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  • What if I told you that the government effectively punishes poor people for working?

  • Sound too sad to be true?

  • Let me tell you a story.

  • I once had a student who interned at Florida's welfare program for low-income families.

  • One day, a distraught mother and her teenage son came into the office.

  • Their benefits had been cut, and they were unable to pay their bills.

  • And she didn't know why.

  • My student searched and searched to figure out why this was the case.

  • And he made an unsettling discovery.

  • It turns out that the teenage son had worked additional hours at his part-time job.

  • He had been doing good work.

  • And his boss extended the number of hours.

  • And this allowed the teenage son to bring home more income to the family.

  • But that little bit of extra money reduced the public assistance that the family was eligible for.

  • In fact, the cut was so deep that those extra hours worked actually lowered the total income the family had to live on.

  • This is a horrible situation, one faced by millions of families.

  • Instead of experiencing a gradual decline in benefits as their earnings increase, the government abruptly strips the benefits away.

  • It punishes them for working.

  • Now imagine if you and your family were struggling financially.

  • And you had the opportunity to work additional hours or take a job.

  • But in doing so you would actually make your family worse off.

  • How would you respond to these perverse incentives?

  • You'd likely scale back on the number of hours worked or not take the job.

  • While individual programs attempt to reduce benefits gradually, they often do so at the same time.

  • And this can result in a large, abrupt reduction in benefits.

  • At times, individual programs also have abrupt, sudden declines in benefits.

  • Take, for example, the federal food stamp program, SNAP.

  • For a parent with two children, the benefits are gradually reduced as earnings approach $30,000.

  • But once the parent earns over $30,000, the benefits suddenly drop.

  • This is crazy! Whatever you think about public assistance for the poor, we can all agree that this is the wrong way to do it.

  • People should be rewarded, not punished, when they work.

  • The welfare system is so poorly designed that it is trapping many people that it was created to help.

  • My name is Sean Mulholland, professor of economics.

  • And I believe there are ways to fix the system.

  • If you'd like to learn more about these issues and explore potential alternatives, please join me for a free online program at Learn Liberty Academy.

  • Please click here to register.

  • I hope to see you there.

What if I told you that the government effectively punishes poor people for working?

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