Welfare

A family man in Minnesota with a wife and two small children is making $800 per week and gets laid off and starts collecting unemployment at $400 per week. Since his new income is below the poverty level for a family of four, which is currently $22,000 he is eligible for public assistance. First he qualifies for low income housing which means he gets a three bedroom apartment for $500 per month or 30% of his gross income. Next his children get free health care through Medicaid and he and his wife get health care through Minnesota Care for $15 per month. They qualify for $190 per month in food stamps plus they can purchase food through MN Fair Share program. Here you pay $15 and get $35 worth of food or any multiple of $15 meaning that for $150 you get $350 in food. They also qualify for WIC and MAC programs that provide additional healthy foods. They also qualify for free school lunch plans. They get fuel assistance credits for utilities. With these benefits it cost about $300 per month to feed the family, $15 per month for a health care plan with no deductible and no co-pay, $100 per month for utilities and $500 for rent.
Prior to going on unemployment he paid $800 in rent, $250 for utilities, $200 for health insurance, and $900 for food. This is about $1,200 per month less than he was paying before. Since his net pay when he was working was $40,000 per year less social security or about $3,000 per month his new income is $1,200 per month less or $1,800. His unemployment is $20,000 per year or $1,660. If his boss calls him back to work he will gain $140 per month for working 40 hours per week or about 85 cents per hour. Will he be anxious to go back to work for this low pay or would he rather just stay at home.
It is likely that his health care at work would cost more than $15 per month plus by working he has transportation cost and other cost associated with work.
If this same guy owned his home with a $200,000 mortgage he would have been paying about $1,400 per month for principal, interest, taxes and insurance on the home so by letting his house go back to the bank his monthly housing cost decrease from $1,400 to $500. For this guy is his home loan is under water and he loses his job, he comes out better off.
I don’t know how many people fit into this category but there are many.