Work doesn’t pay….and that’s the problem

The welfare debate consistently focuses on how best people can be got into work; to demonise the rest, the right focus on a tiny, tiny minority who don’t want to work to condemn a whole system and meanwhile vulnerable people go unsupported. Nobody bothers to wonder why people don’t to work nor is any thought or consideration given to what happens when people are actually in work. They are left to fend for themselves and to the not very tender mercies of the market. However, there is a link between the world of work and the world of welfare which is simply not comprehended by mainstream politicians.

The fact is though that people entering work doesn’t mean they stop struggling. Indeed, with the poverty-pay wages that have become the norm in the private sector it is unlikely entering work will lift your head barely a millimetre closer to the surface of the water. High rents, low pay, growing debt, none of these things get any easier when you are in work because government policy has stopped noticing you totally; it barely recognised your existence on welfare but now you’re not an unemployment stat you have become a cash-cow for the government. This is why Labour in power had no choice but to bolt-on to the welfare system a complicated but also costly network of income supplements. It bowed to private sector pressure and set the minimum wage far too low, did nothing about high-rents, etc, etc.

Enter the Con Dems and the slash and burning of the welfare state. The same problems that pertained under Labour during a time of relative economic prosperity (for the majority of its term) are now at least 10xs worse during a period of economic contraction. However, the government solution is to kick-away the fragile supports that people had, leaving them utterly helpless. In return nothing is offered. Rasing the income tax threshold is a cruel confidence trick that the Institute for Fiscal Studies has exposed, indeed, it is something that would have naturally occurred due in inflationary pressures in any case. The reality is this government has done the sum total of nothing for the poor who are out of work and the poor and struggling in work.

The only viable solution to so-called ‘welfare dependency’ and to the fill the black hole in the governments coffers is to make work pay. A full program of policies like the living wage, as part of a full prices and incomes policy, capping rents and increasing housing stock is needed to address these complex issues. This is a stimulus program which is choc-full of economic virtues; it cuts the welfare bill in a humane way with no suffering (by removing the need for things like tax credits totally and reducing the housing benefit bill, getting people in jobs, etc, etc), it generates productive economic activity which will, in-turn, generate additional revenue for the government. In short, it will solve our social crises in a way that also resolves the economic one. If only Labour had the boldness and vision to advocate such policies….

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About darrellgoodliffe

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