How to Help More Americans Move from Welfare to Work | TWE 162
Aligning incentives, restoring dignity, and expanding opportunity.
Hello Friends!
America’s welfare system is deeply fragmented, costly, and often counterproductive—making it harder, not easier, for people to move forward.
I recently joined an online debate on welfare reform framed as a choice between stronger work requirements or structural changes like “One Door” to Work. But that’s the wrong question. The real question is this: how do we reduce dependency, waste fewer taxpayer dollars, and help more people move into work and self-sufficiency? Work requirements matter, but they are not enough on their own.
In This Week’s Economy, I explain why real reform requires both: strengthening pro-work incentives and fixing the underlying system that delivers these programs. When policy aligns with how people respond to incentives, we can shift from managing dependency to helping people truly prosper.
You can also get the full episode on YouTube, Apple Podcast, or Spotify, and find more information about my work at Ginn Economic Consulting.
HOW WE GOT HERE
Since President Lyndon Johnson declared a “War on Poverty” in 1964, America has spent more than $25 trillion (inflation-adjusted) on anti-poverty programs.
Yet according to the U.S. Census Bureau, the official poverty rate has barely budged—and was already improving before this massive expansion of spending and redistribution.
Instead of fostering upward mobility, too many programs have created cycles of dependence on taxpayers. Policymakers continue to debate how much to spend or how to tweak benefits at the margins, rather than asking the more important question:
How do we help people thrive?
New poverty data reveals the cracks in the system. Millions remain stuck, even as welfare spending continues to rise. For many, the structure of these programs creates steep implicit tax rates on work—where earning more can mean losing more in benefits—making it rational to stay on assistance rather than move ahead.
It doesn’t have to be this way.
Let’s look at policy solutions that empower people and truly LET PEOPLE PROSPER!
1. Reduce Dependency
The Principles:
The current system too often creates unintended cycles of dependency. When earning more means losing benefits quickly, people face real tradeoffs when considering work. Families learn to navigate welfare programs instead of labor markets. Children grow up without seeing steady employment. And communities lose the dignity and prosperity that come from meaningful work.
The best welfare policy is one that helps people move off welfare, not remain on it.
Why it Matters:
Too Many Programs Lock-In Dependency:
Today, many welfare programs effectively punish work and productivity. When recipients earn even slightly above eligibility thresholds, benefits are reduced or eliminated abruptly—creating what economists call a “benefit cliff.”The result is a powerful disincentive: work more, lose more.
For a single parent balancing childcare, transportation, and lost benefits, taking a higher-paying job or working additional hours can actually leave them worse off financially. Instead of encouraging upward mobility, the system often traps people in place.
A Path Out Of Welfare:
If we want fewer people dependent on government assistance and more people moving toward self-sufficiency, policy must reinforce a simple principle: work should always pay. That means designing programs that support individuals temporarily while encouraging a clear path back into the workforce. Assistance should be a bridge—not a destination.
Improving the Vision for Welfare Reform:
Real welfare reform is not just about reducing spending or caseloads. It’s about restoring a vision of human dignity—one where people are treated as capable individuals, not passive recipients. State leaders have an opportunity to lead by aligning policy with this vision: encouraging work, rewarding progress, and creating systems that help people build better lives.
Related Reading: We need a better vision for welfare reform. Here’s why the war on poverty failed.
2. Restore Dignity & Self-Sufficiency
The Principle:
Welfare programs should promote a vision of human dignity—one where people are not treated as passive recipients of aid, but as capable individuals expected to build better lives. Work is central to that dignity.
A healthy society is built on work, family, faith, and strong civil institutions—not permanent reliance on government. Assistance should be limited, temporary, and designed to support upward mobility.
Why it Matters:
Supporting Work Supports Society:
Encouraging work doesn’t just benefit individuals—it strengthens society as a whole. While much of the debate focuses on the fiscal cost of welfare programs, the broader social costs are just as significant:
Lost productivity when millions of able-bodied adults remain out of the workforce.
Greater instability in communities where long-term dependency is entrenched.
Declining family formation and weakened civil society as government crowds out local support systems.
Why Work Requirements Matter:
Incentives shape behavior. When work requirements are in place, more people enter the workforce, gain skills, and increase their earnings over time. When those expectations are removed, participation declines.
The difference isn’t simply the size of the benefit—it’s whether the system is designed to encourage progress or accommodate long-term dependency.
Work Requirements are Now Part of the Governing Reality:
Recent policy changes reflect this shift. The 2025 “One Big Beautiful Bill” reconciliation law includes new Medicaid work requirements for many adults in the Affordable Care Act expansion population, beginning January 1, 2027. It also requires states to verify compliance or exemptions at the time of application and renewal.
The question now is not whether work should be part of welfare policy—but whether states will implement these requirements effectively, or allow them to become another layer of bureaucracy.
Related Reading: I explain why real welfare reform must move people from dependency to work—and ultimately to self-sufficiency.
3. Empower American Families
The Principle:
A smarter path forward is Empowerment Accounts—a system that consolidates welfare benefits into a single, flexible platform that individuals can use based on their needs, while maintaining clear incentives to return to work.
Why it Matters:
Flexibility and Choice for Families:
Empowerment Accounts allow families to allocate resources where they are most needed—whether for childcare, job training, transportation, or basic necessities. At the same time, they introduce accountability. Support is tied to progress toward self-sufficiency, with expectations that reinforce work and upward mobility.
Simplifying a Fragmented System:
Today’s welfare system is a maze of overlapping programs—food assistance, housing vouchers, Medicaid, and more—each with its own rules, paperwork, and eligibility thresholds. Empowerment Accounts streamline these benefits into a single system, reducing administrative burden, limiting fraud, and making support easier to access and understand.
Just as importantly, benefits can be phased out gradually—avoiding the sharp cliffs that discourage work and helping ensure that earning more always means taking home more.
Shifting the Focus from Aid to Opportunity:
Empowerment Accounts are not just about efficiency—they’re about outcomes. They shift the conversation from “How much support can someone receive?” to “How quickly can someone succeed?” By emphasizing responsibility, flexibility, and work, this approach treats individuals as capable decision-makers and restores the goal of welfare as temporary support on the path to independence.
Related Viewing: I recently discussed Empowerment Accounts with Nic Dunn on Sutherland Institute’s Defending Ideas podcast.
5. Block Grants to States
The Principle:
Transitioning Medicaid and other federal welfare programs to block grants can improve efficiency, control costs, and better align incentives. This approach proved effective during the 1996 welfare reforms, which reduced dependency and increased employment.
Giving states greater flexibility—while encouraging personal responsibility—can also help address the unsustainable growth of mandatory spending over time.
Why it Matters:
Shifting Power from Washington to the States:
Block grants allow states to design policies that reflect their unique economic conditions and population needs—rather than operating under one-size-fits-all federal rules that often create unintended consequences. The success of the 1996 reforms was driven by this shift in control. Expanding that model would allow states to continue innovating and improving outcomes.
Strengthening Civil Society, Not Replacing It:
Long before the modern welfare state, families, local organizations, and faith-based institutions played a central role in helping people in need.
Policy should complement—not crowd out—these institutions. That means reducing barriers to work, limiting overregulation, and fostering an environment where communities and private organizations can support upward mobility alongside government programs.
A Bold Vision for States:
States have an opportunity to lead where federal policy has fallen short. By embracing flexibility, accountability, and work-oriented reforms, they can design systems that do more than provide support—they can help people move toward independence. That’s the difference between managing poverty and reducing it.
Related Reading: I explained block grants and welfare reform in depth at AIER’s The Daily Economy.
Bottom Line
Welfare reform should never be about preserving programs—it should be about improving lives. That requires aligning policy with the incentives that actually drive human behavior: rewarding work, encouraging responsibility, and removing the barriers that keep people stuck.
When benefits are designed to phase out gradually, when work is expected and supported, and when families are given flexibility, we create a system that promotes upward mobility instead of dependency.
The reforms outlined here are grounded in what we know works. The success of past reforms and the lessons from today’s broken system point in the same direction: people respond to incentives, and policy should be designed with that reality in mind.
If we get this right, the results will extend far beyond lower spending or smaller caseloads. We will see stronger families, more vibrant communities, and an economy where more Americans can contribute and succeed. That’s the ultimate goal—not just reducing poverty, but creating the conditions where more people can truly let people prosper.
FOR MORE, CHECK OUT SOME RELEVANT EPISODES OF LET PEOPLE PROSPER:
Thanks for joining me in this episode of "This Week's Economy." For more insights, visit vanceginn.com and get even greater value with a paid subscription to my Substack newsletter at vanceginn.substack.com.
God bless you, and let people prosper!
