‘Death Spiral’ States?

Posted on January 11, 2013

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.

graphic

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, Forbes.com 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. And they are all highlighted in the graphic above, which was taken from segments of the Fox Business television program Varney & Co., where Baldwin’s reporting was later discussed.

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).

Baldwin told us in an interview that what he reported and what the email says “are not the same thing at all.”

More: FactCheck.org : ‘Death Spiral’ States?