If you think everything is bigger in Texas, you’ve never been on welfare.  Here, a family of three qualifies for a maximum monthly benefit of $250.  Add a few hundred dollars per month for food stamps, and you’re still below the $673 in cash assistance that the same family would receive through Wisconsin Works, or W-2.

How can this be?  Under the Temporary Assistance for Needy Families (TANF) program, states are allowed to define “temporary,” “assistance,” and “needy” more or less as they see fit.  This has resulted in significant differences among states.

These differences apply not just to benefit levels, but to program requirements and limits, too.  You may have heard, for example, that most people on welfare are now required to work.  Different states have interpreted this requirement differently.  Some have communicated to participants that “work” means, “get a job and get off of welfare as quickly as possible.”  In other states, “work” refers to what you are expected to do while still on welfare.  Among other activities, for example, welfare recipients can be required to work in a part-time job, perform volunteer work or community service, participate in on-the-job training, and/or provide child care for other families on welfare. 

By insisting that participants work while on welfare, program administrators hope to prepare them for full-time, unsubsidized employment.  (They also hope to satisfy the tax-paying public, which hates the idea of welfare programs that demand nothing.)  As noted, however, not all states are equally diligent about enforcing the work requirement.  In Texas, for example, the most recent data available indicate that fewer than one-third of adult Texans on welfare met the federal work participation standard of at least 20 hours per week.  In Wisconsin, by contrast, the figure was more than two-thirds.

Does this make Wisconsin welfare a bad deal for participants? If by “bad deal” you mean that the requirements are stricter than in many other states, the answer is yes.  But what about in terms of straight economics?  Let’s imagine that we want Wisconsin parents on welfare to earn at least the minimum wage for any time they spend in required program activities.  And let’s assume that, on average, these parents will devote 28 hours per week to W-2 requirements.  (Federal work requirements differ depending on one’s marital status and the age of one’s children, but 28 hours per week is a reasonable approximation.)  Finally, let us note that the federal minimum wage will increase to $7.25 in July of 2009.  

If W-2 participants were paid the minimum wage for every hour they worked over the course of a month, they would earn $879 per month (assuming 28 hours’ work per week).  The maximum benefit in Wisconsin is only $673 per month.  Remember, though, that families on welfare also qualify for food stamps and Medicaid.  The combined value of the cash grant and the food stamp benefit alone surpasses the $879 break-even point.  Add the value of Medicaid coverage for parent(s) and child(ren), and it’s clear that as a financial matter, Wisconsin Works is more than fair to the families that have the misfortune to need it. 

Make no mistake, I hope I never have to trade places with any of these families.  But if I did, there are far worse places to do so than Wisconsin.

-September 14, 2009