According to the structural functionalist paradigm, "Welfare stigma" exists because the welfare system is viewed as something that prevents individuals from actively contributing to society by working. Welfare is the term used to describe the collection of programs, usually funded by taxes, that provide financial aid to groups that can not support themselves. At face value, welfare does seem to be in direct violation of the societal norm of working and earning money yourself. "Welfare Stigma" exists because the general idea of welfare goes against the accepted belief that one needs to work and contribute to society instead of taking from it.

According to the symbolic interactionist paradigm, "Welfare stigma" exists because people aided by welfare are described as parasite by the critics of the welfare system. In order to make other people dislike the welfare system, critics will create the idea that people on welfare are parasites sucking away the life blood of society, the money paid by tax payers. Welfare has been made to represent laziness and stealing from the taxpayer.  "Welfare Stigma" exists because critics have labeled it an immoral act and people recognize the label it has been given.