There are a lot of ways we could ask about the motivational effects of the safety net. We could do complicated analysis of the rate at which benefits phase out as income increases, and then compare the level of benefits from the safety net to those of holding a minimum wage job. But the simplest and most direct way to look at the motivational effects of the safety net is to see if people who fall into poverty then stay in poverty and live off government benefits. And the overwhelming answer is no. From page 4 of the U.S. Census Burea’s Income, Poverty, and Health Insurance in the United States: 2012
Chronic poverty over the 3-year period from 2009 to 2011 was relatively uncommon, with 3.5 percent of the population living in poverty all 36 months.
The poverty rate for all three of those years was around 15%. That means in any given year, over 75% of the people who live in poverty are not in chronic poverty. For these people, the safety net is doing exactly what it is supposed to, providing a lifeline during a rough period in their lives. For many of the working poor who are at or just above the poverty line the safety net provides a supplemental source of income that allows them to make ends meet despite low wages.
What about the chronic poor? In general, the 3.5% of the population that lives in chronic poverty faces severe barriers to work. Those could be mental, social, psychological, or physical. This might not be true in every single case, but the vast majority of the chronically poor are not choosing to live off of government benefits, they just don’t have a realistic alternative. Want proof? When welfare reform introduced tougher time limits it didn’t push the chronically poor into jobs, it pushed them into deeper poverty. The shift to using the EITC instead of AFDC/TANF to fight poverty gave more benefits to the working poor, at the expense of those who face serious barriers to work. The safety net still helps a little, but if we continue to cut and impose ever stricter requirements we risk hurting the chronically poor more than we already have. Chronic poverty can only be tackled with intense personal intervention.
Cutting the safety net would be bad for the temporarily poor, and bad for the chronic poor. The degree to which people move in and out of poverty shows that we don’t have a hammock for people to sleep in, but instead a net that will catch people as they try to get back on their feet.