States have a lot of discretion over administering federal anti-poverty programs. Take Medicaid, for instance. As Chicago Fed economist Jacob Bermanpoints out,the eligibility cut-off for a single-parent household with three kids rangesfrom an annual income of $50,868 in Washington DC to $2,652 in Alabama. In a new study, Bermananalyzes which state have the most and least generous safety nets — supposedly accounting for living costs — including the following programs:
— Medicaid Children’s Health Insurance Program (CHIP);
— Earned income credits;
— Unemployment insurance Supplemental Security Income (SSI);
— Temporary Assistance for Needy Families (TANF);
— Supplemental Nutrition Assistance Program (SNAP);
— Special Supplemental Nutrition Program for Women, Infants, and Children (WIC);
— Worker’s compensation;
— Temporary disability insurance.
Berman’s key finding:
Vermont ranks as the most generous state with the average low-income person receiving about $26,000 in benefits. This is due largely to the fact that, using my measure, Vermont has the most generous Medicaid program and Medicaid accounts for about half of all of the programs I consider. Vermont also has its own refundable earned income credit and SSI program. Conversely, Georgia is at the bottom of the ranking since it has some of the most restrictive laws for Medicaid and TANF.
Now here is the part I find really interesting. As Berman concedes, government spending isn’t the only thing that affect living standards for low-income Americans: “Outside of the budget process, regulations influence the prices households pay for goods and services. For example, restrictive zoning laws tend toincreasehousing costs. Transfer payments are only part of the story.”
Here is the summary of the well-known paper that Berman links to:
Does America face an affordable housing crisis and, if so, why? This paper argues that in much of America the price of housing is quite close to the marginal, physical costs of new construction. The price of housing is significantly higher than construction costs only in a limited number of areas, such as California and some eastern cities. In those areas, we argue that high prices have little to do with conventional models with a free market for land. Instead, our evidence suggests that zoning and other land use controls, play the dominant role in making housing expensive.
Along these lines, a very nice blog post from my pal Ryan Avent on housing markets.
Follow James Pethokoukis on Twitter at@JimPethokoukis, and AEIdeas at@AEIdeas.
