"In my opinion, they should be incentivizing earning on the side at all levels and in all places. But, they seem to punish hard work."

This is happening all around the world and it looks like the governments want the vast majority of the population dependent on them because then they can mandate whatever they want and the people don't have that much power to say no. Using food and housing as a weapon to make people comply has been documented through the ages, they're just doing it in a wolf in sheep's clothing fashion. It's going to mess up economies more and most of the government interventions are like putting band-aids on artery lacerations. Short lived and then the problem is far more difficult to fix afterwards like you say kicking the can down the road.