FactCheck: Do You Live in a 'Death Spiral' State?
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.”
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.
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.”
‘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 “eleven 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 through TANF — which is what many people think of as “welfare” — or even participants in the Supplemental Nutrition Assistance Program, once known as food stamps.
The total employment in California, for example, was about 14.4 million in November, according to preliminary estimates from the Bureau of Labor Statistics. And more than 12 million of those employees worked in the private sector. California had slightly more than 1.4 million TANF recipients as of December 2011, according to the most recent figures from the Department of Health and Human Services, and the state had a little more than 4.1 million SNAP participants as of October 2012, according to initial estimates from the Department of Agriculture. None of the other states on Baldwin’s list has more recipients of TANF or participants in SNAP than the number of private or total workers, either.
Even when using Baldwin’s definition of “welfare” — those enrolled in Medicaid — none of the states on the list has more enrollees than workers, whether in the private sector or overall.
California had about 7.4 million people receiving Medicaid as of June 2011, according to the most recent figures from the Kaiser Commission on Medicaid and the Uninsured. That figure is about 39 percent less than the number of private workers and 49 percent less than the total number of workers.
(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.
Democrats Not All in Control, Either
It’s true that seven of the 11 states went for President Barack Obama in the 2012 election, as the email says. Obama won Ohio, Hawaii, Illinois, New York, Maine, California and New Mexico. And Mitt Romney was victorious in Kentucky, South Carolina, Alabama and Mississippi.
But some versions of the email — including the one above — take it a step further, claiming that Democrats are at the helm of government in all of the states on Baldwin’s list. That’s just not so.
Ohio, Maine and New Mexico — which were all won by Obama in the election — have Republican governors. Ohio Gov. John Kasich, Maine Gov. Paul LePage and New Mexico Gov. Susana Martinez all took office in January 2011. South Carolina Gov. Nikki Halley, Mississippi Gov. Phil Bryant and AlabamaGov. Robert Bentley are Republicans, too.
And Republicans currently have majorities in both the state House and state Senate in Ohio, Alabama,South Carolina and Mississippi, while Kentucky’s Legislature is partly controlled by Republicans who have a majority in the Senate.
The so-called “death spiral” states may indeed have something in common, but it isn’t that “all of them have Democrat Governors and Democrat controlled legislatures.”