The argument put forth by most conservative economists is that when you give out free money that it becomes a disincentive to work. Programs like food stamps and unemployment simply make it easier for people to work less or not work at all. This may be true. However, there is a more sinister side to social programs. First we must understand what gives money value. Many believe that inflation (the steady loss of value of a currency) is due to an increase in the money supply. This thinking points out a foundational misunderstanding of economics.
The value of money is dictated not by what you can get for it, rather it is dictated by what you did to get it. The more you produce or work for money, the more value that money has. This is regardless of whether you make ten dollars an hour or one hundred. If you worked the same amount for both amounts, the values are the same. A great example of this is the stories you hear from your grandparents. My grandfather made five dollars a week digging ditches. Now I make 5 every six minutes building websites. The difference is that the 1940’s dollar had a larger value. The reason it had more value is because of what he did to get it. It took him a week of hard back breaking labor to make five dollars. On the other hand, I type out a few paragraphs and make five bucks.
Following this logic further, if you where to give your employees a 10% raise with no expectation of a larger output, that value of the dollar will decrease. One employer doing this would have unnoticeable effects. However, if all employers did this as was required by the minimum wage (only the bottom wage earners saw a raise) there would be a noticeable effect on the purchasing power of the dollar. Now if we take it to a further conclusion, social service programs including unemployment and even social security, is essentially free money. It is money that was not worked for. This causes a decrease in value of the dollar and increase in prices. The people who are affected by inflation the most are the middle class. For the economy to stay stable, the value of the dollar must stay stable. A result of this free money is that those who work without the luxury of social services must work harder for the dollar they get to make up for the loss in value caused by the free money. Although they work harder, their money’s values is only average.
While the poor benefit from the free money, the middle class can barley meet ends meet because they are wasting their time working for the poor’s free money. This is work they could be using to increase their standard of living. The poor are living off of the backs of the middle class.