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Why is it so hard to escape poverty? - Ann-Helén Bay

Explore the paradox of welfare programs, and learn how they inadvertently reinforce generational poverty, and what we can do to fix them.

Imagine that you’ve been unemployed for months. Government benefit programs have helped you cover your expenses, but you’re barely getting by. Finally, you receive a paycheck— but there’s a catch. Your new job pays enough to disqualify you from benefit programs, but not enough to cover your costs. So how do we design benefit programs that don’t penalize you for working? Ann-Helén Bay investigates.

youtube.com/watch?v=D9N7QaIOkG

@stux The important sentence here is "Your new job pays [...] not enough to cover your costs". Maybe it's not the welfare program that's the problem.

@lukas @stux IMO there are counter incentives in a lot of welfare programs.

A friend of mine in the US used to live with her mom and despite working part time, at minimum wage, she brought their welfare status into jeopardy by getting close to the limit for being allowed to live in their government housing and also cutting into the welfare checks.

When there's no grace bracket it's tends to keep people from getting into the job market :blobawkward:

@stux There is a reason why most social welfare in Switzerland is progressive with a pretty high cap. I.e., you can apply for some form of welfare once your income drops somewhere around 3000/month. You wont get much, and most people don't bother because it's not worth the effort (and the scrutiny you receive), but those who need it are happy it's there.

Similarly, if you get a job that gives you less than 80% of unemployment, after deducing all cost, the rest is covered by social welfare..

@stux This is a real problem, but its prevalence is greatly exaggerated as a anti-welfare propaganda tactic.

The truth is that most welfare programs are designed to take this into account, with benefits tapering in, and thus the "welfare traps", if they exist at all, are pretty shallow.

Consider the US's "Earned Income Credit" program, which is "reverse taxation". If you work, but are low income, you get a subsidy.

@stux The biggest problem with the US system is all the paperwork hurdles you have to go through, and the stigma attached to applying for aid.

This encourages a lot of people who qualify not to receive the services -- and there is enormous resentment, perversely directed at those who do receive the benefits, rather than the system that makes it hard to use (this difficulty is often touted by conservatives as a cost-saving method, so it's intentional).

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