Haven - cutting welfare

The concept of a "welfare cliff"--that is, the amount of money a person would have to earn per year to make employment more profitable than collecting benefits--is a real concept and is contributing to Finland's relatively high unemployment rate.

Finland is looking into a basic living stipend instead of the current welfare system. It would be interesting to see how this works out in practice. Elimination of any welfare cliff would be one element needed for any reform. But Haven had a basic living stipend, I wonder how the Legislaturists and dolist manangers discouraged people from earning some honest income on the side Possibly this was done by needed red tape to get a job, maybe by encouraging the poor educational system, or maybe by more direct discouragement.

A few decades back, Scientific American had a small article on an experiment in New Jersey - they took fifty families on welfare, and arranged it so that anytime work was found, only half of the earned amount was subtracted from the welfare income. This eliminated the "welfare cliff." The experiment was terminated after one year, possibly because it was too successful for the comfort of the bureaucrats who live off the complicated welfare system.

In the real world, with automation becoming less expensive (Moore's law increase of computer capability and better programming), the available work will tend to divide into 1) work that can't be done by computers, and 2) work that requires better education. It will be important for families to encourage their children to enjoy learning.

Two of the oldest and most venerated public policy institutes in Washington, D.C., the American Enterprise Institute and the Brookings Institution, have produced a new joint report dealing with the issue of fighting poverty in America.

The report, "Opportunity, Responsibility, and Security: A Consensus Plan for Reducing Poverty and Restoring the American Dream," is noteworthy for a number of reasons. One is that it reflects a consensus view between long established Washington institutions representing opposite sides of the political spectrum, with AEI being right of center and the Brooking Institution left of center.

But also noteworthy is the nature of this consensus. The report focuses on three pillars that need attention: family, work, and education.

I wonder what effect Haven big shot policies had on their families?

When right leaning and a left leaning institutions agree, it is very likely worth serious study.

Dumb mistakes are very irritating.
Smart mistakes go on forever
Unless you test your assumptions!

Our welfare system is far from perfect, but it has an initial amount that you can earn free, then you lose 50% of what you earn. Eventually as it progresses it cuts out welfare payments but you still retain discounted health and such up to a higher point when it all cuts out.

The worst trap we have at present is for mothers in a traditional family wanting to return to work. By the time they pay for childcare and lose the single low income (for working hubby) child supplement they are often worse off.

Daryl wrote:Our welfare system is far from perfect, but it has an initial amount that you can earn free, then you lose 50% of what you earn. Eventually as it progresses it cuts out welfare payments but you still retain discounted health and such up to a higher point when it all cuts out.

The worst trap we have at present is for mothers in a traditional family wanting to return to work. By the time they pay for childcare and lose the single low income (for working hubby) child supplement they are often worse off.

Its pretty ugly for fathers too. One guy at work had to ask to have his wage lowered because of the stupid way they did the child assistance cut offs. Make one cent more than a certain threshold and they cut out about 500$ a month in child care assistance. Ideally if you want something that as you are working yourself off the dole there is a gradual shift away from it as you earn more money. If there is not you are incentivizing people into not leaving your system because they can't jump their wages high enough fast enough to be worth the effort.

The problem with most schemes to gradually lower benefits as earnings rise is that they are subsidising the companies employing lower paid staff, in fact all schemes that give benefits or tax credits to working people are a form of subsidy for the employers.

DDHvi wrote:In the real world, with automation becoming less expensive (Moore's law increase of computer capability and better programming), the available work will tend to divide into 1) work that can't be done by computers, and 2) work that requires better education. It will be important for families to encourage their children to enjoy learning.

Actually, I wonder what's going to happen when automation reaches a point that the % employment required is much lower than the actual population-at what point will that prompt social change? What path will that change take? At some point education won't matter, because it won't actually get you anywhere.

Sully wrote:

DDHvi wrote:In the real world, with automation becoming less expensive (Moore's law increase of computer capability and better programming), the available work will tend to divide into 1) work that can't be done by computers, and 2) work that requires better education. It will be important for families to encourage their children to enjoy learning.

Actually, I wonder what's going to happen when automation reaches a point that the % employment required is much lower than the actual population-at what point will that prompt social change? What path will that change take? At some point education won't matter, because it won't actually get you anywhere.

With Automation and technological advance, it seems that some job paths close with the introduction of new technology but that new technology introduces a whole host of other potential careers. Industry and governments need to be more flexible in order to guide people into the areas that would guarantee maximum employment.

Sigs wrote:

Sully" quote="DDHvi wrote:In the real world, with automation becoming less expensive (Moore's law increase of computer capability and better programming), the available work will tend to divide into 1) work that can't be done by computers, and 2) work that requires better education. It will be important for families to encourage their children to enjoy learning.

Actually, I wonder what's going to happen when automation reaches a point that the % employment required is much lower than the actual population-at what point will that prompt social change? What path will that change take? At some point education won't matter, because it won't actually get you anywhere.

With Automation and technological advance, it seems that some job paths close with the introduction of new technology but that new technology introduces a whole host of other potential careers. Industry and governments need to be more flexible in order to guide people into the areas that would guarantee maximum employment.[/quote]


If you want job security? Try Salvage Reclamation and Recycling.

kaid wrote:Its pretty ugly for fathers too. One guy at work had to ask to have his wage lowered because of the stupid way they did the child assistance cut offs. Make one cent more than a certain threshold and they cut out about 500$ a month in child care assistance. Ideally if you want something that as you are working yourself off the dole there is a gradual shift away from it as you earn more money. If there is not you are incentivizing people into not leaving your system because they can't jump their wages high enough fast enough to be worth the effort.

Progressive income taxes in the U.S. at least have dollars earned over a given point pay a bit more in taxes; the key thing is that the dollars earned in the lower bracket are still taxed at the lower rate. So taxation is fairly smoothly progressive - though the effect isn't widely known and people tend to think that they are paying taxes at the highest applicable rate on all their income when it gets into a higher bracket.

The same sort of treatment could be taken on the welfare "anti-taxation" end: 100% welfare benefit up to X amount in income, 90% per dollar earned in a next higher bracket, and so on. It'd be a bit more tedious to calculate, and it'd be vulnerable to the same misunderstanding as the tax rates get. But tedious to calculate is why we have computers, and you can pretty much guarantee creative misunderstandings anyway in politically sensitive contexts, so suck it up and pass the headache meds.

George J. Smith wrote:The problem with most schemes to gradually lower benefits as earnings rise is that they are subsidising the companies employing lower paid staff, in fact all schemes that give benefits or tax credits to working people are a form of subsidy for the employers.

True, especially when employers are allowed to pay sub standard wages.

But then in general if you work a full 40 hour week your income should not be low enough to need assistance.

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I've just had a thought, what about increasing the amount that can be earned before tax instead of paying in work benefits? What would that do to the equation of what the government pays out and expects to receive, viz what the worker gets to take home at the end of the month?