DOES ANYONE really think it makes sense to legislate a setup in which poor young people must be denied summer jobs to keep their families from losing all welfare aid?

This is no mere abstract possibility. For the last two months, local administrators who run government summer job programs throughout the country have been struggling with their consciences and rulebooks to see if there is some way around a ridiculous law that Congress enacted as part of last summer's budget reconciliation.

That law requires that welfare and Medicaid benefits be cut off whenever a family has a monthly income more than 50 percent above the welfare needs standard. If the youth is no longer in school, aid could be cut off at a still lower income level. Since welfare standards are very low in many states, even part-time work in a minimum wage job could disqualify a youth's family for aid.

Even in more generous states, families can lose benefits if a parent also has a low-wage job or if there is more than one child who takes summer work. Under these circumstances a youth wanting to help out his family by working would end up making them substantially worse off by his efforts.

This is an absurdly self-defeating arrangement, and the National Association of Counties has been working with summer job programs in many states to find ways to avoid it. Unfortunately, the easiest way out for everyone concerned is simply to keep welfare youths out of the job programs altogether-- and some of those responsible for the programs have made that choice.

Most program administrators, however, realize that the best way to keep welfare children from following in their parents' footsteps is to give them a chance to learn to be self-supporting. So, they've been doing things, such as limiting hours of work and giving small allowances instead of wages, to make sure that the kids don't earn "too much."

All of this finagling is very cumbersome. It also sends a bad signal to the kids: don't work too much or you'll end up being worse off. And none of it, in any case, protects the youth who has the luck and initiative to find a private-sector job and then finds out a month later that he has cost his mother her only source of support.

The only sensible solution is for Congress to adopt the House Ways and Means Committee proposals to restore to the welfare law the work-incentive provisions that were so unwisely eliminated last summer. Making it unprofitable to work doesn't save money for anyone.