OKPOLICY.ORG
A recent report by the Cato Institute claims to calculate the total value of a “welfare benefit package”, and it contrasts that value with the salary of a full-time worker earning minimum wage. On Tuesday, the Oklahoman published an editorial about this report. They claim that Oklahomans can receive welfare benefits worth more than the starting salary of many entry level positions, and that this acts as a disincentive to work.
The Cato report and the Oklahoman op-ed are premised on two big distortions of the truth. The first is to base their argument on the premise that Oklahomans receive support from every major public assistance program at once. Cato arrived at its number for the annual value of public assistance in Oklahoma ($26,784) by totaling average benefits for Oklahomans receiving TANF, SNAP, Medicaid, housing assistance, LIHEAP, WIC, and emergency food assistance. Yet these are separate and distinct safety net programs with different purposes and different eligibility criteria. They are not part of any “package.” The number of Oklahoma families enrolled in all of them ranges from tiny to nonexistent.
For example, let’s look at the Temporary Assistance for Needy Families program (TANF). This is the only program offering cash payments to low-income families. Even so, most of the TANF funds that Oklahoma receives from the federal government have been diverted to other uses. The result is that the program provides cash assistance to a small fraction of the families living in poverty in Oklahoma.
The average monthly enrollment in TANF is about 9,000 families, containing about 20,000 individuals. More than 80 percent of those recipients are children. As of November 2011, just 3,828 adults were enrolled in the program. Based on Census population numbers and the poverty rate (17 percent) of working-age adults in Oklahoma, our state has about 400,000 adults under 65 living in poverty. TANF payments go to less than 1 percent of this population, yet the TANF benefit makes up more than 13 percent of the total that Cato is presenting as Oklahoma’s “welfare benefit package.”
Other parts of the so-called package run into the same problem. A majority of Oklahoma Medicaid recipients are children, and working-age adults without children are ineligible for Medicaid regardless of how little they earn. The Women, Infants and Children (WIC) program provides food and baby formula only to low-income mothers of children younger than 5 who are at severe nutritional risk. Demand is so great and funding so limited for LIHEAP utility assistance that this year the program ran out of money in a week. Cato’s own report says just 17.7 percent of TANF households receive housing assistance. These distortions are why Cato’s hypothetical family gets $26,784, but data on real families shows the average public assistance income for the bottom fifth of households is just $4,633.
The Cato report and the Oklahoman editorial depend on a second big distortion — that the safety net primarily functions as an alternative to work, rather than as a supplement to jobs that do not pay a living wage. The Oklahoman mentions that the salary for a retail cashier in Oklahoma averages $12,000 and for a preschool teacher, $22,000. How do they think anyone is surviving and supporting a family on that income, if not with public assistance?
The reality is that the vast majority of Oklahoma’s poorest families work hard, but they do not earn a living wage. Public assistance programs are not subsidizing people who choose not to work; they’re subsidizing companies that don’t pay workers enough to live on. Oklahoma’s largest private employer, Walmart, is a prime offender. Examples from across the nation show that workers at Walmart and other large retail and fast food corporations are forced to rely on Medicaid, food stamps, and other public assistance just to get by.
Instead of addressing this real problem, Cato and the Oklahoman call for making it worse by hacking away at the safety net. By spreading such a wildly inaccurate story about poverty, The Cato Institute and the Oklahoman have done a disservice to anyone who takes them seriously as a source of information.
