Middle class to rags
C is a middle aged woman with a few years of college and decades of work experience. When her chronic illness became uncharacteristically severe, she had to stop working for a while. She didn’t worry at first, since she had COBRA health benefits, unemployment insurance, and savings. She was able to afford her expenses between her UI and savings. However, when she got more and more sick, she started to worry. Her savings were dwindling, and her UI was about to run out. She applied for long-term disability benefits through Social Security, but was denied. Although she appealed the denial, she waited about two years for a hearing. In that time, she became ineligible for COBRA, but she still had too much money left to qualify for Medicaid. She could not see doctors regularly, and during times of acute symptoms, she received only the most essential and least expensive care in the emergency room. Her health became so bad at this time that her condition became life threatening. Finally, however, she spent the last of her savings on rent and entered the safe haven of indigence – she could now receive Medicaid. She began to see doctors again and has been stable, though still severely ill, for a few months. If she is lucky enough to win her disability benefit hearing, she will receive enough retroactive money to replace her savings as well as monthly income and Medicare benefits. However, since she doesn’t have any money left, she is now on welfare. The rent stipend is too low to pay for the apartment in which she has lived for decades, and she risks being evicted before she has her appeal hearing. If she is evicted, she may have to live in a homeless shelter for some time.
Over the past decade or so, upward socioeconomic mobility has crawled nearly to a stop. Downward mobility, however, seems as strong as ever.
The punishment of hard workers
E also suffers from a chronic illness that prevents her from earning enough money to support herself. She received disability benefits for some time. Later, she had the extraordinary fortune to receive assistance through a charitable organization that supports people with her condition. She was placed with a top private company in her city, where she was paid a fair salary for clerical work regardless of how much work she actually completed. Since her wages generally exceeded the value of her work, regulations direct that the actual value of her work be the basis for determining her Medicaid eligibility. However, E did not fully understanding this or how it affected her responsibility to report income and additional evidence from her employer about the value of her work versus her wages. After her Medicaid office learned of her earnings through her tax return, her health insurance was terminated and she received a notice that she owed five figures in overpaid funds. Without her health insurance, E became so ill that she eventually had to be cared for full-time in a hospital. She got her health insurance back when she stopped working, but now she cannot do any work at all.
B, a middle aged man who also has a chronic illness, worked one day per week at a local nonprofit. Over several years, his good performance resulted in several raises, and he eventually started working two days a week. The extra work was hard for him, but the extra money was a sufficient incentive to overcome his hardships. However, after his tax return was received by his benefit agency after his first year of working two days per week, he lost his health insurance as well as his benefits and he, too, received a notice saying he owed five figures in overpaid funds. B, however, had always reported his income, but he didn’t realize that he had started to earn enough money that he would automatically be considered “not disabled” – he exceeded this limit by less than $100. He was forced to sign an agreement to earn less money than he was capable of making. He got his benefits and health insurance back after a few months, but he couldn’t afford his life-sustaining treatment during that time, and his landlord sued him for rent arrears.
Some may say that having very strict resource and income limits for public benefits prevents undeserving people from getting taxpayer money. I don’t know if this is true. However, these draconian limits force people who genuinely need assistance to bankrupt themselves and, often, to go without health insurance for a time before they can become eligible. Functionally, we are punishing virtue.
Toxic soup: underfunded offices, underpaid recipients
We saw in C’s case that she was put at risk for eviction because her welfare housing stipend was too low to afford her apartment. In New York City, this stipend is about $250 for a single adult. C lived in a studio apartment in a modest part of the city that cost, by local standards, a mere $800 each month. Her case is typical. Most welfare recipients here are simply not able to afford an apartment on their own. They often make ends meet by living with friends, family, and roommates. C did not have any family or friends. She found a roommate for a while, but the roommate got a job elsewhere and moved out. Since welfare does not enable adults to be self-sufficient while they look for work or while they wait for a decision on longer-term disability benefits, any time one person in a welfare household has a change in circumstances – perhaps there is a death in the household, perhaps someone gets a job, perhaps someone moves out – the entire household is put at risk.
To solve this problem, at least one, and likely all of the household members will need to make multiple trips to multiple benefit offices. These offices are underfunded and understaffed while their employees are undertrained and overworked. Click here for a look at a welfare case worker’s desk:

This picture says more than this entire blog post. It seems unlikely that this caseworker will be able to process cases timely or accurately. Welfare, then, is a toxic soup of insufficient funds for recipients and insufficient resources for benefit offices.
I’d like to take a look at two different benefits for poor people. TANF (Temporary Assistance for Needy Families, better known as welfare) is paid to people who are capable of working but are unemployed or transitioning to employment, and SSI (Supplemental Security Income) is paid to elderly and disabled people who have very little or no income and resources.
Since their inception, both TANF and SSI were paid at levels below the federal poverty guideline. Here’s a historical chart for the monthly SSI Federal Benefit Rate versus the monthly Federal Poverty Guideline since 1982:

We can see that, although SSI has received yearly Cost of Living Adjustments, it remains at nearly the same proportion to the Federal Poverty Guidelines as in 1982. The message we send to people who are poor and disabled or elderly is, “If you don’t have money and you can’t work, you don’t deserve to live in dignity.” More importantly for policy development is that inadequate and stagnant SSI levels actually hurt poor communities. Since SSI recipients have nothing, they spend every dollar they have. They don’t qualify for credit, and if at any point they did have credit, any debt would have been discharged through bankruptcy. Therefore, any increase in SSI would be a direct economic stimulus to the poorest communities and a boon to the small businesses that develop in them. Furthermore, an increase in SSI could decrease total costs to the taxpayer. Since the benefit is currently below the Federal Poverty Guideline, SSI recipients are at constant risk for eviction and homelessness, which puts them at the greatest risk for institutionalization. Increasing the SSI grant could decrease the risk of this greater financial burden, and would decrease the cost to the taxpayer.
We can make similar arguments for TANF levels. TANF pays significantly less than SSI. In NYC, a single adult receives about $500 per month, which is about 55% of the Federal Poverty Guideline. TANF grants per capita have not been increased in decades, so it becomes harder to survive on them each year.
The inadequacy of these benefits puts their recipients at constant risk. The acrobatics necessary to preserve even this exceedingly low income create hardships in pursing work; thus, misguided concerns about the bottom line for the taxpayer actually impede employment and raise the taxpayer’s burden, while putting the lives of the poor in peril.
The anti-welfare argument: government as miser
Currently, there exists a system of purported disincentives, in the form of benefit reductions and, ultimately, termination, to prevent noncompliance with work requirements. The conservative Heritage Foundation noted in 2003 that about 20% of NYC welfare cases were sanctioned, which it defined as “[having] an assignment but not currently attending.” It elaborated in a footnote that “Due to permissive rules enacted by the New York state legislature, if a recipient flatly refuses to undertake required activities, New York City may reduce TANF welfare checks only modestly[… ] If New York City were permitted to impose a “full-check sanction” (temporary elimination of the whole monthly TANF check) for serious noncompliance, experience from other states with such a full-check provision shows that nearly all recipients would comply or would look for alternatives to welfare and close their case.”
Source: http://www.heritage.org/Research/Welfare/bg1651.cfm
The euphemisms in these definitions and conclusions so obscure the context and meaning of the subject matter that these claims are rendered misleading and even irresponsible. It appears that those who are “noncompliant” are choosing not to work when they could. However, many sanctioned cases involve recipients who try to work but encounter difficulty. Consider S’s case as an example. S received TANF funds to cover part of her college education, since she was turned down for private loans that would have met the full cost of attendance beyond federally guaranteed loans. She provided evidence of meeting educational requirements in lieu of a work program, but her benefit office didn’t process them in time and a computer system automatically sanctioned her case after a period of time. Deprived of sufficient funds to pay for her living expenses, S dropped out of school for the semester. However, now she is able to comply with all of the work requirements of the welfare program.
Noncompliance sanctions may also result from something as simple as a missed appointment. Welfare recipients are routinely required to appear, in person, at benefit offices for tasks as mundane as submitting paperwork or providing information. However, because the offices are underfunded and understaffed, doing so may require a half day or even a full day of the recipient’s time. This, in part, contributes to perennial unemployment among welfare recipients. Since these meetings take place at least once per month, recipients are often faced between complying with welfare requirements and complying with other requirements of life, including going to work, shopping for necessities, cooking, caring for children, and going to school. Functionally, many recipients are punished for not being able to be in more than one place at one time. The Heritage Foundation calls this “flat refusal”.
I offer one last example on this issue. S received welfare for several months during which she was unemployed. When she finally found a good job, she had to go for two weeks of training. She was unable to attend a required, work training appointment at her welfare office during that time. She attempted to contact her case worker, but was unable to do so – the line was often busy, and several voice messages went unreturned. As a result, she was sanctioned for noncompliance even while she was attending training for a high-paying job with benefits. The sanction caused her to go into arrears in her rent for one month, but fortunately, she arranged a payment plan with her landlord after providing proof of employment.
The Heritage Foundation and welfare offices will have retained her record of noncompliance.
Furthermore, the claims of “alternatives to welfare” are specious at best and disingenuous at worst. Alternatives to welfare include getting support from friends and family, crime, homelessness, or some combination thereof. Our ethos is that we prefer the risk of earnest people living on the street rather to the risk of providing support for even one person who is undeserving, all in the name of spending the least conceivable amount of taxpayer money.
The “alternatives to welfare” argument also fails to consider, however, that the withdrawal of support from the most needy, even if we end up giving money to some who are undeserving, returns to us in other ways. I mentioned the increased likelihood of institutionalization above. The drug economy is tempting for people living in poverty who cannot realistically depend either on welfare or on the market as a way to obtain funds for the necessities of life. As we all should know, the societal costs of the war on drugs may be unsustainable. Prison sentences for drug offenders drain vast amounts of taxpayer wealth every year. The violence caused by drugs and gang activity harms families and communities, and it is part of the reason urban schools and urban students are unlikely to succeed, which contributes to poverty in the long-term. It is worth noting the superior health and quality of life outcomes in Europe that are produced, in part, by superior safety nets – which, remarkably, are not causing widespread financial ruin of the taxpayer.
Both SSI and TANF should be paid at least at a level sufficient to cover the costs of living for the individuals enrolled in each case. It should be a no-brainer that a safe home, enough money for food and basic necessities, and access to health care will remove some of the most common barriers faced by the poor in finding work. As long as we continue to punish the many people in genuine need of held because of the alleged actions of a few dishonest frauds, we will never have a healthy society and we will continue to lag behind other developed nations.