Sociology 315: Foundations of Social Welfare

Fall 2012

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Welfare reform: an introduction

 

Why welfare reform?

By the time we're finished with this, you should have thought about that question. What is welfare reform, and who benefits from it?

What is cost of welfare? Maybe $100 billion annually for the four major means tested programs. Another $238 billion is spent on in-kind programs. Total projected budget for the U.S. Government in 2003 is, well, difficult to assess. Just try. The closest I could find was an estimate of $1.7 trillion, about $540 billion of which goes to human resources. This particular website shows two different pie charts, one as we've discussed, including the social security trust fund, the large one excluding it. As we've discussed in class, the majority of spending on welfare is for social insurance programs (from DiNitto, 2003):

  • Social security: 22%
  • Medicare: 11%
  • Means-tested entitlements (e.g., TANF, Food stamps): 6%
  • Medicaid: 6%

Some authors distinguish between 'welfare' and 'social insurance' programs. Welfare programs are 'means-tested'--only people below a certain level of income can qualify, in most cases.

Precursors to welfare reform

Omnibus Budget Reconciliation act, 1981 (Reagan)

Gave states more authority over welfare decisions, regulations, eligibility conditions, work requirements. AFDC became more of a state-administered (but federally funded) program, through block grants. It was essential a 'devolution' of responsiblity from the federal to the state level of government.

Family support act of 1988 (again, a product of the Reagan era)

Three underlying assumptions:
Individuals should take more responsibility for getting off welfare;
Work requirements must complement incentives to get welfare recipients into workforce;
Greater mix of services more likely to be effective.

Some of the provisions included:

Child support

  • Strengthened child support regulations, procedures for collecting;
  • States must establish paternity for AFDC children (to get welfare, you gots to give it up)
  • key theme: Responsibility for parenthood

JOBS program Job Opportunities and Basic Skills

  • Educational/vocational services;
  • Participation mandatory for recipients with no children under three
  • Community service requirements (for one parent of 2 p household, or not-yet-hired-but-trained
  • Welfare is temporary, work is unavoidable
  • Funding was always well below target levels

Work incentives -- more reasons to leave welfare

  • Extended Medicaid eligibility for one year after leaving welfare (only one year-not indefinite) - otherwise, people wouldn't work above point where Medicaid coverage disappears
  • Guaranteed child care for JOBS participants or employed.
  • These can be seen as investments in getting people back into the workforce

AFDC-UP ('unemployed parent')

  • Two-parent families had to be included-the assumption was that excluding two-parent families encouraged single-parent families;
  • Limits on benefits, strict eligibility make it a small program
  • early promotion of two-parent households (a prelude of things to come)

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The four major means-tested programs

Welfare program background No. current recipients Avg. benefit / recipient / month Annual outlays (1999)
SSI supplemental security income 1973 version replaced earlier versions, begun in 1930s 6.8 (million) $355 ($4,260/yr) $29 (billion)
TANF temporary assistance to needy families replaced AFDC in 1996; ADC in 1935 6.9 $160 ($1,920/yr) $22 billion
EITC: earned income tax credit for working poor 1975 18.6 $120 ($1,440/yr) $27 billion
GA: general assistance for needy not fitting other categories(childless couples, individuals) 1.4 $190 ($2,280/yr) $3 billion
Totals   33.7 million   $81 billion

 

SSI: Supplemental security income

  • Serves adults and children
  • Provides cash for food, clothing, shelter
  • Aged, blind, disabled-'the worthy'
  • SSI varies by state (minimum federal baseline amounts are supplemented by many states)
  • This is the 'deserving' population . . .

TANF: temporary assistance for needy families

  • Cash assistance, temporary
  • 5 year lifetime limit; 2 years consecutive, then you need a job
  • states can exempt up to 20% of the population from the time limits
  • focus here on temporary--welfare as a transitory state
  • officially: provide assistance to needy families so children may be cared for in home or homes of relatives;
  • end dependency of needy parents on govt. benefits by promoting job prep., work and marriage
  • prevent/reduce incidence of out-of-wedlock pregnancies
  • encourage formation and maintenance of two-parent families

EITC: Earned income tax credit

  • Payment to working poor-subsidy of 40% on low wages-it's applied to their tax liability-so they only get money back if the credit exceeds the liability.
  • Average credit for yr 2000 was about $1,500
  • 19 million households received EITCs in 2000
  • Above $12,500, the credit begins to decrease (disappears into 21% base tax rate)
  • encouraging people to work--here's a question for you: is it a subsidy for workeres, or employers?

GA: General assistance

  • A welfare program of last resort-a safety net for the safety net
  • Cash and in-kind assistance programs, administered entirely by state, county, municipality, etc.
  • Designed to catch people ineligible for TANF or SSI
  • 35 states have GA programs; 24 have standard eligibility rules
  • Only 13 states provide GA to able-bodied adults without children
  • Who are these people? Some include children living with unrelated adult; disabled individuals; elderly who are not eligible for SSI (or are waiting to hear);
  • Most states give GA only to the severely poor (for most states, monthly income eligibility range is $100 - $400 for individuals, 300-600 for family of 3);
  • According to Schiller, benefits for GA are 'low and falling'

In-kind programs

These include food stamps, Medicaid, housing assistance, and nutrition programs like the federally subsidized programs we've talked about in the hunger project). Here are some data on these (from Schiller):

program
no. recipients
avg. benefit / recipient / month
total annual cost
food stamps
20 (million)
$92
$22 billion
medicaid
42
$367

$185 billion

housing assistance
11
159
$21 billion
school lunch
26
$26
$6 billion
WIC (women, infants and children)
8
$31
$4 billion
totals
$238 billion

source: U.S. Census Bureau, Office of Management and Budget

Food stamps is a federal program we should all be pretty familiar with. Medicaid (called Oregon Health Plan here) is federally funded, but state-administered. As one of the brushes articles notes, there is a stigma associated with the use of Medicaid, and some physicians simply don't accept Medicaid patients. Federal housing assistance is designed to reduce rent payments for people with low incomes. The in-kind programs often involve being put on waiting lists, and this can be one of the longer waits. There are public housing projects, public-assisted housing, and tenant-based assistance (tenant can choose his/her own place, provided the landlord will take the money--another 'brushes' experience). There are also federally-funded nutrition programs, which include WIC, for pregnant women and mothers of children under one year. There are food voucher programs, which we've discussed, school lunch programs, and commodity programs (where local food banks get much of their food, along with food drive contributions).

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PRWORA (personal responsibility and work opportunity reconciliation act of 1996): Some provisions, key points

  • Drafted and passed by Republican-controlled House of Representatives; signed by President Clinton;
  • Gave more power to states ('devolution'); designed to keep more children in their own homes or with relatives (why?); focus on job preparation, work, and marriage; discouraged out of wedlock pregnancies (as opposed to, say, births?); encouraged formation of two-parent families
  • Current funding of marriage promotion (more than $1 billion and counting) is an effort to apply funding to what was an unfunded part of the 1996 legislation;
  • Block grants are federal funds administered by states; TANF is block grant-again, more devolution (further 'federalizing' AFDC);
  • Time limits: 60 months on cash assistance (states may reduce this); states can exempt up to 20% of recipients, and can continue beyond limits with their own funds (few reportedly do, however--have you checked out state budgets lately?);
  • Work requirements: after two years of cash assistance; states face financial penalties for not moving a certain percentage off of welfare--the key measure is reducing welfare rolls;
  • Family cap: families already receiving assistance will not gain new benefits with additional children--the underlying assumption being . . . ?

Restrictions for immigrants for SSI, food stamps; states can restrict immigrants' eligibility for TANF, Medicaid as well
Child care-from an entitlement program rolled into block grants;
Medicaid-delinked from welfare? All family members can get coverage (CHIPs is a newer program--children's health insurance program--that many states have tried to fund)
Child support-beefed up regulation, to collect more from fathers (see one horror story)
Food stamps-reductions in maximum benefits (how would this jive with inflation?)
SSI-narrower standards of what counts as disability; more frequent review of disability status;

 

Sources:
DiNitto, Diana. 2003. Social Welfare: Politics and Public Policy (5th edition). Boston: Allyn and Bacon.

 

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