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January 30, 2022

Here's why it doesn't really pay to work any more: report

When is it better to earn $29,000 than to earn $69,000? When you’re a single mom living in Pennsylvania, it seems.

Describing what it feels to be the painful reality in America, Tyler Durden, the collective that writes to inflame at Zerohedge, concludes that "for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work."

Here's another zinger: New York Times columnist Nicholas D. Kristof recently wrote about families in the Appalachian hill country pulling their kids out of literacy classes since, if they learn to read and write, the parents are likely to lose their monthly stipend for kids with intellectual disabilities.

Durden is actually basing his argument on that of Gary Alexander, Secretary of Public Welfare for Pennsylvania, who published a paper last summer called Welfare’s Failure and the Solution, a scathing indictment of his own state's economic safety net.

Among other things, Alexander's report included a chart showing the government benefits that accrue to single mothers, concluding that “the single mom is better off earning gross income of $29,000 with $57,327 in net income and benefits than to earn gross income of $69,000 with net income and benefits of $57,045.”

Worse, another chart shows that if the same single mom making $29,000 were to get a $1,000 raise, she would lose close to $7,000 in state benefits. So much for forging ahead.

"All this is to say that the current system is chaotic, woefully inefficient and obviously unsustainable. It incentivizes dependency and punishes ambition. It’s long past time for serious reform. But it will probably be a long time before we get it," declares one Pennsylvania newspaper columnist

You could, as Senator Hugh Segal suggests here, simply scrap welfare altogether, of course. Or boost the current program substantially, which Ontario's incoming premier Kathleen Wynne seems to have in mind.

Do you see parallels to the U.S. situation in your own community? Are the discrepancies in Canada of the same order?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...