In The Path to Tyranny, I wrote:
Why work if the government will provide free food, subsidized housing, free health care, and a welfare check?
It turns out that fewer people are working and more are relying on government assistance. The USA Today reports Record number in government anti-poverty programs. Here are some of the numbers:
- “More than 50 million Americans are on Medicaid.”
- “The new health care law adds about 16 million people, beginning in 2014.”
- “More than 40 million people get food stamps.”
- “Close to 10 million receive unemployment insurance.”
- “More than 4.4 million people are on welfare.”
- “The federal price tag for Medicaid has jumped 36% in two years, to $273 billion. Jobless benefits have soared from $43 billion to $160 billion. The food stamps program has risen 80%, to $70 billion. Welfare is up 24%, to $22 billion. Taken together, they cost more than Medicare.”
All told, these government welfare programs cost $525 billion. Currently, there are 139 million employed people in the United States. Thus, each worker is taxed about $3,800 to support the unemployed. The average employee earns about $40,000 per year. So he gives up 9.5% of his wages to be received by the employed. The unemployment rate is 9.5%, an exact match for this income redistribution scheme.
Of course, the average employed person lives much better than the average unemployed person. But this is not always true at the margin. A below average wage earner may find he or she is better off not working and choose to receive government welfare instead. This is especially true if he or she has children and would have to pay for childcare while working. The added childcare expense along with taxes and transportation expense may make it financial wiser to stay unemployed and receive government assistance.
Not only are these programs costing hard-working Americans a large portion of their earnings, it is encouraging many to stay at home when they could work and would like to work.
Entitlement programs are undermining the American economy and overburdening the American worker. At some point, many in the workforce will become mini-Galt’s, and the virtuous circle of hard work and its rewards will become a vicious spiral of increasing taxes and decreasing productivity.