01-23-2013 | The NEK Poverty Trap

Innovation Patterns | Live from St. Johnsbury, Vermont

“Work doesn’t pay”

For Paul Dragon, Reach Up director, the reason the poor don’t get off welfare is because if they work, they suffer economically.

“Work doesn’t pay,” he says. “People are working hard, trying to do the best they can. Vermont has decent benefits and a high cost of living. When someone goes off benefits and starts climbing up a bit, work doesn’t pay at $15 or $16 an hour.”

A 2008 study commissioned by the Department of Children and Families (DCF) concluded that unless a Reach Up recipient in the Northeast Kingdom earns at least $17 an hour or $35,726 a year, benefits must continue.

If a single mother of two starts working a 20-hour-a-week job at a minimum wage, she still receives more than $20,000 a year in benefits, plus some help with child care. When she works 40 hours, she still receives $1,900 a month in benefits, plus child-care assistance. In both scenarios, she pays no income taxes.

“As family income rises from approximately 100 to 200 percent of the federal poverty level, significant losses across multiple benefits — combined with increases in payroll and income taxes — actually exceed the parent’s substantial gains in earnings,” was the finding of the 2008 analysis prepared for DCF by Columbia University’s public health researchers.

When her children start school, reducing child care expenses, “The family’s net resources hover around the break-even point. There are no significant changes in the family’s financial situation until annual earnings reach about $31,000,” the analysts conclude, “At this point, the loss of fuel assistance and child care assistance trigger a decline in net resources that leaves the family unable to make ends meet.” In other words, work doesn’t pay. For single mothers, it is better economically to remain dependent on state aid.

-- that was excerpted from a recent Bethany Knight series on rural poverty in the Northeast Kingdom, originally run in the Caledonian Record. This was the end of part 5, "The Court of Public Opinion." The series has been re-run on VT Digger and I recommend all of it -- it's good enough that I can even forgive her referring to my home as a "King-Dump," which would probably be more offensive if it was less asinine.

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