Traverse City Record-Eagle

January 19, 2013

Fact Check: Claims about states


TANF — Q: Do 11 states now have more people on welfare than they have employed?

A: A viral email making this claim is off base. It distorts a Forbes article that compares private-sector workers with those "dependent on the government," including government workers and pensioners, and Medicaid recipients — not just "people on welfare."

Full question

Please let me know if this is accurate or not. I am just concerned if the comparison between the number of people who are employed vs the number of people who are on welfare is accurate.

These eleven states now have more people on welfare than they have employed.

All eleven of them have one thing very much in common. All of them have Democrat Governors and Democrat controlled legislatures, and; surprise surprise, seven of these eleven states all voted for Obama. DUH!

This just goes to prove that the majority of Americans have no intention of ever attempting to put together an independent life for themselves and their families, but rather, that they are quite content to just live on the tax payers dime for eternity.

Unfortunately, I see no clear cut scenario in which any of these states, or possibly even the whole United States for that matter, will ever manage to recover.

Full answer

On Nov. 25, 2012, published an article by William Baldwin, an investment strategies contributing writer, that asked, "Do You Live In A Death Spiral State?" Baldwin's advice to readers was to avoid putting capital in financially troubled states where people "dependent on government" outnumber those working in the private sector.

"If your career takes you to Los Angeles or Chicago, don't buy a house. Rent," he wrote. "If you have money in municipal bonds, clean up the portfolio. Sell holdings from the sick states and reinvest where you're less likely to get clipped." That list of "fiscal hellholes," as Baldwin labeled them, included Ohio, Hawaii, Illinois, Kentucky, South Carolina, New York, Maine, Alabama, California, Mississippi and New Mexico.

But Baldwin's definition of individuals "dependent on government" is stated incorrectly in the viral email as simply those on "welfare." Baldwin wrote that, among the dependents, he included current state and local government employees, as well as former workers receiving government pensions. And he only counted Medicaid recipients as those on "welfare." And none of the 11 states on his list has more Medicaid recipients than workers. Also, none of the states has more recipients of other kinds of "welfare," such as TANF (Temporary Assistance for Needy Families) or food stamps (officially known as the Supplemental Nutrition Assistance Program).

'Dependent on government'

In determining the states on the "death spiral" list, Baldwin took two things into consideration: a state's credit-worthiness ranking according to an analysis done by money management firm Conning & Co., and a state's "taker/maker ratio," which Baldwin himself calculated using figures from the Bureau of Labor Statistics and other sources. That ratio has been misrepresented in the viral message above.

Baldwin's article explains that "a maker is someone gainfully employed in the private sector," while "a taker is someone who draws money from the government, as an employee, pensioner or welfare recipient." And Baldwin's article further explains that the formula that he used only counted state and local government workers, not federal ones, and that he only counted people receiving Medicaid as those on welfare. On top of that, he added one person for every $100,000 of unfunded pension liabilities to the "takers" side. But those specifics were all left out of the message that simply claims that "11 states now have more people on welfare than they have employed." Baldwin said that there may be states with more "welfare" recipients than private-sector workers, but he didn't know if that was the case. That would depend on what one counts as "welfare." But it is certainly not the case when comparing workers to recipients of cash assistance throughwhich is what many people think of as "welfare" — or even participants in the Supplemental Nutrition Assistance Program, once known as food stamps.

(A word of caution: You cannot add the number of recipients for all three programs in California or any other state and compare that with the number of total employees, because of overlap that would result in double-counting.) Baldwin said that his article doesn't support the claim made in the email, because he wasn't comparing workers to welfare recipients. "I was comparing employment to government dependency," he said.

D'Angelo Gore for