Week 1 summary

Some basic ideas:

  • to provide for a minimal level of well-being, physical and mental, among a population
  • Benefits or services to help people meet their basic needs
  • relieving pain and suffering
  • Often thought of as occurring outside the ‘market system’
  • Organized in a variety of ways, including public and private funding
  • ‘assistance’ and ‘care’

General philosophies of welfare

  • Human capital (helping people build it for themselves)
    • What is it? foreign language, computer skills, a college degree, appreticeship in carpentry, etc.
    • Individual, mostly achieved skills that presumably make workers more valuable in the labor force.
    • So, the philosophy suggests, those with less human capital are more likely to struggle, and the goal of a welfare program should be helping people to development more human capital.
  • Structural constraints (inequality of access, opportunity)
    • Does everyone have the same opportunities to build human capital?
    • What sorts of barriers do people face?
    • How can a welfare system acknowledge structural forces that limit people’s life chances and economic opportunities?
What are your chances of reaching the…
With parents in the…
Bottom quintile Middle quintile Top quintile
Top income quintile 6.3 % 16.3 % 42.3 %
Middle income quintile 17.3 % 25 % 15.3 %
Bottom income quintile 37.3 % 18.4 % 7.3 %

Take some time to digest the above table. It says something important about social mobility, people’s ability to move from one (in this case) income class to another. Children born into poverty have long odds–some will make it into a higher income class (almost 1 in 5 can make it from the bottom to the middle quintile), but there’s not much margin for error here.

  • ‘Big Brother’ (welfare reinforces cycles of dependency)
    • Welfare creates dependency
    • Better off showing ‘tough love,’ people need to be in the work force, earning money, not expecting ‘handouts’ from the government. Collins and Mayer (2010) refer to this as paternalism–the same basic concept–government as the ‘nanny,’ as the coddling parent.
    • Welfare Reform Act (PRWORA) of 1996–‘personal responsibility and work opportunity reconciliation act’

Compared

  • If we were to compare these, we would see some major differences in terms of:
    • structure/agency (the role of individuals, their latitude to act, to change)
    • cause and effect–the ‘human capital’ approach seems pretty obvious, but doesn’t address why some have more human capital than others;
    • ‘Big Brother’ philosophy suggests that allowing people the ‘freedom’ to pursue human capital works best when government doesn’t foster dependency and stifle individual initiative (ulterior motives include reducing tax burdens of higher income classes, possibly businesses)
    • In practicePRWORA* was closest to the Big Brother approach, provides for some human capital development when budgets are flush with money, allows states to recognize that the hardest population to help will likely not succeed without public assistance (structural)

Some basic needs: food, shelter, health care (physical and mental), transportation, protection, emergency, economic hardship, child care

Where does the money come from?

  • public (federal, state, local),
  • private (contractors for public services),
  • non-profit (e.g., CHD, GRCC, church- religion-based services)

Some basic concepts

Politics

  • Welfare is often about who gets what, when, and how
  • These are political decisions, especially when public funds are used
  • Who has the resources to influence this debate in public?
  • Welfare–if it’s a transfer of income/wealth from one group to another, in the form of assistance/subsidy, is it limited to somehow disadvantaged populations?


Forms of assistance

  • Cash (TANF–Temporary Assistance for Needy Families)
  • In-kind (food stamps, Medicaid, WIC, etc.)
  • Social insurance (Unemployment, Social Security, Medicare, Workers’ Compensation)
  • Means-tested (TANF, food stamps, Medicaid …)
  • Entitlements vs Block grants

Wealth inequality and the welfare state: a conundrum

  • How to afford a welfare system without tax revenue (There are, of course, other means of taxation besides taxing individuals’ incomes)?
  • Which groups have the most influence in our current political system–where limits on campaign financing are few–on taxation rates?
  • Progressive vs regressive taxation

Broader trends affecting poverty, inequality

  • Globalization–shifts in jobs, wages (‘outsourcing’)
    • Rise in lower-paying service sector jobs as manufacturing jobs go overseas
  • decline in strength of labor unions (lower wages, less benefits)
  • trend away from full-time jobs
  • Increasing inequality–greater now than at any time since the 1930s
    • Increased compensation for corporate executives
    • Tax cuts that benefited the highest income earners
    • Corporate profits have steadily risen, while wages have remained flat
  • Gender equity–more women in college, workforce
  • Increasing divorce, lower marriage rates, more co-habitation:
    • ½ of all marriages in the U.S. today will end in divorce;
    • In 1900,< 5% of children lived in single-mother households; by 1970 this was 13%. Now it’s over half. By race, 75% of white children live in two-parent households, 36% of black children (Bureau of the Census, 2000)
    • 1/3 of all children born in the U.S. now are born outside of marriage.
    • What’s causing these changes? Individuals’ decisions based on current welfare policy??
  • Feminization of poverty-more women/mothers living below poverty line
  • Cultural ‘demonization’ of mothers on welfare
  • Policy
    • Welfare Reform Act of 1996
    • Tax cuts disproportionately benefiting the wealthy (rising inequality)
  • Changes in costs of living: Housing issues, increases in health care costs, insurance, transportation
  • Targeting immigrants: The Trump Administration is considering immigrants who use the welfare system as a ‘public charge,’ and proposing to deny them a path to green cards (working permits) and citizenship. This will likely mean a lot of people on the margins fearful of using public assistance because it might jeopardize their immigration status.

A look at rising wealth and income inequality: (compared with UK)

Note the separation between the top 1% and all other income groups, including the top 20%. Yet most Americans believe the US economy is ‘fair.’ Does this video on wealth inequality help explain that?

Welfare ‘reform’ (1996)

  • Recipients have to work
  • Reduced welfare rolls
  • Effects on poverty and inequality less clear

*PRWORA is the tortured acronym for the ‘Welfare Reform Act’ of 1996. It stands for ‘Personal Responsibility and Work Opportunity Reconciliation Act,’ which should give you some idea of the underlying philosophy.

Jane Collins and Victoria Mayer. 2010. Both Hands Tied: Welfare Reform and the Race to the Bottom in the Low-Wage Labor Market. Univ. of Chicago Press