The American Welfare State

I recently got into a debate via social media about the current condition of the United States Welfare program and challenged to present data to support my views on why the American Social Programs are overrun and this article is what I put together. I hope you enjoy the read!

America thrives on a Citizens capability to thrive in the work force and achieve fiscal independence, and I have always believed that as a person that is blessed to walk the soils of this glorious nation that I am able to achieve such financial prowess by possessing these three American traits; strong work ethic, ambition, and ferocious determination but there is a growing lack of these traits in America as more Citizens settle into the social programs that have come to be since the revelations of the 1930’s or The Great Depression era and I have often wondered how have these programs developed over the decades since their conception. So lets look at the current numbers and reference the numbers of the 1980’s – a relatively lull era of events.

Welfare Statistics
Total number of Americans on welfare—————- 12,800,000
Total number of Americans on food stamps————- 46,700,000
Total number of Americans on unemployment insurance—2,859,000
Total number of Americans on assistance————– 21%

As we all know Welfare has long been a considerable presence in the U.S. economy that now services 313.9 million people. As of August 65.1 million or 21% of the American population are enrolled in an assistance program. I by no means feel that social programs serve no benefits to America, but I do not think that such a hefty amount of American’s need to be involved in this program – call it skepticism as only 58.6% of our population attributes to the labor force – now I know what most may be thinking at this point – What a brutal thing to say! I know many people that can hold jobs but will not as they are assimilated to entitlement living. America needs programs like this to ballast the poverty levels – I know this, but the term “impoverished” needs to be reevaluated as if a person is a working class American that cannot afford vital life needs then they very well should seek assistance as most Americans would be overjoyed to help a working family, but if a person on this program makes it a long term career choice than they should be desisted from their position and recycled into the labor force until they accumulate some work experience and replenish some of the funds they used in their long stay on Welfare – this is my opinion anyway.

So lets look at how long Americans on these programs stay on them; here are the statistics based on data from the U.S. Department of Health and Human:

Less than 7 months——19%
7 to 12 months—— 15.2%
1 to 2 years——— 19.3%
2 to 5 years——— 26.9%
Over 5 years ——– 19.6%

Another portion of this debate is how these programs affect The United States financially – So let’s take a look.

Currently, entitlement spending reflects as a 19% expenditure to our Gross Domestic Product or GDP which currently produces $15.6 trillion annually. That means Entitlement spending cost American’s $3 trillion a year! These figures are an increase from the 1980’s deduction of 13% which would have equated to $3.6 billion deducted from the $2.8 trillion GDP generated in the 1980’s. An impressive jump in expense in just 33 years; to put it in a stronger prospective that is a $2.994 trillion dollar increase; or 9.1 billion dollar increase each year since 1980 – I think we all got the point by now. It is truly a growing deficiency in our gross domestic product and it is projected to grow significantly with the current fiscal course of the United States.
My calcuations are based on the most recent published data from government agencies and does not reflect the implications of inflation over time.

Now enough about numbers, lets talk America –  we all know that America faces some turbulent times ahead and with those times Americans will suffer and have to go without certain properties of their life but lets face it we cannot continue to feed horrendous amounts of dollars into a program without discussing how to weed out career beneficiaries that take from those that actually need aid. There must be changes to these program that make it as prosperous as it was meant to be, not a lifestyle choice for working capable American’s. We can fix any aspect of America if we are willing to pursue the proper corrections as we are united in this effort to keep the United States an autonomous fiscal body!

OUR VOICE. OUR ACTION. OUR NATION.

If you want to look at additional spending information that I used to draft this article here they are:
http://www.fns.usda.gov/pd/29snapcurrpp.htm
http://www.usgovernmentspending.com/welfare_spending
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
http://www.tradingeconomics.com/united-states/gdp
http://www.wrconference.net/
http://www.acf.hhs.gov
http://www.hhs.gov/
http://www.dol.gov/opa/media/press/eta/ui/current.htm

Real Cost to Employ

Real Cost to Employ based on a $8.50 an hour salary

Hard Cost- Breakdown (per hour)

FICA(Social Security) 6.20% = $ .53
FUTA( Unemployment) 0.08% = $ .07
Medicare 1.45% = $ .12
SUTA(state unemployment) 1.50% = $ .13
Workers Comp 5.36% = $ .46

—Total Hard Cost = $ 1.31
——-
Soft Cost -Breakdown

Administrative Costs = $ .51
Recruitment & Interviewing Costs = $ 1.31
Benefit Costs = $ 2.21
Increase W/C Costs = –
Legal Fees = –
Lost Revenue due to
Poor Productivity = –
—-Total Soft Cost = $ 3.70

Administrative Costs

Total wages of HR, Payroll and Assistant Administrative Personnel involved in handling:
• Payroll
• Employee paperwork
• Reporting and paying quarterly taxes
• Year-end reports
• W-2’s, W-4’s, I-9’s
• Handling workers comp. claims
• Unemployment claims
• Employee complaints

HR Director HR/Payroll Asst.
Per Hour Wage $18.26 $9.61
Hard Costs $1.88 $0.99

Totals $20.14 $10.60 = $30.74
Divide by Number of Employees
= 60

Total Administration Costs per Employee per Hour

$ 0.51

Recruitment Costs

One ad for 30 days = $320.00 to fill one position!
Cost of ad per hour for new hires for:
First 30 days or 160 hours = $2.00 per hour
at 320 hours = $1.00 per hour
at 480 hours = $ .66 per hour
Total Recruitment Costs $ 1.00

Interviewing Costs

HR Time at $20.14 per hour times number of Hours Interviewing
For example: 10 half-hour interviews = 5 hours x $20.14 per hour = $100.70
New Hire Cost: at 160 hours = $.63 per hour
at 320 hours = $.31 per hour
Total Interviewing Costs $ 0.31

Benefit Costs
Health Insurance
Single Female 33 years old
$239 per month x 12 months = $2868 per year
$2868 / 2080 work hours = $1.38 per hour
—
Health Insurance $ 1.38 per hour
—
Vacation Pay – Two Weeks Vacation
$8.50 per hour plus $1.31 taxes & hard costs = $9.81 per.hour
$9.81 x 80 hours = $784.80 / 2080 hours = $.38 per hour

Vacation Pay $ 0.38

Sick Pay – Six Days
$8.50 per hour plus $1.31 taxes & hard costs = $9.81
$9.81 x 48 hours = $470.88 / 2080 hours = $.23 per hour
—
Sick Pay $ 0.23
—
Holiday Pay – Six Days
$8.50 per hour plus $1.31 taxes & hard costs = $9.81
$9.81 x 48 hours = $470.88 / 2080 hours = $.23 per hour
—-
Holiday Pay $ 0.23
—
Total Benefit Costs $ 2.22

Total cost to employ = $ 13.51

This is a large attributor to a 58.6% labor participation. The next time you are at work think of this.

Social Securty and our retirement

When you retire how do you see it playing out? Americans invest into Social Security at 6.2% of there wages each year and on top of this employee contribution, an employer must pay another 6.2% each year. This contribution in its entirety equals 12.4% of our yearly wages goes to a Government controlled bank account so that one day Americans can use these funds to retire. Now these funds are only accessible after you turn 62, but at this period of your life it is at a lower pull rate. As you can only get the full extent of the contribution after you are deemed fully retired at 67 years of age. Now lets stop and let you explore your interest in Social Security and what your estimated retirement disbursement looks like go to https://secure.ssa.gov/acu/ACU_KBA/main.jsp?URL=/apps8z/ARPI/main.jsp?locale=en&LVL=4 . This is a secure site that you can use to see your monthly income that will be given to you in retirement – as long as you apply for it!
The average American salary in 2013 is $52,100 as of June. That means the average American contributes $3,230.20 a year to Social Security and his or employer must match that so that brings the average yearly contribution to Social Security to $6,460.40, an average person starts working when their 18 years of age and with the currents standards set fourth by the Social Security administration can begin pulling their benefits when they are 62 years of age. That equates to 44 years of working contributions to social security, which brings the holistic contribution to Social Security by a single working American to $284,257.60 and with interest over the working cycle a single American will have $510,766.69 available when they retire based on the average income data and simple interest . We all know that these numbers are not typical to the normal working class American, and this is due to the current wage gap that presents itself in America and the “normal” wage of a working class American is closer to the 30 to 40k a year mark, but the wage data used is the most credible information available. The chart below shows the fluctuation of the Social Security trust since the conception of the fund.

Only way to post custom chart.

To take my point to the equivocal level of the yearly contribution of all working Americans based on the most credible information available by The Bureau of Labor Statistics places the current nonfarm working Americans as of August 2013 at 144,170,000 that would place the approximate average contribution to Social Security at $40,981,418,192,000.00 or 40.981 trillion dollars with a current effective interest rate of 4.1%. This staggering contribution by the American populace does not see an ounce of Government contribution as this is a savings account that Americans contribute to, to ensure that they have monies in place to one day retire around the age of 62.
The growing mindset that Social Security is Our Governments contribution to the American people is a fallacy this is something we all worked to contribute to as an autonomous working body without aid from the government. The US government has however borrowed 4.776 trillion or $4,776,000,000,000.00 from the Social Security program, which violates the purpose of the program and takes some of the ability for the program to fund a hard working Americans retirement. The fact that many feel this program is in jeopardy of capsizing is unfounded as the program continues to be strongly funded by the American public. The only reason this program will fail is if Government borrowing goes unregistered and is not paid back in a timely fashion.
Social Security was originally enacted to assist the “Elderly poor” with retirement and has stayed in place to assist Americans live comfortably in life after 62, but with the development of stronger financial programs over the decades since the conception of Social Security it leaves one to ask “what does retirement structuring look like today?” So if a person took out a 12 month Certificate of Deposit in the year 2000 at a humble 3% with $1612 which would be 12.4% of a $13,000 yearly salary, by the end of the first year they would have $1,660, and if they continue to place the 12.4% contribution into a 12 month CD for the entirety of the average 44 year working cycle and in the time frame achieved an average annual income of 60k a year by the age of 34 they would have approximately $533,601.41 ready for retirement with $294,869.13 contributed from their salary. The outcome is attributably the same to Social Security, but with Social Security you are not able to protect your funds from the long arm of government spending. We all one day will retire with Social Security being a proponent of our after 62 income but how much will we have is the question? If you were an active saver the monthly distribution will be enough to live a life you are assimilated to, but if you have not accumulated enough funds to live at your desired pace than you will find Social Security an unaccommodating income base post retirement.
This is why I believe that if we were to be able to opt-out of Social Security contribution would see less volatility towards government aided security nets for retirement, and an increase in long-term approval of government aid programs. The proper course of the action I am proposing is that if an individual begins contributing to personal retirement program than they should have the ability to maneuver the 12.4% contribution they were issuing to Social Security to their own personal retirement plan this way they can actively dictate how much money they will have to work with when they retire and where it is invested.
My thoughts in closing are; if you are not willing to actively engage in retirement talk and dictate a set monthly salary yourself and wish to continue to contribute to the Social Security plan than so be it, but if you are a person that would like to see the 12.4% contribution pass through a program you chose and monitor then that should be a choice we all can make!

Our Voice. Our Action. Our Nation