Are Entitlements a Barrier to Financial Success?
The progressive left argues that entitlements are a required social safety net for individuals who fall on hard times and need temporary financial assistance. However, as with all progressive policies, unintended consequences end up holding back the very people those policies were meant to boost up.
The Washington Free Beacon reports:
Government entitlement programs such as Medicaid and housing assistance may make their beneficiaries less likely to work, according to a Government Accountability Office (GAO) report. According to the GAO, an increase in income could result in a loss of Medicaid benefits for an individual and thus cause them to be less likely to pursue employment.
The GAO found the same result when looking at the housing assistance program, especially in Chicago. GAO found that the Section 8 program had a negative effect on labor force participation and earnings.
“The decision of how many hours to work may be influenced by the extent to which an increase in earnings (through more hours worked or a higher wage) is offset by higher taxes and reduced benefits,” states GAO. “The labor force participation decision partly depends on the availability of benefits while working, as well as actual compensation from employment.”
Long story short: incentives matter.
If entitlement programs give benefits to those who fall below a work requirement maximum, people will respond by keeping their work hours and income down. If entitlement programs give benefits to those who fall above a work requirement minimum, people will respond by finding work or trying to increase their work hours and income.
Entitlement spending increases every year, while the labor force participation rate sinks. If the government wants to put Americans back to work, they should empower people with education and work skills, rather than enslaving them to a life of waiting in line for handouts.