SJS, there is NOTHING wrong with getting paid in cash. Not in my opinion, and not in the opinion of the IRS. There are circumstances that require it. Not reporting those cash payments, however, is illegal. Of course no frum person should be doing anything illegal. So taking cash “under the table” to maintain welfare status is crooked and is NOT condoned.
Not trying to get a job, is a valid and legitimate response to incentives. I have no problem with that. Make it sweet enough and I won’t work a day in my life. In the UK, they actually have such a system, where one can volunteer to NOT join the workforce in exchange for payments.
The number of games that people do is enormous. Some are completely legitimate, some are pretty shady. But I will only condemn the ones that are illegal (though I would never want anyone I know to do anything shady either).