Welfare reform
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Welfare reform is the name for a policy change in countries with a state-administered social welfare system to reduce dependence on welfare, as demanded by political conservatives.
The reasons for instituting welfare reform usually include:
- objections to the cost of social welfare.
- desire to minimize the culture of poverty fostered by the welfare system
- negative perceptions concerning the behavior of people who live off welfare.
- a lack of incentive for welfare recipients to search for a job.
- the realization that many of the poor expect the government to take care of them.
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[edit] United States
[edit] Welfare before welfare reform
The major welfare programs of the Great Depression in the United States for able-bodied workers involved the WPA and the CCC. They were abolished when full employment returned during World War II. The states, however, continued to provide welfare for people who were unable to work; disability insurance was provided by the federal Social Security System. After the War on Poverty in the 1960s, welfare rolls grew rapidly, angering conservatives. [Katz 1986] Before 1996, welfare payments were distributed through a program known as Aid to Families with Dependent Children (AFDC). In the 1980s, the program drew heavy criticism. There were numerous stories of "welfare queens", women who cheated the welfare system, receiving multiple checks each month and growing wealthy while not working. Many critics claimed that welfare bred a poor work ethic and a self-perpetuation "culture of poverty" in which ambitions focused on staying on welfare and avoiding productive work. [Katz 1986]
The AFDC system was under constant attack in the 1980s; these continued in the 1990s, with Presidential candidate Bill Clinton vowing to "end welfare as we know it." Clinton, once elected, worked with a Democratic congress and met with considerable success in moving people from welfare to work through state waiver programs. These programs allowed states to experiment with various welfare reform measures. The system became a common target of Newt Gingrich and other Republican leaders, though changes had already been set in motion by Clinton and the Democrats. Toughening the criteria for receiving welfare was the third point (out of ten) in the Republicans' Contract with America. The tide of public opinion in favor of some change to the welfare system was considerable. The stage was already set by 1996. The welfare reform movement reached its apex on August 22, 1996, when President Clinton signed a welfare reform bill, officially titled the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The bill was hammered out in a compromise with the Republican-controlled Congress, and many Democrats were critical of Clinton's decision to sign the bill, saying it was much the same as the two previous welfare reform bills he had vetoed. In fact, it emerged as one of the most controversial issues for Clinton within his own party.[Haskins 2006]
One of the bill's provisions was a time limit. Under the law, no person could receive welfare payments for more than five years, consecutive or nonconsecutive. Another controversial change was transferring welfare to a block grant system, i.e. one in which the federal government gives states "blocks" of money, which the states then distribute under their own legislation and criteria. Some states simply kept the federal rules, but others used the money for non-welfare programs, such as subsidized childcare (to allow parents to work) or subsidized public transportation (to allow people to travel to work without owning cars).[Haskins 2006; Blank 2002].
[edit] Outcome
Critics made dire predictions about the consequences of welfare reform. For instance, they claimed that the five-year time limit was needlessly short, and that those who exceeded the limit through no fault of their own might turn to begging or crime. They also felt that too little money was devoted to vocational training. Others criticized the block grant system, claiming that states would not be able to administer the program properly, or would be too motivated by cost. Finally, it was claimed that although the bill might work in a booming economy like that of the 1990s, it would cause significant harm in a recession.
Supporters held that the five-year limit was a necessity, that allowing states to experiment would result in improving welfare, and that the number of people affected by the five-year limit would be small. These controversies have not been fully resolved.
The consequences of welfare reform have been dramatic. As expected, welfare rolls (the number of people receiving payments) dropped significantly (57%) in the years since passage of the bill. Child poverty rates for African American families have dropped the sharpest since statistics began to be tallied in the 1960s; although critics argue that this is due more to overall economic improvement than to welfare reform, and that in any case the rate of child poverty in the United States is still far higher than in nations with greater welfare protections for the poor, although some would counter that this apparent disparity is due to misleading statistical analysis (measuring inequality rather than poverty) and that welfare rolls in the United States historically are much more closely correlated with government spending rather than economic fluctuations. The original bill was set to expire in September of 2002; Congress passed numerous reauthorizations as debate continued over Republican attempts to increase the amount of hours that recipients should be required to work. The 1996 welfare reform law was reauthorized in the Deficit Reduction Act of 2005. The reauthorization required the Secretary of the U.S. Department of Health and Human Services (HHS), by June 30, 2006, to promulgate regulations designed to address eligible work activities and uniform reporting and accountability measures. The reauthorization maintains the original law’s requirement that 50 percent of states’ welfare caseloads fulfill statutory work requirements. To fulfill work requirements, TANF recipients must be participating for 20 hours per week (or 30 hours in cases where the youngest child is 6 years old or older) in one or more of the 12 work activities named in the statute.
[edit] Other countries
In many countries of the Western World, social welfare is linked to some aspects of social security. Depending how the situation is considered, the notion of social welfare may include unemployment benefits.
In France, the government of Jean-Pierre Raffarin tightened the conditions for unemployment benefits: the duration of benefits has been reduced, and recipients must commit themselves to some "contract" to find new work.
Proponents of such reforms claim that unemployment benefits are costly and that many people who receive them refuse to actively seek work. Opponents claim that many people actually cannot find work in good faith and will be thrown into poverty by the suppression of benefits, and that abuse of unemployment benefits is overstated. Comparisons of income based on GDP per capita and the Gini index among developed nations demonstrate that in countries with more generous welfare systems, the actual level of poverty - including child poverty - is lower than in the United States, although it has been argued this is due to misleading statistical analysis.
Demographers today generally believe that most countries in Europe - and soon Asia, Canada and New Zealand - will, owing to low fertility rates, face the problem of a rising proportion of their nation's GDP spent on pensions to the elderly with insufficient numbers of younger workers to take their place. Yet, radical reforms of the pensions system in these countries are made difficult because the aging of the electorate means such measures are unlikely to be popular. The demographic problem of aging populations is one that is faced by all developed nations to a varying degree, with some analysts suggesting massive immigration and illegal immigration of young workers from foreign countries as a possible solution, while other countries consider raising the age of retirement.
[edit] References
- Blank, Rebecca M. “Evaluating Welfare Reform in the United States.” (2002) Journal of Economic Literature 40 (4): 1105-1166. online at JSTOR
- Howard Chernwick, “Fiscal Effects of Block Grants for the Needy: An Interpretation of the Evidence,” Tax and Public Finance 5, no. 2 (1998): 205–33.
- R. Kent Weaver, Ending Welfare As We Know It Brookings Institution, 2000.
- Rebecca M. Blank and Ron Haskins, eds., The New World of Welfare. Brookings Institution Press, 2001.
- Mark H. Greenberg et al., "The 1996 Welfare Law: Key Elements and Reauthorization Issues Affecting Children" The Future of Children, Vol. 12, 2002.
- Ron Haskins, Work over Welfare: The Inside Story of the 1996 Welfare Reform Law. Brookings Institution Press, 2006.
- Michael B. Katz. In the Shadow of the Poorhouse: A Social History of Welfare in America (1986)
- Longman, Phillip, The Empty Cradle: How Falling Birth Rates Threaten World Prosperity and What to Do About It Basic Books, 2004.
- Michael D. Tanner, The Poverty of Welfare: Helping Others in Civil Society. Cato Institute 2003, libertarian approach.
[edit] See also
- Newt Gingrich (see "welfare reform")
