America long ago committed to providing for the basic needs of all its citizens, constructing a so-called safety net of government programs to catch those unable to support themselves. But an effective safety net must be positioned at the right height—safely above the rock-hard floor yet still well below the tightrope. The value of the baseline government benefits provided to someone not working must be significantly lower than the income that person could earn in an entry-level job. That “income gap” creates the economic incentive to work in the first place, ensuring that all who are able will strive to climb back up and into the labor force.
Unfortunately, a combination of macroeconomic trends and counterproductive policy choices has significantly eroded the incentive to work. Wages for low-skilled and entry-level positions have stagnated, while many of the positions that would have afforded a middle-class lifestyle have vanished entirely. At the same time, the safety net has grown to encompass an ever wider panoply of benefits that have become ever more expensive as health-care and education costs have exploded. This system of benefits, obviously requiring careful design and management, has neither. Countless programs are delivered through an alphabet soup of agencies, leaving no holistic anti-poverty approach and no one accountable for measuring or maintaining a meaningful income gap.