Some welfare basics

• Human capital
  • 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
  • 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 %

• 'Big Brother'
  • 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 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
  • In practice--PRWORA 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)

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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:

• Social/economic inequality
• Social stratification
• Status (achieved and ascribed)
• Social mobility

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)?
• 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

A look at rising income inequality:

Welfare 'reform' (1996)

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

 

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