Imagine telling your boss you don't want a raise.

Not because you're lazy. Not because you lack ambition. But because you've done the math—and earning more could actually leave your family worse off.

Absurd? Absolutely.

Yet America's complicated system of government assistance can create precisely that predicament.

Politicians promise to fight poverty through additional spending and expanded assistance. But what happens when those programs penalize the people trying to escape poverty?

When government makes working harder a bad financial decision, something is fundamentally wrong with government—not with work.

The raise that barely pays

Economist Craig J. Richardson of Winston-Salem State University has studied how taxes and reductions in government benefits can discourage economic advancement.

Consider a hypothetical worker facing an 85% effective marginal tax rate. That rate combines additional taxes with the value of government assistance lost as earnings increase.

What happens when the worker earns another $10?

Illustrative arithmetic, not a specific result attributed to Richardson's research.

An extra $10 of work produces just $1.50 in additional resources.

How enthusiastic would you be about overtime under those conditions?

The problem is not imaginary. Richardson and his coauthor Zachary Blizard examined the interaction of taxes and government benefits using a simulation developed for Forsyth County, North Carolina.

Their research identified extended ranges of earnings in which effective marginal tax rates approach 100%.

That means a worker could earn substantially more while gaining little additional financial benefit.

These are modeled outcomes, not a claim that every recipient faces such rates. But they reveal a serious problem with how assistance programs interact.

Welcome to the disincentive desert

Most discussions focus on the benefits cliff: a point where a modest increase in earnings causes a substantial benefit to disappear.

Imagine accepting a promotion only to lose valuable childcare assistance.

That's a benefits cliff.

Richardson and Blizard identified a related problem they call the disincentive desert.

Instead of losing assistance suddenly, a worker experiences reductions over an extended range of income. Higher wages are offset by declining benefits and additional taxes.

Here is what different effective marginal tax rates would mean for a hypothetical $10,000 increase in earnings:

Illustration assumes a constant effective marginal rate across the entire earnings increase.

At 100%, every additional dollar earned is offset by taxes and lost assistance.

You might as well be running on a treadmill.

And unlike a single benefits cliff, a disincentive desert can stretch across years of potential career advancement.

We routinely debate whether high marginal tax rates discourage investment and entrepreneurship among wealthy Americans.

Why should we tolerate effective marginal rates approaching 100% for workers trying to rise out of poverty?

Did the War on Poverty create a war on advancement?

In 1964, President Lyndon Johnson declared an unconditional war on poverty. Over subsequent decades, government developed and expanded numerous programs intended to assist low-income Americans.

The intentions may have been admirable. But good intentions are not enough.

More than sixty years later, we should ask harder questions.

Are these programs encouraging work and self-sufficiency? Are they helping people advance economically? Or do overlapping eligibility rules sometimes make continued assistance more financially attractive than additional earnings?

The central problem is straightforward: when multiple benefits decline as earnings rise, their combined effects can consume nearly all the financial reward from additional work.

People respond to incentives.

If working longer hours produces almost no immediate financial gain, some workers may reasonably decline additional hours or responsibilities.

That does not mean every assistance recipient avoids work. Career prospects, personal satisfaction, family obligations, and other considerations also matter.

But the principle remains:

Government should not create powerful financial incentives against work, advancement, and independence.

The government's favorite solution: more government?

What should policymakers do when assistance programs discourage advancement?

Create another task force? Hire additional benefit coordinators? Establish a new bureaucracy to manage existing bureaucracies?

Here's a better question:

Why not eliminate programs that do more harm than good?

Consider housing.

Government provides housing assistance because many families struggle with housing costs. Yet restrictive zoning, permitting delays, and other barriers can make new construction more expensive.

Why not remove unnecessary restrictions and allow more homes to be built?

Additional supply and competition can help reduce housing costs without continually expanding subsidies.

Or consider childcare.

Before committing taxpayers to ever-larger subsidies, policymakers should examine whether licensing requirements, zoning restrictions, and other rules unnecessarily limit childcare providers and raise prices.

Legitimate health and safety protections matter. But regulations should be judged by their actual benefits and costs.

Government can restrict supply, contribute to higher prices, and then offer taxpayer-funded assistance to offset those prices.

First it helps create an affordability problem. Then it demands more money to solve it.

That is a poor substitute for economic freedom.

Helping people become independent

A free society has every reason to care for those who cannot support themselves.

But compassion requires judgment.

Helping someone who cannot work is different from subsidizing an able-bodied person who repeatedly refuses reasonable opportunities for employment.

There is also a third group: people who want to work and advance but discover that government policies make additional earnings financially unrewarding.

Richardson's research is particularly relevant to them.

They don't need lectures about ambition. They need government to stop penalizing it.

A sensible anti-poverty policy should encourage productive work, protect those genuinely in need, and make long-term economic independence more attractive than continued reliance on assistance.

That requires examining work incentives, appropriate eligibility rules, reasonable time limits where justified, and the effectiveness of individual programs.

It also requires asking whether some programs should be consolidated, reduced, or eliminated.

Why should an anti-poverty program be considered successful merely because its budget or enrollment grows?

Shouldn't success ultimately mean more people achieving lasting economic independence?

What would a free-enterprise solution look like?

Government reform should begin with a simple objective: make advancement pay.

That means removing unnecessary barriers to employment, housing construction, entrepreneurship, and private investment.

It also means examining how benefit programs interact. A policy that looks reasonable in isolation can create damaging incentives when combined with several others.

A practical reform agenda would:

• Remove unnecessary government barriers to employment and enterprise.
• Identify and reduce benefit cliffs and extended disincentive deserts.
• Establish appropriate incentives for employable recipients to advance toward self-sufficiency.
• Consolidate or eliminate ineffective and duplicative programs.
• Judge anti-poverty policy by economic mobility and lasting independence, not simply by spending or enrollment.

Richardson and Blizard also suggest that private employers may find alternative ways to reward workers when conventional wage increases trigger substantial benefit losses.

For example, childcare or transportation assistance might improve a worker's circumstances, depending on the applicable tax and benefit rules.

Such arrangements must be evaluated carefully. They are no substitute for correcting defective public policy.

Nor should reform disregard genuine hardship. Abruptly removing essential assistance can harm vulnerable families. Changes should be designed with those consequences in mind.

But concern about hardship cannot justify preserving every ineffective program indefinitely.

And expanding eligibility to eliminate one benefits cliff may simply increase spending and extend benefit reductions across a larger income range.

The answer to a malfunctioning welfare system cannot always be a bigger welfare system.

Prosperity comes from productive work

America's prosperity has been built largely by people creating businesses, producing goods and services, investing capital, taking risks, competing, and meeting the needs of others.

Markets are imperfect. So are people.

But free enterprise rewards initiative, innovation, productivity, and service to customers.

Government assistance should be evaluated not only by how much it distributes but also by the incentives it creates.

Craig Richardson's research offers a striking warning about policies that focus on providing benefits without adequately considering how those benefits affect economic behavior.

We should not accept a system in which working harder can leave someone no better off.

Nor should we assume that every failure of government assistance requires more spending, more subsidies, and more administration.

A prosperous society makes productive work more rewarding—not government dependency more comfortable.

That is the debate Professor Richardson invites us to have.

Join the Raleigh Economics Club on November 11

Craig J. Richardson, Ph.D.
Truist Distinguished Professor of Economics
Founding Director, Center for the Study of Economic Mobility
Winston-Salem State University

Presentation: The Good Intentions Trap: How Government Programs Ensnared People in Poverty (and New Ideas for Change)

Wednesday, November 11, 2026
11:30 a.m.–1:00 p.m.
Cantina 18, 433 Daniels St., Raleigh, NC 27605

Join us for a discussion of government assistance, unintended economic consequences, and new ideas for expanding opportunity.

Event details and registration: https://raleigheconomics.org/

Sources and further reading

1. Craig J. Richardson and Zachary Blizard, “Benefits Cliffs, Disincentive Deserts, and Economic Mobility,” Journal of Poverty, https://doi.org/10.1080/10875549.2020.1869665.
2. Ed Dolan, “Work Disincentives Hit the Near-Poor Hardest. Why and What to Do About It,” Niskanen Center, May 5, 2022.

Raleigh Economics Club — Liberty. Free Enterprise. Prosperity.