Note the loss in government benefits on earning income between $30,000 and $70,000. That’s right, at a certain point, getting a job or earning a higher income results in a net decrease in standard of living. Call this the economic disincentives that are inherent to welfare and entitlements, or the $30k welfare cliff.
“The painful reality in America is that: for increasingly more Americans it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is such an important topic that we felt it necessary to warrant a second look. The graphic below quite clearly, and very painfully, confirms that there is an earnings vacuum of around $40k in which US workers are perfectly ambivalent toward inputting more effort since it does not result in any additional incremental disposable income.” [Emphasis in the original.]
-Tyler Durden, 1-Dec-12 (Link)