Imagine being unemployed for months, relying on government benefits to cover rent, utilities, and food. Finally, you get a job, but your paycheck disqualifies you from benefits and isn’t enough to cover expenses, leaving you worse off. This is the welfare trap, where earning slightly more can actually result in having less.
Poverty traps like these keep millions in poverty due to reinforcing economic and environmental circumstances. While welfare programs aim to help, they can sometimes create disincentives to work because people lose benefits once their income exceeds a certain level. Solutions like phased-out benefits, universal services, and universal basic income (UBI) have been suggested. UBI, in particular, could eliminate welfare traps by providing a stable income for everyone, preventing people from falling into poverty.
However, it remains largely theoretical. Effective solutions need to respect people's autonomy and enable long-term changes to break the cycle of poverty.
Vocabulary:
• Unemployed: Not having a job.
• Benefits: Financial help provided by the government.
• Disqualify: To make someone ineligible.
• Childcare: Care for children while parents are at work.
• Economists: Experts in economics.
• Perpetuating: Making something continue indefinitely.
• Means-tested: Available only to people with low incomes.
• Incentivized: Given a reason or reward to do something.
• Universal: Applicable to all people.
• Hypothetical: Based on possible ideas or situations rather than actual ones.
Source: Ted-Ed