is $12.71 an hour.

The report says that there are 126 separate federal anti-poverty programs, spending about $668.2 billion annually, with states spending another $284 billion per year. The most prominent of these programs are the Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program, Medicaid, Housing Assistance, Utilities Assistance and the Women, Infants and Children Program. There also are county and municipal government programs.

The authors of the study said they think the government should work to encourage people to find jobs, even low-level or part-time work when possible.

"There is little doubt that one of the most important long-term steps toward avoiding or getting out of poverty is taking a job," the report said. "Only 2.6 percent of full-time workers are poor, as defined by the Federal Poverty Level standard, compared with 23.9 percent of adults who do not work. Even part-time work makes a significant difference; only 15 percent of part-time workers are poor. And while many anti-poverty activists decry low wage jobs, a minimum-wage job can be a springboard out of poverty."

The study went on to recommend that welfare programs be more tightly controlled.

"If Congress and state legislatures are serious about reducing welfare dependence and rewarding work, they should consider strengthening welfare work requirements, removing exemptions, and narrowing the definition of work. Moreover, states should consider ways to shrink the gap between the value of welfare and work by reducing current benefit levels and tightening eligibility requirements," the study said.

The Cato Institute is a public policy think tank "dedicated to the principles of individual liberty, limited government, free markets and peace." It is based in Washington, D.C.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.