Report: Welfare Benefits Could Exceed Low-Paying Job Wages

Updated: 08/21/2013 7:27 AM By: Beth McDonough

A controversial new report questions if people are better off working or better off on welfare.

The CATO Institute, an independent agency, conducted the study. It says Minnesota is the 14th most generous state in the country. 

Right now, there are roughly 35,000 Minnesotans on welfare. That includes Kimberly Hammel; the mother of two is out of work and out of money. 

"It pays the light, the gas and the rent, it gets me by pretty well because if you didn't have it? I would not have lights, we wouldn't be living in our townhome right now," Hammel said.

Hammel qualifies for $532 a month. She would prefer a job but is grateful for the state's help. 

In the report from the CATO Institute the author, Michael Tanner, questions if people are passing on low-paying job opportunities for higher-paying aid. "If you look at all those overlapping programs, people can accumulate a great many benefits, and those benefits act as a disincentive to work," he said.

In Minnesota, the maximum amount of aid a parent with two children could get is $12,060.  Factor in federal benefits like housing and healthcare and the compensation jumps to $31,603, according to the report. Those are tax-free dollars.

If a parent works full-time earning minimum-wage, $7.25 an hour, their income tops out at $15,080. That's before taxes are taken out. 

When the welfare benefits far exceed everyday earnings, local conservative think tank, the MN Freedom Foundation, wants reform. "The first thing Minnesota should strengthen is our work requirements," says Annette Meeks, MN Freedom Foundation.

Meeks says only 56 percent of recipients are working right now. The Department of Human Services insists parents are expected to have a job or look for one. 

Kia Jones has a part-time job, but she'd like more. Until then, she looks to Human Services for help. "That's the money... keeping a roof over my head, other than the $250 dollars, that can't really do nothing for me," Jones said.

There's a 60-month lifetime limit in the welfare program in Minnesota. According to DHS, 71 percent of the recipients are children.

The CATO Institute says Hawaii is the most generous state for welfare benefits.

*"Hourly Wage" refers to an hourly wage equivalent based on a 2,080-hour work year. Source: The Work Verses Welfare Trade-off: 2013, An analysis of the total level of welfare benefits by state.