Families of four with neither parent working can receive welfare benefits worth in excess of six figures per year in Washington, Massachusetts, and New Jersey, according to a study from the Committee to Unleash Prosperity.
A previous analysis from the conservative think tank found that federal supplemental unemployment benefits, food stamp expansions, child tax credit payments, and other benefits offered in the aftermath of the lockdown-induced recession could exceed $120,000 in multiple states as labor market tensions were exacerbated by the handouts.
Even with the expiration of the supplemental programs, the more recent study found that unemployment insurance and the “dramatic recent expansion of ObamaCare subsidies” can exceed the national median income in 24 states for families with two parents and two children, according to the analysis, which was completed by University of Chicago economics professor Casey Mulligan and Heritage Foundation research fellow EJ Antoni.
“The federal government and the states offer a wide array of more than two dozen programs that provide cash assistance or in-kind benefits to low-income families. These ‘safety net programs’ are designed to keep families out of poverty,” the authors wrote. “But the expansion of assistance, especially in subsidized health insurance to families with children and no parents working, can mean that families can earn as much or more income from receiving government assistance than the median household does from working. Unemployment insurance benefits are time limited, but for the period when the benefits are provided, returning to work may not pay for many households.”
Such families in Washington can receive more than $122,000, while families in Massachusetts and New Jersey can reap more than $117,000 and $108,000 in annualized benefits respectively. Citizens of states such as Pennsylvania, Montana, Oregon, Rhode Island, and Kentucky can receive more than $80,000, roughly equaling or surpassing the median value of wages and benefits earned by electricians, firefighters, and secondary school teachers.
Many states do not subject unemployment benefits to payroll taxes, producing an implicit advantage over earning a salary. A family of four in Massachusetts with both parents out of work can “receive a maximum annualized unemployment benefit” of almost $104,000, which is equivalent to more than $112,000 in pre-tax earned income.
Labor force participation failed to recover over the past two years, worsening a decades-long trend of low engagement in the job market and increasing inflationary pressures as businesses raised prices to fill positions. The metric dropped from 63.4% in February 2020 to 60.2% in April 2020 alone amid government lockdowns and business closures, according to data from the Bureau of Labor Statistics. Labor force participation climbed to 62.1% as of November 2022.
Federal Reserve Chair Jerome Powell has remarked that the workforce “participation gap” is largely a result of “excess retirements” that occurred beyond “what would have been expected from population aging alone,” even as young people largely return to the job market. “In the labor market, demand for workers far exceeds the supply of available workers,” he commented while discussing the central bank’s recent efforts to roll back monetary stimulus. “Thus, another condition we are looking for is the restoration of balance between supply and demand in the labor market.”