How Much Money Do Welfare Recipients Receive Per Month

Welfare Examples

Three families are shown below as welfare examples. Each of the families represents a married couple with two children. The only difference in the families is their outside income from wages. One family makes zero wages a year, one makes $15,000 a year and one makes $35,000 a year. This page shows what each of the families would qualify for in the top three welfare programs of the federal government, EITC, SNAP and Housing Assistance. The poverty threshold for a family of four for the year 2020 is $26,172 and therefore Families 1 and 2 are considered to be "in poverty" and Family 3 is not "in poverty."

Three conclusions stem from the welfare examples:

Welfare is poorly focused on getting the most benefits to those at the lowest income levels. As shown below, Family 2 gets slightly higher benefits than family 1.

Many families with modest income can be boosted well above the poverty threshold. Family 2 is boosted to a level of income and benefits of over $35,000 a year.

The welfare system discourages work for families and individuals with modest income levels because the loss in benefits can override the gain from additional wages. See the comparison of Family 2 and 3 below and also the Welfare Issues Page.

Comparison of three families
The following table presents what welfare payments the three families would receive from three large welfare programs – EITC, SNAP and Housing Assistance.

Family 1, with zero income from wages would receive benefits from SNAP, EITC and Housing Assistance totaling $19,704. Family 2, with $15,000 in income from wages, would receive benefits of $20,140 slightly higher than Family 1 due to the impact of EITC. Income plus benefits for Family 2 totals $35,140, well above the poverty threshold of $25,701. After benefits family 1 is still $6,468 below the poverty threshold, while Family 2 is boosted to $8,968 above the poverty threshold.

Family 3 has income from wages of $35,000 which is $20,000 higher than family 2 but loses $16,285 in benefits because they don't qualify for SNAP or Housing Assistance. They do get an EITC payment which takes them to $38,855 in income plus benefits but this is only $3,715 higher than family 2 even though they make $20,000 more in wages. If a spouse in Family 2 is not working but has the ability to go to work and earn $20,000 a year in the end they would only come out ahead by $3,715 a year or the equivalent of $1.79 an hour [iv]. After payroll tax the difference is even less. The family could also lose other benefits such as Child Nutrition, Head Start, LIHEAP, Lifeline and state general welfare, which will put them further behind Family 2. The dramatic loss in benefits is a disincentive to work.

Work Penalty
The comparison above points out the poor economics that result from families with modest income as they obtain additional wages. This is an illustration how our current system does not "make work pay". It is simply not worth it for an individual to go to work full time for a marginal increase in income plus benefits and in some cases the additional wages could result in a greater loss in benefits than added by the additional wages. This phenomenon is referred to as "cliffs" – the disqualification from programs and the dramatic loss in benefits as income grows. It causes what is sometimes referred to as the "work penalty" imbedded in the welfare system. See more information on the Work for Welfare Page.

Marriage Penalty
The comparison above also can be used to demonstrate why our welfare system discourages marriage. A single parent with two children would get benefits very similar to the amounts shown above. If they marry an individual with income from a good job that would take the couple to a level of income above the poverty threshold they will lose most of the welfare benefits. By remaining single they can come out ahead economically. Many critics of the current welfare system argue that this is one of the contributing factors to the high incidence of unmarried mothers on welfare.

[i] Calculated using the State of Colorado SNAP screening tool [Internet]. Data retrieved March 15, 2021. Data for a family living in Colorado, with two dependent children, $1,000 in monthly rent, no assets and no other sources of income or expense. Available here.

[ii] Calculated using the IRS EITC Assistant for the tax year 2020 [Internet]. Data retrieved March 15, 2021. Data for a married couple filing a joint return with two dependent children, wages as stated above and no other items of income, expenses or assets. Available here.

[iii] Assumed Families 1 and 2 qualified for Rent Voucher and Family 3 did not. The Voucher equaled a rental expense of $1,000 per month less 30% of the family's income from wages. The rent expense of $1,000 per month approximates the average HUD rent expense for a family of four in the U.S. (see Housing Assistance Program).

[iv] Assumes the spouse worked a standard work year of 2,080 hours to earn $20,000 in wages for the year.