Why the new state budget both favors and hurts Haredim… and deeply threatens Israel
Haredim once had fewer children and high employment rates. Government policies changed that. As the community grows, it’s getting harder to justify living at someone else’s expense
Haviv Rettig Gur is The Times of Israel's senior analyst.
At the bottom of the Atlantic Ocean, an old Haredi myth has it, lie a million sets of tefillin, the phylacteries worn on arm and head by Jews at prayer.
In the six decades that preceded the Holocaust, nearly three million Jews fled Europe westward to the Americas. According to the Haredi rabbinic leadership back in Eastern Europe at the time, these Jews were all but lost to the Jewish people. In the permissive West, they would abandon their religion and lose their identity. Those tefillin allegedly lying on the ocean floor were said to have been thrown overboard by Jewish men abandoning their tradition and preparing to arrive in the harbors of their new homelands unencumbered by their past.
It is a bitter irony of Jewish history that those rabbis would soon discover how catastrophically wrong they had been to counsel traditional Jews to stay in Europe.
In the end, the Jews who harkened to their warnings and remained behind were murdered in the Holocaust (some 85% of the Jews killed by the Nazis were Yiddish-speaking; westernized Jews largely succeeded in fleeing the war), while the shattered remnants of the Haredi cultural world would go on to rebuild itself in the very places, America and Israel, they had once described as the graveyards of Jewishness.
After the war, the impulse to restore what was lost became the driving mission of Haredi religious leadership everywhere, but especially in the new Jewish state. New yeshivas were founded by the survivors of the old ones — Mir, Belz, Ponobezh and others — and new communities sprang up, tiny and fragile at first, but soon flourishing and growing to scales that outstripped anything that had existed in Europe.
That very success has now become the community’s central problem, and a threat to the prosperity and future of Israel.
Among Haredi men, fully half don’t participate in the workforce
The desire to rebuild the lost community of Torah students succeeded so massively in Israel that among Haredi men, fully half don’t participate in the workforce, with vast numbers choosing full-time yeshiva study instead. To allow these students to feed their families while they learn, Haredi political parties have put in place over the years a vast system of government subsidies, stipends and other benefits that have transformed the Haredi community in two troubling ways: It is now a community that literally lives at other people’s expense, and that systematically disincentivizes its young men from joining the workforce.
Over the years, full-time yeshiva study on a mass scale became an ideal in its own right. In the culture of Haredi yeshivas, the monastic existence of the rare full-time Torah scholar has become democratized into a religious ideal that all are encouraged to pursue. The well-lived life, a life of rich inner contemplation, strong community, a powerful sense of meaning and ever-present intellectual challenge, is a life of full-time study.
Nothing quite like it has ever existed in Jewish history. In Israel, for the first time ever, this religious impulse could be realized on so grand a scale only because it had found a political system willing to foot the bill.
This week, the Israeli Knesset is set to pass a state budget for fiscal years 2023 and 2024 that has become one of the most contentious in memory, and the key point of contention is the Haredi community.
The Great Wall
Much has been written in recent weeks about yeshiva stipends, child subsidies and other direct payment schemes that have contributed, often by design, to the Haredi community’s low levels of workforce participation. But the community enjoys a vast array of subsidies that often go unnoticed because they are paid out in discounts rather than direct payments, including rent assistance, daycare subsidies, steep property tax discounts and more. These are funded through various schemes that can be hard to track in the state budget, such as subsidies for Haredi-majority municipalities to compensate for reduced property taxes.
A Haredi family in which the father does not work receives four times the total financial help given to a non-Haredi Jewish family
The result of this complex web of benefits spread across a dizzying array of government agencies is that a Haredi family in which the father does not work receives four times the total financial help given to a non-Haredi Jewish family, according to researcher Nisan Avraham of the conservative Kohelet Policy Forum.
But the subsidies themselves aren’t the real problem. The deeper crisis lies in the conditions placed on these subsidies, which, in the case of Haredi recipients, are often taken away as soon as the father of the household goes to work.
Many benefits, including seminary stipends, rent assistance and property tax discounts, evaporate or shrink dramatically once a salary starts coming in, while new costs arise that are connected to the new salary, including national insurance and healthcare taxes, new expenditures on food, clothes and transportation, and so on.
The bottom line is astonishing: Haredi yeshiva students are so heavily subsidized that it simply isn’t worthwhile to go to work.
According to Kohelet, a Haredi man who starts working at a salary of NIS 8,800 (some $2,400) per month (30% higher than minimum wage) will increase his household’s net income by barely a third of that amount, or just NIS 3,000 ($810) per month, because of the many benefits he will no longer be qualified to receive after finding work.
In contrast, a non-Haredi man who makes the same move from unemployment to work at the same 8,800/month salary boosts his net household income, after lost benefits and new taxes and expenses are factored in, by twice as much, or some NIS 5,900 ($1,600). He simply has fewer benefits to lose.
A Great Wall of financial disincentives has helped drive the astonishing growth of full-time Haredi yeshiva learning, and helped keep vast numbers of Haredi men out of the workforce. It is a system that traps Haredi men in a gilded cage of entitlements pegged to yeshiva study and designed to incentivize it.
The education gap
And the above scenario is an optimistic one. How many Haredi men can make that leap from the yeshiva to the workforce at a wage that allows them to feed their families?
The numbers, alas, tell a dismal tale. The Haredi education system now set to gain a massive boost in funding refuses to prepare its students for a life of productive economic activity.
Another report by the right-wing think tank (here beginning on page 47) clarifies just how difficult Haredi men now find it to join the workforce when they actually choose to do so.
Only 3% of Haredi men aged 22 to 44 are eligible for high school matriculation, compared to 79% of non-Haredi Jewish men. Just 2% take the psychometric exam (Israel’s equivalent to the American SATs), compared to 40% of non-Haredi Jewish men.
Haredim who take the exam score higher in verbal skills than their non-Haredi counterparts, but dramatically lower on math and abysmally low in English. It’s a point of optimism, but also of frustration. It suggests that what the Haredi education system teaches — reading and comprehension are essential parts of the Haredi curriculum — it teaches well.
The few Haredim who seek out college or university studies are relegated to the lowest-ranked colleges because of these educational lacunae, and fully 47% end up dropping out, twice the 23% rate of non-Haredim.
This vast educational gap isn’t merely a question of culture or ethics. It is the major reason that Haredi men earn much less than their non-Haredi counterparts even when they do enter the workforce. Haredi men make on average less than 60% as much as their non-Haredi peers in their first year of work and some 70% of their non-Haredi peers’ salaries throughout their working life. That gap correlates very closely to education and work experience, suggesting the gap is not a function of, for example, employer prejudice.
The lower wages are partly due to the large numbers of Haredi men employed in the Haredi education system itself, where salaries are low. But even among financially successful Haredi men, such as the 4.1% who find work in Israel’s large and flourishing high-tech industry (which employs 19% of non-Haredi Jewish men), their salaries are 38% lower on average than their non-Haredi colleagues’.
No wonder Haredi men are less likely to stay in the workforce once they have a job. By age 44, after 26 years of adulthood, the average working Haredi man has just 10.1 years of work experience. When nonworking Haredi men are added to the count, the figure drops to just over six years.
It’s a long, depressing slog through the numbers. And none of them trend upward. Indeed, all these gaps are growing.
The younger the cohort measured, the wider the employment gap between Haredim and non-Haredim grows (pages 49 and 60 in the report). Haredi men’s employment rates rose for a few years beginning roughly 20 years ago, but have stagnated since 2015 even as the Haredi population has grown. A stagnant rate in a growing population means the overall economic cost of this non-work is growing steadily — and will now grow faster with the benefit increases of the new budget.
Haredi men face immense pressure to remain unproductive, impoverished and dependent
Propped up by a vast scheme of benefits and subsidies that cut out when they leave yeshiva, and kept willfully and meticulously unprepared for higher education and success in the workplace by an education system that prioritizes yeshiva study and discourages other paths, Haredi men face immense pressure to remain unproductive, impoverished and dependent.
Made in Israel
It’s easy to blame Haredi political parties, especially in recent decades when sustaining this incentive system became their central political mission. But these policies did not begin in Haredi politics. They were gifts given to the Haredi community by other forces, commitments that were meant to secure Haredi political support and ended up reshaping the community into one that can literally no longer pay for itself without government largesse.
Before 1955, the Haredi birthrate was less than three children per woman. That began to change in the 1970s, with the introduction in 1974 of a new tax reform that favored per-child subsidies, and which was further expanded after Likud came to power with Haredi electoral help in 1977.
It’s a similar story with Haredi exemptions from the military draft. At Israel’s founding, 400 exceptional yeshiva students were granted a special exemption from the draft each year. As late as 1975, the figure was still just 800. It was only under Menachem Begin’s Likud government, beginning in 1977, that the limits were lifted and the exemptions expanded to include all Haredi men.
The children of Haredi leaders in the early years of the state fought and died in IDF uniforms in Israel’s first wars
Secular Israelis would be surprised to learn that the children of Haredi leaders in the early years of the state fought and died in IDF uniforms in the country’s first wars.
As their families grew larger and their sense of shared responsibility for a larger Israeli society shrank into a cloistered sectoral existence — and as Israeli governments proved increasingly willing to finance these changes — Haredi men began leaving the workforce in favor of yeshiva study.
In 1979, some 85% of Haredi men had jobs. By 1998, the figure had fallen below 50%.
The point is simple. The things that frustrate and anger other Israelis about present-day Israeli Haredism are not intrinsic to Haredi Judaism or society. They are a recent development spawned by Israeli government policy.
Unsustainable
It is hard to tell exactly how much the new budget will add to these subsidies and benefits. The benefits to Haredi communities are intentionally scattered across different bills and government agencies to make it difficult to put a direct price tag on the raft of spending that allows so many Haredi men to remain out of the workforce.
But no one doubts — indeed, the Haredi parties boast of it in every community newspaper and before every Haredi audience — that these funds have grown in the new budget. The increases are so great — of NIS 13.2 billion ($3.6 billion) of “coalition agreement funds,” just NIS 2.2 billion are meant for Israeli society writ large; the rest are earmarked for either Haredi or religious-Zionist institutions and causes — that even the Israeli right has started to worry about the country’s future.
It’s no accident that the figures cited above all come from Kohelet, a conservative think tank that largely supports the current government and helped create and push its judicial overhaul. The concern about the unsustainable economic future toward which the Haredi community is now pulling the country leaped long ago beyond the bounds of the secular left.
When Israel was founded, 3% of Israelis were Haredi. Today the figure is 13%, 18% of 18-year-olds and almost a quarter of newborns. As Haredi education expands in both numbers and per-student funding, the very existence of an independent school system tailor-made for insularity has begun to reshape how other Israelis think of the education system, which is already divided by religion and language.
On Sunday, the top headline of Israel’s most-read daily, the pro-Netanyahu Israel Hayom, seemed pulled from the pages of leftist Haaretz: “The public education system is in danger.”
The newspaper explained: “Officials in the education system are warning the coalition agreements will lead to the abandonment of public institutions in favor of private ones.”
The very idea of a shared Israeli educational experience — of Israeli children growing up with a sense of a shared identity and citizenship — is under threat
Education officials worry that the growth in funding for narrow, sectoral schools will convince growing numbers of Israeli parents from other parts of Israeli society to demand their own homogenous, insular school systems. Haredi political power has made such isolationist education so flush with money that the very idea of a shared Israeli educational experience — of Israeli children growing up with a sense of a shared identity and citizenship — is under threat.
And it is the right, not just the left, that is now articulating that fear on the front pages of its newspapers.
The future
Earlier this week, a letter signed by many of Israel’s top economists, including trusted longtime advisers to Prime Minister Benjamin Netanyahu, former heads of the treasury’s Budgets Department and former directors-general of the Finance Ministry, warned that if the present demographic and economic trends continue without a fundamental change to government policy, “Israel may transform into a third-world economy” within a few decades’ time.
Instead of correcting the state-made incentive structure that encourages non-work, they warned, the new budget doubles down on it.
By its own measure, the Israeli Haredi community is a wild success story. It is a community constructed around a sacred mission to resurrect the religious culture that was consumed in the fires of the Holocaust. And it is hard to exaggerate just how successful this project has been. That religious community, or at least what the Haredi world understands that community to have been, has been more than restored; it is now vastly larger than it ever was in Europe.
The Mir Yeshiva in Mir, in present-day Belarus, had an enrollment that topped out at 400 in the 1920s. Its present-day successor, the flagship of the yeshiva world, is the Mir Yeshiva in Jerusalem, with enrollment above 9,000. The Belz Hasidic sect, almost entirely wiped out in the Nazi invasion of Poland in 1939, now has 12 yeshivas throughout Israel and more members and wealth than had ever existed in Belz itself.
There is more full-time yeshiva study taking place in modern-day Israel than had ever existed in the history of the Jewish people
The largest Hasidic group in Israel, the Ger Hasidim, were all but wiped out in the Holocaust. Their remnants, reestablished in Israel after the war, now number some 12,000 families.
There is now more Torah study, including full-time yeshiva study, taking place in modern-day Israel than had ever existed in the history of the Jewish people, and probably by an order of magnitude. Nearly all Haredim had jobs in the early years of the state because nearly all Haredim had jobs back in Europe. The only reason the community could grow this large and this successful was because, for the first time in Jewish history, someone was paying for it.
In the budget talks of this past month, the Budgets Department of the Israeli Finance Ministry warned that the old arrangement on which Israeli Haredi society was constructed has become untenable. The combination of mass non-work, vast entitlement spending and a rapidly growing Haredi population was simply unsustainable.
The Haredi community is no longer rebuilding a pre-Holocaust world. It long ago outpaced and outscaled that world and became something new, something fascinating and remarkable (and probably one of the happiest societies in the world), but something that has lost its justification for living off someone else’s money and sacrifices.
Netanyahu once understood all of that. In 2002, when he served as finance minister in Ariel Sharon’s government, he cut subsidies and benefits and drove a decade-long increase in Haredi male employment and decrease in the Haredi birthrate. The community came out of that experience wealthier and slightly less dependent on government largesse than it had been before.
Netanyahu knows it now, too, if only because every right-wing economist and think tank has been trying to remind him of these facts over the past month.
And so it must be counted one of the tragedies of this political moment that this government’s budget, thanks to Haredi political leaders with the rest of the political right in tow, so willfully chose to double down on a system so demonstrably harmful to Israel’s future, and even more so to Israel’s Haredi community.
