Welfare reform?

By e-mail, a reader asked,

My gut tells me that – for a long time, until there is better balance in wages across this planet – the government will be forced to create jobs at blue collar levels.  But white collar taxpayers will no doubt be reluctant to fund this through the tax rolls.  So, I am wondering what welfare reform ideas would at least try to employ people who are underemployed instead of simply paying them to sit home (and look for jobs that will never materialize)?

Any good references that you might be able to direct me towards?

I’m likely no more expert in this area then many readers of this blog. So, share your thoughts in the comments. Also, should Tyler Cowen, Matt Yglesias, or Kevin Drum focus on this they’d probably do a better job than I could at putting together some thoughts of value.

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