Dependence on government welfare programs continues to grow, even as more Idahoans return to work in an economy limping out of the Great Recession.
Idaho Department of Health and Welfare Director Dick Armstrong told budget committee members last week that 21.1 percent of Idahoans relied on some sort of government program for assistance each month of 2015. That includes food stamps, cash payments, child care subsidies and Medicaid.
What Armstrong didn’t tell legislators is that figure continues to grow, even as the state and workers unbury themselves from turbulence in the American economy through the past decade.
In 2013, 20.2 percent of Idahoans used welfare programs. In 2014, the figure rose to 20.6 percent.
In the pre-recession days of 2007, only 14 percent of Idahoans needed welfare payments each month.
Yet, the unending creep of government dependency catches few headlines. Instead, leaders excitedly blast out press releases celebrating job growth.
Just last week, Gov. Butch Otter’s Department of Labor spiked the economic football on jobs with this announcement: “Idaho Fastest Growing State in Over-the-Year Job Growth; December Unemployment Rate Unchanged at 3.9%.
Something to celebrate, to be sure.
Still, according to Department of Health and Welfare data, more Idahoans accept government assistance than at any other time in the past 16 years. If legislators could solve the dichotomy of welfare roll increases during job growth, maybe they could reverse the trend.
That contradiction puzzles even those who are paid to understand the economy.
Peter Crabb, an economist who teaches at Northwest Nazarene University in Nampa, told IdahoReporter.com Wednesday, no one’s certain why government dependency is rising alongside job growth
“I’m not sure there’s an economic consensus as to what’s driving [this],” Crabb said.
Nevertheless, economic thinkers offer several plausible theories. Crabb said Idaho’s lackluster wage growth could lead to higher welfare reliance.
“Government rolls continue to rise because wages are not raising fast enough,” he explained. “We have a lot of people working at jobs that have not seen real wage gains.”
Indeed, Idaho struggles in the wage growth arena. A U.S. Bureau of Labor Statistics report released late last year revealed that, including D.C., Idaho is 50th in the nation for wage growth, leading only Mississippi. That report also found a steep decline in wages for Ada County, Idaho’s metro center.
Crabb proposed an explanation for Idaho’s wage problem. “Firms are paying more for benefits, but not more in wages,” he said. “Real wages aren’t rising because they have to pay more to have you as an employee.”
The NNU economist pointed a finger at health insurance costs -- heaped on by Obamacare -- as one additional cost burden employers face.
To reduce dependency, Sen. Steven Thayn, R-Emmett, wants to focus on production. Thayn, who’s writing a plan to give low-cost routine medical coverage to 78,000 Idahoans, says government isn’t doing enough to entice people to become productive, contributing members of society.
“Our entitlement programs ... are based on an incorrect assumption,” Thayn said in his East Wing Capitol office last week. “That assumption is that poverty can be eliminated by increasing the ability of those people to consume.”
Though Thayn said programs like food stamps, Medicaid and others might address needs in the short term, they create a problem in the long run. He explained, “The long term impact of [such programs] is to create a dependent portion of our society that … continues to need to receive public assistance.”
Thayn’s health care plan, which could look similar to a proposal Otter and his team want legislators to consider this year, will include provisions to provide mentors for enrollees, who Thayn sees as guides to give struggling workers a hand up.
His plan will also cap plan participation by an individual at three years, something federal programs don’t do.
Crabb sees a different way to reduce government reliance. Instead of creating a new program -- albeit a homegrown plan with stricter participation limits than federal assistance -- he believes legislators could take one simple step to help workers.
Cut taxes for businesses.
“You gotta have the incentive for the employer to increase wages,” Crabb said. “That incentive is not there for the employers.”
If that’s the solution, there may be a small amount of help on the way. Members of the House Revenue and Taxation Committee introduced legislation to reduce income taxes for top individual earners by one-tenth of one percent, from 7.4 percent to 7.3 percent. That’s a $22 million reduction.
Because many small business owners file their taxes under the individual income tax, the plan would relieve some of the tax burden.
The bill, written by House Majority Leader Mike Moyle, R-Star, also increases Idaho’s grocery tax credit, which refunds annually the taxes Idaho families pay on groceries, by $10 per person.
Note: Peter Crabb is a member of the Idaho Freedom Foundation’s Board of Scholars. The foundation publishes IdahoReporter.com.
