From a New York Times column about the failures of the government's "war on poverty":
Importantly, government benefits can make it tough for people to leave poverty behind. "There's a lot of action at the very bottom," Professor Waldfogel said. "But once you hit the poverty line a lot goes away."
For a two-parent family with children and a breadwinner earning $25,000, it makes little financial sense for the other spouse to get a job. After subtracting taxes, lost government benefits and the added cost of child care, the family would take in only some 30 cents of each additional dollar, according to calculations by Melissa Kearney and Lesley Turner of the University of Maryland.
"There are huge work disincentives here," said Professor Kearney, who also runs the Hamilton Project at the Brookings Institution. "They should be allowed to keep more disposable income. They are doing — quote, unquote — what they are supposed to and they are not much better off than they were before."
One could deal with this in a variety of ways, among them by making the government benefits less generous to begin with, by making them more generous so they stay in place at higher levels further up the income ladder, or by somehow fiddling with the payroll tax. But government tax and welfare policy that creates "huge work disincentives" is something that has promise as a political issue, and, more importantly, if something were done to repair it might actually improve people's lives.