By Nathan Benefield
Who is in poverty – and why – is often misinterpreted by both the political right and left. Some blame the poor for their lack of work ethic. Others see the poor as victims that only more government programs can help.
But an accurate understanding of what poverty looks like in Pennsylvania — who it affects and their experiences — is crucial for state lawmakers as they seek policy solutions that actually help, rather than hurt, families in Pennsylvania. These solutions should focus on creating the necessary conditions for prosperity, instead of developing the bureaucratic apparatus of social protection.
Pennsylvania’s official poverty rate is slightly higher than the national rate, at 12.1%, and welfare program costs continue to rise, now accounting for half of the Pennsylvania government’s total spending.
Because social service programs have been, and continue to be, an important part of state budget discussions, state policymakers need a data-driven approach to tackling poverty. .
A new study from the Commonwealth Foundation uses both survey data and in-depth interviews to better understand the situation of low-income Pennsylvanians — and the findings can help inform public policy.
Almost two-thirds of respondents with incomes below 200% of the poverty line were employed, self-employed or looking for work. And the majority of those not working or looking for work were actively engaged as caretakers.
These low-income people do not necessarily see the government welfare system as beneficial.
The study results show that 21% of respondents knew they were eligible for government assistance, but chose not to enroll in the programs because the process was too difficult or the amount of assistance was too difficult. was not worth their efforts.
Pennsylvania’s welfare system is a tangle of agencies and programs that makes getting help confusing and complicated. Instead of expanding the web further and viewing poverty as something the government must alleviate, state lawmakers should focus on removing barriers to people’s prosperity.
After debt, respondents identified taxes as the biggest barrier to financial security. On average, these taxes amount to $4,575 per year, a high bill for families earning less than $34,000 per year. If low-income people could keep more of their wages, financial security would be more accessible, both through the ability to pay off debt and through savings.
There are plenty of ways for policymakers to restore the paychecks of low-income Pennsylvanians. Adopting more competitive tax rates, reducing state regulatory bureaucracy, and adopting a state earned income tax credit are areas to explore.
Consider that eliminating the 3.07% personal income tax in Pennsylvania would result in an annual savings of $1,033 for the average respondent earning $33,657. For someone like Linda, a respondent in the study who lives on just $1,000 a month and saves 10% of her monthly income to pay her property tax bill, those savings are more than living expenses. a whole month.
Reducing state bureaucracy and controlling state spending can also allow individuals to keep more of their income. Reforms such as the Taxpayer Protection Act, which tie government spending to inflation and population growth, limit increases in government spending that might otherwise require tax hikes. If such guardrails had been in place, Pennsylvania taxpayers would have saved about $20,000 in taxes per family of four over the past two decades.
Finally, while 34 states offer a working income tax credit to allow low-income families to keep more of their working income, this is not the case in Pennsylvania. Lawmakers should consider replacing bureaucratic welfare programs — many of which create a “welfare cliff” that discourages families from earning too much income — with an earned income tax credit, which allows families earn more and keep a higher share of their income.
Low-income people are willing and eager to earn their success. Instead of expanding social bureaucracy with programs that discourage work, policymakers should act to widen the pathways to prosperity. It starts with removing government barriers and barriers to employment, giving low-income Pennsylvanians greater access to their paychecks.
Nathan Benefield is Senior Vice President of the Commonwealth Foundation, Pennsylvania’s free market think tank.
