State of the state: What every Illinoisan should know about the social safety net

The state’s complex and duplicative social-welfare system is punishing many of those who seek to move up the ladder of economic opportunity.

The beginning of 2015 marks the second half-century of the War on Poverty.

Over the last 50 years, the United States has spent almost $20 trillion on the seemingly intractable problem of poverty. In Illinois, there is no shortage of political will to combat it.

Unfortunately, the state’s complex and duplicative social-welfare system is punishing many of those who seek to move up the ladder of economic opportunity rather than rewarding them.

Too often, the current system functions as a welfare trap rather than a hand up.

“Modeling Potential Income and Welfare-Assistance Benefits in Illinois,” a study commissioned by the Illinois Policy Institute, found that the combination of welfare and tax benefits can penalize additional work – forcing some low-wage working families to reject a promotion or a higher-paying job. The end result is that welfare recipients can find themselves trapped in long-term government dependence. For single- and two-parent households in Illinois, there is a significant welfare “cliff” where the household may become worse off financially as they work more hours or as their wages increase. That is because the available welfare benefits decline by a greater amount than the increase in earned income.

Key findings for Cook County include:

• A wide range of benefits provides a large magnitude of support.The potential sum of welfare benefits can reach $47,894 annually for single-parent households and $41,237 for two-parent households. Welfare benefits are available to some households earning as much as $74,880 annually.
• Welfare cliffs are significant and can trap families.A single mom has the most resources available to her family when she works full time at a wage of $8.25 to $12 an hour. Disturbingly, taking a pay increase to $18 an hour can leave her with about one-third fewer total resources. In order to make work “pay” again, she would need an hourly wage of $38 to mitigate the impact of lost benefits and higher taxes.
• The system is inequitable.A minimum-wage increase to $10 an hour would push a household where both parents work for minimum wage over the welfare cliff. They would suffer a net loss in household resources of about $9,000 as reduced government benefits more than cancel out the higher wages.

When faced with the challenge of persistent poverty, the default position of lawmakers, bureaucrats and welfare advocates is usually to “do something” by way of a government program.

These programs continue to grow, and there is little coordination of program eligibility between them, creating a poorly targeted patchwork of duplicative programs.

This has to change.

A new approach that is focused on rewarding work – not discouraging it – should be the central goal for any future iteration of the War on Poverty.

That is why Gov. Bruce Rauner should make social services a top priority. The new administration should conduct a comprehensive needs-gap audit for the state’s entire social-welfare safety net. The long-term goal of this project should be to redirect resources to better serve the state’ s neediest citizens, as well as identify and craft innovative solutions.

There is no lack of commitment to eradicate poverty in Illinois. The state’s tools and tactics should reflect that.