When the war on poverty was declared fifty years ago, it began a debate about how to provide welfare to the poor without it becoming a disincentive to work and self-improvement. Most of us are willing to help the truly needy, but we also have a nagging feeling that the welfare state sometimes punishes work and incentive.

In a past column I talked about the claim from the Secretary of Public Welfare for the Commonwealth of Pennsylvania. He explained that a single mom is better off earning a gross income of $29,000 than earning a gross income of $69,000. Why is that? If she only earns $29,000, she then receives all sorts of welfare benefits so that her total net income (including benefits) is $57,327. If, however, she was able to earn $69,000, her net income and benefits would be $57,045.

In other words, she would do better financially earning just $29,000 than she would if she could get a much better job and earned $69,000. That, my friends, is what you call a major disincentive! It also illustrates one of the problems with the current welfare system in America.

If you want to see this on a graph, I recommend you go to the article “When Work Is Punished: The Tragedy of America’s Welfare State” by Tyler Durden. The graphs he has posted are helpful in showing where we have the highest “welfare cliffs.” There are thresholds were government benefits for food, housing, and child care stop. A single mom in Pennsylvania qualifies for certain benefits until she hits a key income threshold. At that point, she must earn much more in order to do as well as she did as a recipient of government aid.

While we are having a discussion about how to help the poor, we should concentrate on a government benefits scale that often punishes work, incentive, and independence.