Suppose that your state currently provides an income guarantee under TANF of $4,000/year and a benefit reduction rate of 50%. A typical potential recipient can make $10/hour and can choose to work up to 2,000 hours per year. How many hours must a typical recipient work to no longer receive a benefit from TANF?

800 hours

Explanation:

The Temporary Assistance for Needy Families (TANF) is a federal welfare program established in 1996 which helps qualifying families with childcare assistance, professional training and work assistance. The federal government transfers money to the states and then each state sets is requirements for receiving TANF assistance.

Since the benefit reduction rate is 50% and the TANF amount is $4,000, the total yearly income must be less than $8,000 to receive TANF ($8,000 x 50% = $4,000). If the potential recipient can earn $10 per hour, then she should work less than 800 hours (= $8,000 / $10) in order to keep receiving TANF benefits.