The story so far . . .

Okay, by now you should have the authors' ideas down pretty well. Welfare functions to regulate labor and to quell civil unrest (easy enough to memorize, your job will be to know how). We've seen how it worked in the 1930s, brought on by the Great Depression. FDR allowed enough direct relief to work through the crisis, put people to work, but then as the unrest subsided (even before unemployment had returned to pre-Depression levels), the direct relief system contracted, and the shell of the system for the disabled and elderly, the 'worthy' populations, remained. We've discussed how agricultural mechanization led to a wave of migration of blacks after WWII, creating conditions ripe for disorder in large cities in the 1960s (there would have likely been unrest during this period, because of the deplorable conditions of poverty in which much of the black population lived, but having no political power, the government was not obliged to step in). The Federal Government raised the profile of poverty in America, identified some of its racial contours, and set out to find a way to direct relief to disenfranchised blacks in large urban areas, despite a long history of racial discrimination at the state and local levels of government (with a strong ulterior motive of reducing levels of protest and unrest). The result was the Great Society programs, which to a large extent bypassed traditional welfare, only then to pry open public agencies' coffers and make available to blacks the public assistance that they had been denied for so long.

The results of the changes in the 1960s were impressive. Blacks had some measure of political power, especially in the larger industrial cities. Institutional changes to the welfare system made it more difficult for agencies to use their discretion to deny services or assistance. The result, combined with other Great Society programs such as Medicare, Food Stamps and Head Start, was a sizeable expansion of welfare expenditures--a large population of poor gaining access to the system for the first time will do that. Another result was the predictable political backlash--the mobilization of conservatives (and even some moderates) to do something about the 'crisis,' which wasn't, as they constructed the problem, a crisis of poverty, but instead a crisis of a welfare system out of control.

So, one role of relief is to quell disorder, as we saw in the 1930s and 1960s. However, the authors are at pains to point out how relief also undermines 'labor discipline.' The post 1960s era shows how employers attempted to reassert their power and influence with government to restore greater control over labor market regulation (and wages) and relief programs. Five basic strategies were used by both business and conservative republicans:

1. Reduce welfare benefits
2. Damage the organized labor movement
3. Tighten welfare eligibility criteria
4. Make welfare assistance conditional
5. Deepen the stigma experienced by welfare recipients

The Right Mobilizes

The years since the late 1960s have seen erosions in the welfare system. Keep in mind--welfare had historically functioned, according to Fox Piven and Cloward, to regulate labor and quell unrest. The idea that people should get welfare as an entitlement, and that it could be attractive enough that recipients weren't pushed into low-wage employment, was anathema to the business community (which has gained in influence over politicians, and over the political process, with the increased importance of television and advertising to political campaigning). The presidents who did the most to curb any gains through welfare were Richard Nixon, Ronald Reagan and George Bush, Sr. Bill Clinton's signing of Welfare Reform in 1996 was a compromise with the Republican-controlled Congress. Based on a welfare reform law titled the 'Personal Responsibility and Work Opportunity' Act, what would one expect the government to do? Perhaps find ways to:

1. Make welfare less attractive
2. Restrict access and eligibility to benefits
3. Stigmatize welfare and welfare recipients (expand the population of 'unworthy' or 'undeserving' to include single mothers, two-parent household recipients)
4. Increase waiting periods to make benefits determinations

Other factors were at work as well:

• In the 1970s, the economy was in recession. The energy crisis in 1973 didn't help.
• Labor became more mobile. Companies were seeking out cheaper sources of labor, closing plants, looking to the Southern and Southwestern U.S.
• Wages declined, up to 15% for many workers by the early 1990s (not to mention decreased purchasing power due to inflation). Minimum wage purchasing power is at its lowest since the mid-1950s, and by the 1980s the minimum wage workforce was no longer teenagers taking their first jobs--2/3 of it was people over 20 years old, and 2/3 of these were women.
• As globalization has advanced so has this process (labor mobility), and today we speak of a post-industrial economy. Many of the well-paying factory jobs of the 1960s have been replaced by service sector jobs, as companies have become multinational, and 'free trade' has seen booms and busts not just in the U.S., but in Mexico (booming in the 1990s, busting now), and East Asia (booming now--see Greider's article). In 1960, 30% of American jobs were in manufacturing; in 1990, 15.3%%; in 2000, 12.7%.
• The 1970s were also a period of intense union-busting activity. In the 1920s-30s, union busters were mostly thugs and goons with clubs. In the 70s, it was lawyers and PR experts, working to undercut unionizing efforts, get 'right to work' laws passed in many states, or work to erode the power of striking workers (e.g., by denying them food stamps).
• The 1980s saw a large shift from a permanent to a part-time workforce, which reduced or eliminated benefits for likely millions of workers. As the authors note, by 1990 over 25% of the U.S. labor force was working in jobs outside the regular full-time workforce (some perhaps by choice, keep in mind).
• Most of the strikes in the 1980s were to defend workers' health benefits--not for increased wages or benefits, but to defend and hang on to what they had.
• Social welfare programs were slashed--why? Well, go back to the labor-regulating function of welfare, the relationship between welfare and wages. Many economists were saying that welfare assistance had insulated wages from the effects of rising unemployment--in other words, welfare had become to 'attractive,' and wasn't performing its function of enforcing low-wage labor. The unemployed, as the authors note, posed less of a threat to the employed (in terms of being willing to do their jobs for lower wages, that is).
• A shift in stigmatization, victim-blaming. Over the 1970s and especially the 1980s, many disabled and elderly were either removed from welfare rolls, or their assistance was cut back. As they were forced to in many cases re-enter the workforce, a new population of the 'undeserving' began to emerge: the single mother. Despite the small effect of AFDC or TANF on the overall budget, single mothers on cash assistance were perceived as immoral or at least dependent on welfare, and ways were sought to force them to work to receive benefits. It was a classic example of blaming the victims for their plight.

top

U.S. response vs European response to changing economic conditions

Above are some of the things U.S. businesses and government did to respond to the 'welfare explosion' of the 60s. Europe suffered a recession after the energy crisis in 1973, too, but governments responded in different ways:

• they promoted investment in new production;
• they invested in worker retraining (to minimize disruptions in labor market mismatches)
• focused more on innovation and organizational restructuring, rather than attacking and blaming workers, unions and welfare recipients;
• part of this was because of a tradition of large, vigorous public sector unions and labor parties;

The burden in Europe on industry was to offer attractive jobs--they couldn't just lower wages as U.S. firms did--they were constrained by labor unions and labor parties within government. 

U.S. firms closed plants and moved overseas, put capital into low wage sectors and regions of the country, engaged in transfers of wealth (there were lots of mergers, leveraged buyouts, acquisitions), and the ways money was made on these was to liquidate acquired companies and downsize workforces.

The U.S. government also cut regulations and deregulated formerly controlled, unionized industries (such as the air traffic controllers, whose union was bused by Reagan in the early 1980s). There was an assault on labor as well: in 1970, 20% of the workforce was organized into unions; by 1990, this was down to 12%. The shift to a temporary workforce (where benefits were less likely to accrue) was also noted above. Even though the economy was growing, there was a 15% decline in real wages over 20 years from the early 70s to the early 90s.

Reaganomics

Here are some of the actions of the Reagan Administration (1980-88):

• Unemployment benefits became taxable (chalk this one up as a regressive tax);
• Restriction of eligibility for extended unemployment benefits (beyond 26 weeks);
  • as a result, by 1987 only 26% of unemployed were receiving benefits (vs 81% in 1975);
  • This was particularly hard on the chronically unemployed population (obviously), and likely many of them disappeared from welfare statistics and the labor market altogether;
• Increased the time states could take to determine eligibility from 30 to 45 days;
• Privatization of public jobs--Repeal of a public service job program (CETA) took 400,000 jobs out of the public sector and put them back in the private labor market;
• Decreased the number of disabled on welfare rolls by over 200,000 (declaring them ineligible);
• Delayed food stamp adjustments for inflation;
• increased documenation requirements for applying for benefits, and increased the frequency with which they had to be completed;
• Instituted work registration requirements for individuals claiming benefits or unemployment;
  • All of these measures, taken together, had a dramatic reducing effect on welfare rolls.
• Had strikers declared ineligible for food stamps (unless they were eligible before the strike--think about that one . . . )
• Worked to further stigmatize welfare and welfare recipients, characterizing them as lazy, unmotivated, somehow flawed in their character because they weren't successes in the labor market. Reagan was fond of telling the story of the 'welfare queen': While honest Americans worked and saved, Reagan's welfare queen lived lavishly off taxpayers' hard-earned wages. The details of the tale varied -- sometimes she had 30 aliases, sometimes 60, four fictional dead husbands, ripped off $150,000 from the government, and according to one version, she drove to pick up her welfare checks in a shiny new Cadillac. Does that sound lazy and unmotivated?? Untrue, we know--no one ever found the infamous welfare queen.
• Reduced AFDC cash assistance benefits (food stamp benefits actually maintained their purchasing power during this period);
• Authorized states to deny benefits, even when families were eligible, if they had not completed the paperwork requirements properly--these were called 'procedural denials,' and they increased dramatically during the Reagan years.
• Penalized states that had high 'ineligibility error' rates (benefits given to those declared ineligible), while not penalizing states for high 'denial error' (benefits denied to those eligible);
• Instituted workfare requirements

As the authors put it, it was a period of 'simultaneous growth of poverty and wealth,' with lowered taxes for the wealthiest, and slashes in social programs for those near the bottom of the socioeconomic ladder. Reaganomics was the recycling of supply-side economics (we've referred to this as 'trickle down' economics, where the wealthiest are presumed to be the 'drivers' of the economy, and re-investment of their tax savings and other incentives provided by the Feds is supposed to 'trickle down' to the rest of the population, in the form of jobs). Reagan's welfare 'guru', sociologist Charles Murray, believed that welfare created dependency and a permanent class of impoverished, and that the best welfare was no welfare at all. The 1980s and 90s have been a period in which the victims of poverty have been blamed for welfare expenditures. A more structural argument would suggest that there were large-scale changes taking place within the economy, globalizing forces that were taking manufacturing and industry jobs to countries with cheap labor and few environmental regulations (the rise of the multinationals also occurred during this period), replacing them with low-wage service-sector jobs, the erosion of labor unions' power, and the growing inequality, facilitated by the Administration's economic policies, that created more wealth for the wealthiest and greater poverty for the poorest.

So it should be clear that there was a carefully organized, systematic and collaborative effort on the part of business and government to undermine the ability of relief or welfare to influence people's participation in labor markets. Millions of people lost their benefits and were forced back into the workforce in the 1970s, 80s and 90s, yet the jobs available to them were lower wage with fewer benefits. Benefits to them, that is. Low wage predatory employers were not complaining much.

As the authors note, there was a 're-ordering' of class structure, and a redistribution of wealth. But wealth wasn't being redistributed from the wealthy to the less well-off, but rather in the other direction. The rich were getting richer and the poor were getting poorer. 

top

Workfare ritual

Why do the authors call workfare a ritual? They suggest that they have been tried and failed so many times, that they are more symbol than substance. Workfare rituals. The first workfare program was in 1967. Yes, the New Deal incorporated the concept of workfare, and some of the programs started late enough that they could be seen as strategies to reduce direct welfare. The big difference was that they were publicly funded--not designed to push people into low-wage private sector markets (although the authors do argue that wages were kept low so as not to compete with private labor markets--unemployment was so high, however, that this wasn't such a problem). Some attributes of and comments about contemporary workfare:

• Recipients had to register for work (the unemployed)
• Competition with private sector (publicly funded programs shouldn't compete-FDR was sensitive)
• What happens if there are no jobs??
• Business didn't need the labor of AFDC recipients, they were not competitive with those already in the labor market, but forced to work anyway (hence, it was more of a ritual, a public degradation)
  • What did business need? A competitive labor market, and enough unemployment to suppress wages in an economy where wages (but not profits) where already in decline
• Workfare is costly, rarely improves incomes, forces least qualified to compete with those already working
  • It devalues staying at home, contributing to neighborhood, community
  • Why would we expect single mothers to become self-sufficient, if those with less constraints couldn't? They would be foolish to trade uncertainties of job market if welfare were available, especially if it covered what the low-wage labor market doesn't--insurance for children, child care, housing, etc.
• Costs of administration of workfare often exceeds any savings to government

Effects of workfare

• Churning, revolving door (people going on and off welfare--how does this process work, and what drives it?)
• Children's welfare (what happens to it when parents are forced into the labor market?)
• Ritual, symbolic (it appeases a certain portion of electorate)
• Rituals of public degradation (increases stigmatization--we see this even today in the Administration's abstinence-only and marriage promotion programs). 
• Provides cheap source of labor (although the authors say that business didn't need it, obviously some business sectors can benefit from this)

The Bush jr legacy

While it was President Clinton who signed welfare reform legislation in 1996 (PRWORA, or the Personal Responsibility and Work Opportunity Reconciliation Act), it was a Republican Congress that drafted the legislation. The name says much about the program, its underlying assumptions, and what it was designed to do: reduce welfare rolls by putting time limits on assistance, converting TANF (temporary assistance for needy families) from an entitlement to a block grant, requiring recipients to work to receive assistance (more workfare ritual?), increasing the costs of applying for and maintaining welfare assistance, promoting marriage and abstinence as means of decreasing welfare rolls and out of wedlock births and enhancing child welfare.

Conservatives have touted their commitment to family values and work ethic. George W. Bush called himself a 'compassionate conservative.' To get TANF, recipients--most of them single mothers and their children--had to work. They could also be eligible for child care services, health insurance and in some cases transportation assistance. The results, however, were a devaluing of motherhood--it was more important for poor mothers to work at low-wage employment than to stay home with their children. They were also 'sanctioned' when their children's behavior breached rules (e.g., 'truancy rules' meant that if they skipped school the mothers were held responsible and their welfare benefits could be denied). Recipients were made aware of the 'Big Clock' ticking--one could be on TANF for only five years total over their lives, except in extreme cases defined by states.

So what have been some of the policies of recent administrations?

• Welfare reform passes in 1996 under Bill Clinton (but it reflects more a Republican-controlled Congress. The name of the bill (personal responsibility and work opportunity ... ) says much about its intent. Some of its key provisions included:
  • Converting public assistance (AFDC) from an entitlement program, where all that qualify get assistance, to a block grant (TANF), where a fixed sum of money is given to states, not based on how many people need it.
  • Placing time limits on assistance--five years of total coverage over a person's lifetime.
  • Forcing recipients to work to receive benefits (such as care for children, transportation vouchers, health insurance, job training opportunities).
  • Take measures to promote the preservation of marriages (address high divorce rates, teen pregnancies, out of wedlock births, and higher likelihood that single parent-headed households will be on welfare);
• Bush Administration proposals, activities
  • allow churches and 'faith-based organizations' to compete for federal welfare funds to provide services (billions appropriated )
  • promote marriage by funding proposals that seek to strengthen and maintain marriages
  • reduce workers' rights (the White House sought to increase employers' latitude in paying overtime, rescinded workplace rules that had been researched and implemented by the Clinton Administration, has demanded financial audits of labor unions that will be costly to comply with, proposed an immigration policy that would legalize 8-9 million Mexican immigrants with a temporary work status (essentially a 'guest worker' policy, largely for low wage employers--obviously didn't pass)
  • proposed privatizing social security (allow people to put at least a part of their earnings into their own accounts, rather than into the social security fund--in other words, putting money into accounts controlled by private corporations), reducing benefits of recipients.
  • New Medicare law (Part D) to provide drug prescription coverage. Upon closer inspection, however, the key beneficiaries of this proposal appear to be pharmaceutical corporations, who can set prices without worrying about competition from Canada (this is changing, though as states seek cheaper discounts for their Medicare patients), and insurance companies, who will be entied with some $12 billion in subsidies to offer privatized managed-care style programs for seniors to receive these benefits (the assumption being that it takes large subsidies for the private sector to be more efficient and competitive).
  • Changes in the Head Start program that would give states more control over it and require more testing and 'accountability' among teachers and children in the program.
  • The Bush Administration has attempted to reduce the role of the federal government in Medicaid. As federal taxes are cut, some of the fiscal problems have trickled down to the states, many of which have had to reduce Medicaid rolls, or cut the range of services available, or both. It's trickle down (of accountability . . .)

Many of the family-oriented policies have been symbolic--promoting marriage (at the expense of other household types?), promoting abstinence-only sex education programs in schools (which have yet to produce studies showing they work), and recently lots of talk about an amendment to ban gay marriages.

Another area where the current White House is having an impact is in privatizing public sector jobs, in the name of 'competitive sourcing.' The idea is that some jobs can be performed at lower cost to taxpayers if they're given over to the private sector. This is likely true--the difference, for instance in the removal of health benefits paid or the lowering of wages, becomes the private employers' profit. The Earned Income Tax Credit (EITC) has also become more important over time. Some perceive the EITC as a way to encourage the working poor by giving them some money back at the end of the year. Others see it as a subsidy to low-wage employers, who know that the government will make up the difference between their non-living wages and some arbitrary position below the poverty line. 

Recent movements: Tea Party and Occupy Wall Street

The two most recent developments that might affect the delicate political balance between work and welfare are the Tea Party and Occupy Wall Street movements. Both claimed to be grassroots movements. The Tea Party developed after a rant delivered by a business correspondent for MSNBC, Rick Santelli, that went viral, at the height of the economic meltdown (when people were losing their homes, and banks were being bailed out by the government). Almost immediately, groups like Americans for Prosperity, Tea Party Express and FreedomWorks began funding rallies and demonstrations against government (by this time Obama was in office). Sourcewatch provides a look at their funding sources, which are decidedly corporate in nature (Freedomworks, AFP, Tea Party Express). The anger and disenchantment with the fallout from the recession were real, but the messages--no more taxes, less regulation, no cap-and-trade regulation--reflected the priorities of some of the wealthy corporate backers such as the Koch Brothers (who made their fortune in the oil and gas industry, and provide millions in funding for tax-exempt organizations like AFP and FreedomWorks). The Tea Party clearly affected elections in 2010, and we're beginning to see some of the effects (for instance, corporate backers funding hand-picked candidates and re-drawing Congressional Districts to benefit Tea Party republican candidates). Wisconsin's governor, Scott Walker, supported by the Koch Brothers, led a movement to strip state employees of some of their collective bargaining rights, and reduce public school funding. This link (scroll down to the commercials) shows how some of the money in Wisconsin was spent to shore up the governor's ratings when some of his strategies to balance the state budget turned out to be unpopular (some of the proposed cuts run against opinion on where the public thinks cuts should occur). The House of Representatives saw sweeping changes as Republicans gained a large majority. What does this mean for welfare? Not the kind of civil unrest directed at higher levels of public funding, in fact the first budget cuts proposed sharp spending cuts to social programs that would trickle down from the federal level.

Occupy Wall Street emerged from the so-called Great Recession, and public anger over the preferential treatment given to large banks and the financial industry in two government-funded bailouts (Bush/Cheney's, and Obama's). Said to originate from the AdBusters website (Adbusters is an organization that provides pretty sharp social, cultural and political critiques of capitalism), the group had placed a simple message to occupy Wall Street on September 17th. The movement has taken off since then, but has received scant commercial media attention (this from the Daily Show), even when the NY Police Department arrested 700 peaceful protesters.

However, the Occupy Wall Street movement does pose a threat to that delicate balance--the messages are not being funded by corporations, but by critics of the growing inequalities between the richest and poorest Americans, and the belief that government is, as the protesters say, working for the 1% of the population at the expense of the other 99%. Pro-business groups, as might be expected, are using whatever influence they have to paint the movements (which have grown to include a number of large cities, two weeks in) as little more than disaffected hippies, radicals, left-wing agitators, etc., as opposed to the Tea Party, which included 'solid burghers,' as Rich Lowry put it. Here's typical Fox News opinion (essentially that the movement has been co-opted by labor unions and the democratic party).

More resources on both groups here.

So . . . what does all this mean? Is the thesis of the authors less useful for explaining what's going on now? The Tea Party movement had a major and historic effect on elections, and will continue to affect public policy Congressional redistricting, etc., for years to come. It is a more partisan effect--benefiting the Republican party. However, the blame for economic disruptions is placed at the foot of 'Big Government.' Big Government is represented by taxation and regulation, and social program spending (for instance, there is a major push to 'reform' Social Security and Medicare). So if there is some effect on welfare programs, it will likely be from the business (the 'wage suppressing') perspective, not efforts to quell civil unrest with direct forms of relief.

As for Occupy Wall Street, the message is a direct challenge to the government's perceived cozy relations with corporations and in particular Wall Street and the financial services industry. That is a message that poses threats to how tax revenue is spent, how stock trading is regulated, how banks can make money from lending practices, how wealth is distributed in the country, how federal money and favor is often funneled to wealthy and powerful groups that wield influence, etc. In effect, while the movement is demanding reforms, not necessarily direct forms of relief, if government were to succumb to the pressures--in other words, if the movements were to spread to the point where governance itself was threatened and use of force or law enforcement, or media censorship or negative coverage, were no longer effective in shifting public opinion, then the measures one might expect would likely threaten the incomes of the investor class, threaten the profits of large corporations, threaten the lax regulatory environment that investment banks now enjoy. We might see more investment in unemployment benefits, job retraining, perhaps even more government-based jobs programs. But one of the weaknesses of the authors' theory is that it is difficult to determine where a tipping point might be--what is it specifically that might force the hand of government in making concessions to the movement?

Stay tuned .....

Additional resources:

For a look at 1996 Welfare reform:

• Why welfare reform?
• Concepts, workfare
• An alternative view of the benefits of welfare reform