Making the Jump From Welfare to Work is Much More Complicated Than You Assume

Steve Rhode and Damon Day are coming at you fast Getting you out of debt with their true romance Steve’s not yanked you, Damon’s yank They are here to save the day A couple debt, superhero, Stephen Damon coming your way Alright you’re back with another episode of debt free dudes with Damon Day D-A-M-O-N-D-A-Y.com and myself Steve Rhode They get out of debtguy at getoutofdebt.org Damon this time we’re talking about benefits and specifically, you know we keep calling them people in my generation keep calling them food stamps but they’re now called SNAP which are the benefits people use to purchase food Supplemental Nutrition Assistance Program I don’t know I like food stamps better but what the hell You had a situation recently with somebody and it brought up a great example of this whole problem of trying to get off welfare and get to work What was the situation? Yeah I did it was a potential client that had called me for help last week really nice lady and we were talking about her overall situation and she’s got a business that she’s starting right now and she’s a hustler you know you can just tell she’s a hustler and you know she’s been on some form of public assistance one way or another off and on for the previous decade I mean I didn’t get all the details but one of the things that really stuck with me about that conversation is how badly she wanted to get herself off of relying on any form of public assistance but the hurdles and the barriers that she faced while she was in that transitionary period and the biggest one that she brought up was and I don’t even remember which specific benefit it was but that she kept saying but once I make more than $600 from the business in one month this specific benefit goes away and then it sets me back and she’s like that’s not a big deal except my revenue is not consistent I could make $700 one month and make zero the next month and now that benefit is gone so it puts my family in a spot that were stuck because if I make $600 I lose the benefit and then the next month I don’t make at least that much now we’re going backwards and we don’t have enough money to eat or whatever it’s going to be you know this is not a new problem either I remember many years ago when I first started helping people with debt problems there was a book that came out I had to go look it up and the book was called From Well Fair to Work it was written in 1989 and there’s this one quote from the book that I think is so amazing it says while this book was being written the importance of this knowledge base came into sharper focus the 1988 legislation offers one billion dollars a year in new federal money for welfare to work programs but only if they put up matching state resources states will be making these funding decisions in unusually harsh financial conditions with many facing budget deficits and powerful competing claims on scarce funds I mean damen that was what four years ago yeah nothing has changed nothing has changed now and this whole idea of people on welfare are just lazy jerks that don’t want to do anything is a perception but it’s not necessarily reality the woman that you talk to is a great example of people I have talked to over all these many decades that are trapped in either staying on benefits line I guess or giving up benefits and trying to make that leap yeah it’s just you know in true to form you know you took the time to do a whole bunch of research and you’ve known the stuff for years but see the way the way Stephen I work is I’ll perceive an injustice somewhere right and I’ll get all pissed off and hot and bothered about it and then I’ll call my my logical even feel friend Steve and and he’ll just be doing something else why I you know throw up into the phone about the injustice of whatever this thing is and how it needs to be fixed and this that and the other thing and then about 30 minutes later he’ll probably call me back and say I have done all this research I’ve got all these you know this information about it and let’s talk about it so that’s essentially how we came up with this podcast as I got off that call with that client and got all hot and bothered and pissed off and then Steve says oh look here’s all this information about it but it comes down to for me anyway these these programs should not be designed to kind of trap people on them they should be designed to help people help themselves to get off of it and I think you know because you know I come a little bit more from the right side of things than than you do sometimes and you know absolutely people on my side always say like you said all they’re lazy they’re just abusing the system they’re you know it’s fraud and all this stuff but when you really start to dig into it which I have not but you have and look at it it’s there there is this transitionary period where a lot of people would rather be self-sufficient but the rules of a lot of these programs are very tricky to navigate and you could really put your family in a bad situation by trying to be optimistic and say okay I’m going to do it this month I’m going to do this I’m going to get this job or I’m going to start this business I’m going to generate this revenue and we’re going to have this nice linear upward trajectory and we’re going to make it and then all of a sudden something happens and you fall back down and now it takes a month or two to get that money from that program again but in the meantime you can’t feed your kids you know that’s a real fear so Damon you talk about you’re the the throw up in the microphone friend is that what you said yeah that’s what I do I just like okay and Steve fix these problems and I refer to you as my well actually friend because oftentimes my response is well actually and it’s funny how all these things tie together I’m going to say something that is not a moral statement at all but in this age right now of how we want to ban all abortions I get it people passionate about I understand that it’s going to end up with more single parents and one of the biggest problems of getting off benefits is how do you afford child care when you leave welfare and you go to work this is this is one of the fundamental problems and what do you see I mean Damon you’ve certainly seen something about this I have no idea I’m not going to touch that topic well tell it take care is expensive well daycare yeah I’ll touch daycare but well yeah it absolutely is and you know I mean they and again I don’t know anything about this but I’m assuming and I’m pretty sure they do have assistance and programs for daycare but the same thing once you make over a certain amount of money you lose that assistance for day care and I don’t know the specific numbers but I do know with this potential client I was talking to a particular that was one of the issues where they would get daycare covered but hurts she mentioned her daycare was about $1,200 a month and so what should makes over a certain threshold if that benefit goes away now the sudden you have to make an additional $1,200 to be able to cover that benefit to keep going so it’s almost like one step forward two steps back so that is the part of these programs that really needs to be taken a look at and you know I’m not the guy that’s going to be able to figure out how to do it but rather than just ripping the whole thing away maybe it should be phased out over time and you know with certain amounts not just all of it or none of it or something like that maybe they can do a six month review of somebody’s starting a business or something like that okay you know here these benefits are going to continue let’s meet back in six months and let’s see how the business is doing what where the revenues at now are they at a point where they can you know afford to phase these benefits out and still go forward or not rather than just every 30 days you hit this magic number and this all goes away yeah and as I remember you mentioned that that person you were talking to you said that when they go back and reapply it takes two three months or more before they can resume their benefits yeah and even if even if they even if they make it retroactive and they say oh well you know by time we’ll pay out we’ll pay out for two months ago because you were qualified that doesn’t help them in you know and today when they have to put food on the table today they can’t say yeah I’m going to get this money but it’s going to be two months down the road you know people that are on you know like you said the food stamps and ebt or whatever they typically don’t have a few thousand dollars in the bank account to cover that time so it’s a it’s a huge problem if you’re worried about like oh my gosh I’ve got this business it’s really starting to go wow I made six hundred dollars which in the grand scheme of things is not a huge amount of money but that’s what the threshold is on some of these programs and then like you mentioned at the beginning of the podcast does she does she need to be should she be honest about it you know I mean she’s choosing between you know all this could put my family and jeopardy is it better to ask for forgiveness rather than you know permission because if I you know it’s my own business and I don’t report that I made six hundred dollars that’s wrong we shouldn’t promote that but if this is potentially life and death or you know her kids not going to be able to eat and then maybe three or four months later now she’s making plenty of money and then she tells them oh by the way I made a little bit more and then she has to pay a penalty or whatever it’s easier to pay a penalty when you have the money to pay it then it is just not to have the money at all so I’m not advocating for that obviously but it’s a it’s a moral dilemma that these programs put people into have to make these kind of decisions even if they want to do the right thing so ten years ago I wrote my first piece on benefit fraud and what I came up with at that point was there really wasn’t that much benefit for people actually convicted or found guilty of fraudulently claiming benefits so when we started talking about this I went back and look for updated information and I think these facts are fascinating because recent data has shown that I’m not even going to ask you Damon when you think of benefit fraud what is the typical demographic that you believe people think about because here’s what the actual facts are when it comes to benefit fraud 59% of government benefit fraud offenders were men 40% were white 32% were Hispanic 22% were black and 5% were other races the average age of somebody found the committee in benefit fraud is 46 73% of them are US citizens not people with you know green cards whatever US citizens 70% had little to no prior criminal history and the top five districts for benefit fraud offenders are Massachusetts Ohio Nebraska California and Florida I think those statistics would be a surprise to many people thinking that the number one offender of benefit fraud is white men American citizens and like you said when you looked at the numbers is overwhelmingly not people committing fraud it’s people that are using that money because they need it and let me ask you this what you what you think on this why do you think because I haven’t spent a lot of time thinking about why do you think you know it’s like you said it’s been 40 years since that that book that you read was was written in the problems are you know here today and even in my opinion probably worse today why do you think politicians from both sides are not motivated to fix this because when I look at this it doesn’t seem like it would be that hard or that difficult of an idea to get behind where you’re saying hey look we we know people falling hard time stuff happens we want to be able to help and I’m all for that too and it’s like what can we do though so these programs don’t encourage people to stay on them what can we do to encourage people to get a leg up in society use these programs when they they do fall in hard times but you know let’s promote getting off of these programs unless encourage them to do that like things like I’ve heard about over the years where oh if you go get a job you lose this or if you go try to get get some training and get some further education you can’t get this specific benefit because you’re going to school or whatever it is to me that’s the opposite of what it should be it should actually be hey if you want to go to school or if you want to go to get this vocational training or whatever it is you should actually get an extra benefit in my opinion or or doing that not a penalty uh the deck is stacked against people who have had some sort of disadvantage uh one way or another for example if you live in a a low income area and there are all sorts of online classes and courses and certificate programs that you can take however uh there is no real good subsidy for good internet in low income areas so the the answer to your question Damon is I believe that as a society we have cast uh the person who takes who is perceived to take advantage of benefits as some line scheming sack of crap son of a bitch uh who’s just lazy and taking advantage of the system and the reality is that is not true when you when you think about people living on benefits i’m going to stay on welfare i’m not going to use my i don’t want my tax money just paying for some lazy ass person just to live on welfare have you actually tried to live on a welfare benefit you you you can’t feed anybody on the snap or food stamps or ebt it is it’s a chore it’s not a choice it is a chore yeah but i mean it goes back to my question then why are we not all in universal agreement on these programs need to be overhauled to incentivize people and and help people that are you know the ones that are trying to get off of these programs rather than throw up roadblocks because that’s what a lot of these programs do is they make it very difficult to make that transition yeah people on benefits whether it’s Medicaid uh you know food stamps whatever it is are perceived to be slackers and people constantly all the time say i don’t want my money those people need to go get a job that’s just easy to say but it’s really hard to do now uh i am old enough that i remember when lbj came into office because my father worked for the peace corps at the time and there was a big push for eliminating poverty in america we don’t do that anymore and it could be the pressure from state budgets or federal budgets or demonizing people who need a hand up but ultimately it cost us more as a society to keep people on welfare and benefits than it does to give people a meaningful chance out of this well that’s my point so why are the politicians not fixing these programs what what is motivating them to to not touch it you think that that the perception of it will get them voted voted out is that what you’re saying yeah absolutely that’s exactly what i’m saying like you don’t think they’ll be able to sell it as hey this will ultimately save us save the taxpayers’ money by being able to explain that hey these incentives putting this extra money into this is going to ultimately help people get off of these programs which overall will save us money you don’t think they’d be able to sell it i mean they can sell some bulls and do they gotta be able to sell it they can sell whatever they want that that’s their professional sellers couple of few podcasts ago where i mentioned a quote from somebody who said that uh student loan forgiveness was stupid because i’m a paraphrase it because uh hardworking blue collar truck drivers were going to lose tax money paying for liberal educated gender study students and that’s the same sort of broad brush incendiary statement that is made about people who are on welfare people on benefits yeah the the knee jerk reaction is people on benefits are somehow real losers and just trying to take advantage of the system even during the 2008 housing crash when people were losing everything the number of people on going to the food pantries and the demand for food assistance were exceedingly high and by people who had previous well-paying jobs when you there’s a the food bank near me and on the days when it’s open if you drive by it looks like a typical cross-section of america it doesn’t look like people taking advantage of the system well i mean the way to test that theory about whether or not you know people are just taking advantage of the system is again to incentivize people to get off of the programs not penalize them and then see how many people you know utilize those advantages and get themselves off by going to get a job or like like here’s an example too it’s like people say oh just go get a job okay well what’s the job gonna be let’s say they’re they’re they’re low skilled and they go typical job and they’re able these days you know 15 bucks an hour whatever that is well the problem is $15 an hour is nothing the you know what the inflation the way it is and even before and fully I mean $15 an hour is not enough to raise a family let’s just say you know people say well minimum wage is never designed for that and I and I get that but you got to do what you got to do but if you go get a job let’s say you have two kids and you’re desperate trying to whatever you can you go get a job and you said okay 15 bucks an hour and you’ve got rent payment and food and all the things that go along with life and at the same time you get this $15 an hour job now you have let’s say what would equal I don’t even know the numbers but let’s say you know $10 an hour of benefits go away right or whatever it would be now the set and you’re working full time and you really only netting $5 an hour but then if you have two kids they’re like you said now there’s daycare and there’s all this stuff so it gets to a point where it’s like I could literally stay home and essentially make the same then I could if I got a job that’s what I’m talking about like a penalty for going to get a job whereas what would happen if they could still continue to get the benefits for a certain of time or at least a a pro-rad a portion of those benefits for a certain amount of time once they got the job so they had you know a few months or six months or they had some time to actually get ahead get a little bit of money in an emergency fund have programs designed to incentivize that so they don’t immediately lose what the income that they have as soon as they start this job right and they could they could make those programs so like hey people say well they shouldn’t get benefits why they have a job for six months well you know what if they don’t get that job they’re gonna have those benefits for years so what’s better you know well and you you left out one thing another hurdle from this whole welfare to work bridge is that you know if fuel is getting more expensive if you want to try to get to a job what you have to a lot of people have to take public transportation and here in the United States public transportation generally just sucks or isn’t available and now you’re talking about people that need to take two or three buses to get to work you know and leaving early getting home late now they got latch key kids yeah um you know as part of the generation after LBJ and trying to eradicate poverty in America we started head start to give children who were disadvantaged an opportunity to learn more and have access to meals and everything else and it seems like that gets demonized every election cycle as well easy answers are never the real answer to a difficult problem and this is a multi-layered problem again a lot of people uh look i’m just gonna say it a lot of people believe that the perception of the welfare queen which is a black woman sitting on her ass not doing anything is what welfare fraud is and the statistics are the exact opposite yet we we never talk about that well you were saying the other day that a lot of the fraud comes from employers not necessarily yeah retailers yeah yeah and i was like this first time i ever even heard that concept i’m like what’s talk about Steve yeah i mean we’re retailers are forcing people to convert their ebt money into cash that goes into the retailers pocket instead of getting actual food benefits or skimming some off the top retailer fraud is much bigger of an issue uh then it is somebody individually taking advantage of the system but even above that which is more surprising is the amount of financial loss from snap or food stamps doesn’t occur from either of those it occurs from states inefficient inefficiently administering the program making either overpayments or underpayments now states are more likely to make underpayments of benefits which hurts people even more but uh the most considerable payment error rate was in Rhode Island where they had the the most number of overpayment or underpayments and the lowest was Ohio main people in Maine are more likely to have their snap payments shorted than in any other state so if you took all the waste and fraud out of the state system there would be more money available for people to actually stay on the program a little bit longer and have a chance to succeed now moving from welfare to work like big hurdles right because as you said you’ve got daycare you got transportation you have full fuel you have food you have all this other stuff you said that government programs are notoriously inefficient and wasteful right yes they are yeah so um but I think you know it’s such a huge problem you start with baby steps right and the first thing that I would look at is say what can we do to at least not penalize people that are trying to get ahead for themselves and their families to me that should be an easy place to start not on the front end of these programs on the back end when are we going to take these programs away let’s take a look at that and let’s look at these arbitrary rules that have been put in place on when you lose these programs and let’s see if we could tweak them a little bit that’s all it does that’s not a big thing let’s just tweak them a little bit to incentivize people to give themselves a leg up and and reach for something bigger right and not penalize them for even daring to consider it well the answer the logical answer I always hate applying logic in government but the logical answer would be to take the equivalent of the benefits they’re receiving and apply them to the base amount that they get cut off so that when their benefits so it’s a phase out right and when the benefits do get cut off they are left in the same position that they can move on from yeah but it’s got to phase out but it’s got to be it can’t be like a dollar for dollar because like you said as you apply yourself in a business or at a job other expenses come up that you didn’t have if you just stayed home yeah right so you can’t just say oh I made 600 so I’m going to take 600 away well yeah but I made 600 because I was out of the house working on this business 50 hours a week and not you know if I can’t if I lose that same amount of money I might as well just stay home and I can hang out with my kids myself because as a parent if you have the option to make a thousand dollars hanging out with your kids or make a thousand dollars and not even see your kids why not make a thousand dollars hanging out with your kids and not have them being raised by some stranger you know what I mean well there you go there you go that is a perfect example of what is the right answer for people is it better to have somebody else or raise your child or is it better for you to stay home and raise your child I know what my answer would be but I can see what the next election cycle would be if this was an issue on the progressive side you would have people are entitled to have the welfare to work transition and we’ll give them these benefits etc on the other side it could be for all the blue collar truck drivers that are out there if you don’t vote for us then your money your tax dollars are going to go for people sitting at home on their asses just taking advantage of the system and well that’s just politicians doing what politicians do dividing and conquering that’s why I’m not enthusiastic there’s going to be much of an answer but well it’s been it’s been 40 years so I’m sure I’m sure the next election cycle is going to bring pictures well that book from welfare to work is based on studies that began in 1908 in a perfect world we would have programs in prisons that actually rehabilitated people and gave them you know opportunities we’d have programs that taught people skills and trades and took them from welfare to work and made them more productive members of society but as long as some people out there perceive that someone else is taking advantage of them it’s not going to happen so it’ll never happen Damon that’s my answer yeah it’ll never happen that’s that’s awesome so this this was a wasted podcast we just both railed about program problems with benefits and it’s not going to change anything I would bet you right now that long after I’m gone one day you will remember back and have a a fleeting memory of this podcast and you will say yeah damn we were right it never changed yeah that’s that’s pretty much how it’s so we do we have any takeaways for people that are you know on benefits right now and just have this intense desire not to be on them and not to just have to rely on the government programs and be self-sufficient for themselves in their family I mean do we yes I do have a takeaway and the takeaway for this is much like the takeaway that you and I talk to people about all the time when it comes to bankruptcy right bankruptcy is cast as you you should not file bankruptcy you have a moral obligation to repay your credit is blah blah blah blah blah and in fact when you do the math and you look at the facts oftentimes the answer is exactly opposite this case with the woman that you talk to the person you talk to the the logical answer for them because they’re working hard trying to grow their business to get off the logical answer for them is to lie I wasn’t going to say it but I was going to say my advice is best for one-on-one not for an actual podcast that anybody can listen to well these two guys are advocating fraud what yeah no we don’t want that no I’m trying to advocate logic and help get people off the system I certainly don’t encourage people just to lie but as this person said they’re stuck and so there really is no other option you remain stuck or and you give up your dreams and abilities and hard work to do more and get off the system or you lie yeah and and you know with this particular client too there was a lot of medical issues going on at the same time so it was not just a matter of okay we got this money and we’re trying to start this business been like to get off of it there’s other medical benefits that they’re getting that they have to have you know with with their medical situations they they can’t afford to not get those medical bills covered so that’s it’s even more than just can we feed the kids right it’s are we’re going to be able to live yeah and when it comes to medical bills you know we talk about Medicaid how so many states like North Carolina has fought expansion of Medicaid for years and years and this year they’re they’re voted to do it so they finally realized that you know we need to expand medical care now Medicaid fraud is another interesting topic because the vast majority of Medicaid fraud is not from people not from consumers patients on Medicaid it’s from healthcare providers so why do we continue to penalize the disadvantaged consumer for government fraud medical provider fraud you know everything else because everybody but the consumer is getting rich off of this so I think I just answered my own question of why politicians don’t do anything about it yeah plus it’s it’s much easier to make the perception of the lazy consumers sitting on their ass to be the boogeyman divided in yeah the businesses that take advantage of this get rich the politicians get rich in their own way many of them are very wealthy but you scratch your head and wonder why because their salaries aren’t that great for the positions they hold but yet they have a lot of money all the sudden sometimes not sure how that works but yeah as you get older you just get more and more cynical and and more pragmatic too so I I don’t encourage people to lie I wish there was a third alternative and I’m not suggesting that people you know in this particular situation this person is self-employed making it go of it making their business successful and damon I don’t know I mean if they had to squeak by a couple of extra months and then fess up when they were making a little bit more money what’s the worst case scenario they got to pay some of it back when they can afford to pay it back okay yeah yeah you know well I’m thoroughly depressed now well not only we over are 30 minutes but I didn’t say this at the beginning of the call but I’m doing this podcast in my trailer because I’m at a baseball tournament for my son and I could not do it with the air condition on in my little office here in the trailer and so I stopped the air 30 minutes ago when we started I’m out here in Phoenix and the thermostat has climbed to 77 I’m not like sweating sweating yet but I’m starting to feel it well well in the podcast now let’s you turn your air conditioning back on this is Steve Rhode you’re Get Out of Debt Guy with Damon Day DA MoN DAY dot com Damon is an exceptional debt coach and I have sweat rolling and I’m out of here