Outline Review Questions…many were lacking…your grades reflect it. Deadline for class withdrawal without academic penalty is Wed, Mar 31, 2010 Fundraiser…what

Outline

Review Questions…many were lacking…your grades reflect it. Deadline for class withdrawal without academic penalty is Wed,

Mar 31, 2010 Fundraiser…what happened? Trip to campus…making it happen. Edin and Kefalas Research Jencks and Fairytales Public Policy and Welfare The American Welfare State

Public Assistance and Social Insurance Social Security Act of 1935 Social Security Today

Capitalism, Society and “Safety Nets”

We already noted the following: “ “In a capitalist society, a person’s well being/standard of living will primarily be determined by their participation in the labor market BUT different societies possess different institutional arrangements that will also impact well being/standards of living”

Market is chief source of well being In capitalist society labor (one’s ability to work) is a commodity

that is sold for a wage (income) which is used to buy food, shelter, clothing, child care, health care, etc.

Family is another source of well being Kin help each other by pooling money, transferring money,

passing money on, and by providing services such as child care

Government can be another source of well being Role of government in insuring well being will vary, for instance

government might provide universal access to child care as a right

Capitalist Democracy: Politics Can Replace Markets Social Market Economies vs. Liberal Market

Economies

Capitalist Economies are Embedded in Larger Societies

Different societies possess different institutional arrangements that will impact things like inequality and poverty

Liberal Market Economies (Can think Free Market) Limited government regulation, few universal government

programs and more means tested public assistance programs Free day care for low income, the rest purchase in market Limited child allowances for children provided to low income

household

Social Market Economies supplement labor market with social wage

Significant government regulation, many universal government run social insurance programs Free day care for all citizens Generous Child allowances provided to all from government

“Welfare States”

Welfare State Government insurance, public assistance, education and

medical programs designed to maximize the economic and social welfare of the society’s population

What do you know about the American welfare state? When did it emerge and grow?

What are some key programs?

How does the welfare state in the US compare to other advanced industrial capitalist states?

US Poverty in Perspective, 1870-2004

05

10

1520

253035

4045

50

1870 1890 1910 1935 1944 1955 1970 1982 2004

Percent in Poverty

States respond to poverty…

Poor houses give way to a government response as members of society more:

“…fully recognize the multifaceted causes of poverty, which included not only individual failings but also such factors as accidents, poor health, low wages, and involuntary employment” (Iceland 2003: 122)

Early 20th century, states start to pass legislation to help disabled workers, mothers, kids etc…

Welfare State by state by state…

By 1920s, a patchwork of programs around the nation that vary from state to state

Social Safety Net was spotty

Owner of textile mill in PA has to pay disability insurance

Owner of textile mill in Missisppi doesn’t have to…

Many businesses were aggravated by the unevenness of the system…why?

Welfare State by state by state…

By 1920s, a patchwork of programs around the nation that vary from state to state

Un-level playing field

Programs funded through taxes

Firm in PA at a competitive disadvantage relative to a firm in Mississippi

1930s…Crisis

Great Depression

Large segments of society simply unable to provide for themselves…

Nobody wants to buy their labor power for a wage 25 percent of nation is unemployed

Without wages, people are in trouble… Poverty level estimated to be between 40% and 50%

States and Charities unable to meet demand Tens of millions in need

A Glimpse of Need in Philadelphia…

“One woman went along the docks and picked up vegetables that fell from wagons. Sometimes fish vendors gave her fish at the end of the day. On two different occasions the family was without food for a day and a half. Another family did not have food for two days. Then the husband went out and gathered dandelions and the family ate them.” Social worker testifying to US Senate Committee

Charity or Government?

Is there a role for the federal government, or should we depend on private organizations and the states…positions emerge that remain until today?

“You cannot extend the mastery of government over the daily lives of the people without at the same time making it the master of their souls and thoughts.” President Herbert Hoover

“Trying to turn back this tide of distress through private philanthropic contributions is about as useless as trying to put out a forest fire with a garden house.” Observer of Depression America

FDR’s New Deal…Government must play a role. “Modern society acting through it

government owes the definite obligation to prevent starvation or dire waste of any of its fellow men and women who try to maintain themselves but cannot…Aid to jobless citizens must be extended by government, not as a matter of charity, but as a matter of social duty.”

Franklin Delano Roosevelt

Faced with the Great Depression…

FDR and Democratic Majorities in Congress increase the Government’s Role in providing for people’s welfare

Social Security Act of 1935

Committed the Fed. Govt. to providing Social Insurance & Public Assistance to certain groups

What’s the difference?

Public Assistance via means testing vs. Social Insurance

Public Assistance “…policies specifically target the low income

population” (Iceland 2003: 126)

Means tested income tested… “person or family has to earn

below a certain amount to qualify” (Iceland 2003: 126)

Social Insurance “…broad universal…that generally do not

impose eligibility criteria based on one’s income”(Iceland 2003: 126)


Significant expansion in the Federal Government’s provision of social insurance & public assistance

“…introduced the idea of entitlement into national policy and made the federal government assume responsibility for the welfare of its citizens”( Iceland 2003: 123)

Anyone remember the three main programs?

Old Age Insurance (aka Social Security) Public Assistance or Social Insurance?

Social Insurance…a universal benefit…but initially with an important exception…Anyone?


Old Age Insurance (aka Social Security) Public Assistance or Social Insurance

Social Insurance…universal, but with some exceptions…

Southern Elites fight to exclude agricultural workers, domestic workers and others…Why would they do this?


Social Insurance…universal, but with some exceptions…

Southern Elites fight to exclude agricultural workers, domestic workers and others…Why would they do this?

Fear old age pension will make Blacks less subordinate 80% of Blacks initially excluded from social

security


Aid to Dependent Children (Later Aid to Families with Dependent Children

[AFDC]…what many commonly think of as “Welfare”)

Public Assistance or Social Insurance?

Public Assistance Means tested for women with children


Unemployment Insurance (SI or PA?)

Public Assistance for those who meet criteria…but funded as an insurance program

“…reserves are accumulated during periods of employment to be paid out as benefits to workers during periods of unemployment…Those workers who have been employed and on whose behalf contributions have been paid into an unemployment insurance fund may draw benefits for a definite period of time relative to the length of their previous employment (usually 1 week of benefit to 4 weeks of employment). In normal times, the great majority of workers will be able to find other work before their right to benefits is exhausted.”http://www.ssa.gov/history/reports/ces/cesvol9unemploy.html

Outline

Edin and Kefalas & Teachable Moments

The American Welfare State Public Assistance

and Social Insurance Social Security Act of

1935 Social Security Today AFDC AKA Welfare Myths About the

Welfare Population From AFDC to TANF

Saturday (1/4 pt for activity) Table- Bernard Coolers & ice- Heather Poster – Heather Money- Adam Buying- John H.

11-12, Jamie & John 12-1, Jen & Jamie 1-2, Jen & Selena, Snow 2-3, Selena & Snow

April 10th Spring Carnival Money for rides? Sing up to be there? 1 point EC on assignments

-

Thinking Sociologically

The importance of sample size

My neighbor Joe rides a unicycle, he taught his son to ride one.

Two of the neighbors kids wanted to learn so he taught them

Mrs. Smith looks out her window and always sees kids riding unicycles…she concludes that most American kids these days don’t ride bikes, they ride unicycles

Is this a reasonable conclusion?

Thinking Sociologically

Personal experience might spawn research interest

But research consists of more systematic exploration

To generalize with confidence, one needs a larger sample

Edin and Kefalas…Adam and John and the readings…

Adam recounted his personal experience that girls get pregnant by accident

E&K find that 40% call their births accidents But half of the accidents knew unprotected sex would

likely lead to pregnancy…making them wonder how “accidental” it really was

Pregnancies are usually not described as accidents, but usually aren’t done by design either…“Not exactly planned”…but as discussed in prior lectures, the girls report they wanted to have babies

John says maybe they say that in retrospect…I think that is a fair concern to raise… Their interpretation was always after the fact Survey data on importance of mother hood was not

Expanding the Welfare State…

Modern American Welfare State Emerges in the 1930s

Will be supplemented overtime, particularly in the 1960s during President Johnson’s “War on Poverty”

New Public Assistant Programs Head Start- pre-school program for low income children (FOUNDED

TWO YEARS BEFORE BLACK PANTHERS) Food Stamps- funds for low income people to purchase food Medicaid- health care for the poor

New Social Insurance Program Medicare- health coverage for the elderly

President Nixon adds programs Earned Income Tax Credit- tax rebate for low income workers

Becomes an effective tool for helping the “working poor"

Welfare Programs constitute about 14% of the budget…AND THESE PROGRAMS DO REDUCE POVERTY

Percent of Pre-transfer poor Lifted Out of Poverty, by type of Safety Net, 1996

51.6

31

5.1 7.5 8

0

10

20

30

40

50

60

All Prog Soc Ins MTCash

MT NonCash

TaxEITC

Out of Pov

Welfare State Reduces Poverty

“Poverty rates are higher in the US because many jobs, even full time jobs, pay low wages and because public benefits are more limited.”

Comparative Impact of Welfare State on Relative Poverty,

1989-1994 p.261 Kerbo

Poverty Pre Welfare

Poverty Post Welfare

Percent Reduction

US 26.7% 19.1% -28.5%

Germany 22 7.6 -65.5

Italy 18.4 6.5 -64.7

England 29.2 14.6 -50

Canada 23.4 11.7 -50

Denmark 26.9 7.5 -72.1

Belgium 28.4 5.5 -80.6

Sweden 34.1 6.7 -80.4

The American Welfare State

Addressing poverty among the elderly

Please describe the impact of Social Security on reducing poverty among the elderly.

The American Welfare State

Please describe the impact of Social Security on reducing poverty among the elderly.

Too old to work, too young to die…Social Security greatly reduces poverty among the old

Old Age…US Welfare State

1935, Social Security Federal Insurance Income

Contribution Act (FICA)

Supplemental Income to Retirees Born after 1938…Full at 65 Born after 1960…Full at 67

1972, Cost of Living Adjustment (COLA) provided

On avg., 40% of pay is received by retiree

Pensions

Welfare states and senior citizens…a source of ongoing conflict around the globe…

Why do you think pensions are a huge economic problem for General Motors, but not for Volkswagen (Germany), Volvo (Sweden) or Fiat (Italy)?

Benefits: Government

How does Social Security work?

Benefits: Government

“Pay as you go” Current generation taxed to pay current retirees

6.2% payroll tax on earnings up to $102,000 Employer and Employee both pay

Current Crisis: 1950, 16 contributors for each recipient 1999, 3 contributors for each recipient 2020, 2 contributors for each recipient

Fewer contributors means cash flow problems Too few of you…too many “baby-boomers”

Solutions?

Cut benefits or raise eligibility age Old take a hit

Raise Payroll Taxes All workers & employers take a hit Since regressive, low and middle income take biggest hit

Lift $106,800 cap & tax more earnings In 2000, 12% of US households made more…hey take a

economic hit

Change system to Personal Retirement Account Workers invest % of payment in stock market & bet that

market investments grow How fund current retirees as money is diverted? What if retire when market is down? Many retirees are currently in a

world of hurt…

Fixing Social Security

Poverty Among Women and Children…what to do?


Aid to Dependent Children…typical benificiary of program was a widow with kids

Why not make the women of 1935, 1945, etc…go to work to support themselves?

(Later AFDC…what many commonly think of as “Welfare”)

Means tested public assistance targeted at poor children “under the age of sixteen who has been deprived of

parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent.” http://www.socialsecurity.gov/history/35activ.html

The “Welfare” Debate

AFDC becomes a controversial program

Changed Society Leads to Debate About AFDC

“…By the 1996, less than 2 percent of recipients were widows and 60% had never married their child’s parent” (Jencks 2005: 2)

2/3 of all mothers in society in general were working

Birth control widely available, so questions raised about out of wedlock families

Lots of questions, debate, resentment emerge…

Debate over welfare drove my professors in WI, many of whom worked at the Institute for Research on Poverty, nuts…

What percent of the federal budget do you think was spent on the program that is generally referred to as “welfare”?

Welfare: Fact and Fiction

AFDC spending was less than 1% of federal budget, 1993

Welfare: Fact and Fiction Despite small size…it was a

very controversial program for many reasons…

Discouraged marriage…benefits cut if married

Discouraged work… “AFDC recipients reduced their benefits by about 70 cents for every dollar they earned. As a result, an unskilled mother who had to pay for child care was usually better off staying home.” (Jencks 2005:2)

5. You meet a guy name Joe at a party. He tells you that he has learned a lot of people on welfare by listening to talk radio. He notes that “welfare is composed primarily of young black women who have lots of children, are long term dependent, and pass this dependency from generation to generation.” You are a sociology student who believes that evidence matters, and have just read a book excerpt by Joel Handler. Please explain why Joe is mistaken, being sure to incorporate at least THREE pieces of statistical evidence (one for each claim) into your answer.

Program’s Problems combined w/ Misconceptions fuel Debate…

Stereotype: “Young black women who have lots of children, are long term dependent, and pass on this dependency from generation to generation” Reagan made speeches about “welfare queens in Cadillacs”

Reality: “…most welfare recipients are not African American, that few are teenagers, especially young teenagers,; that welfare families have about the same number of children or fewer than non-welfare families; that most are on welfare for relatively short periods; but that most remain quite poor, and that this probably accounts for their children being more likely to have welfare spells when they are older as compared to children whose parents did not experience welfare.”

Welfare: Fact and Fiction, 1993

Fewer than 5% of population received AFDC and 67% of those on welfare were kids The rest were their guardians…mostly moms

Race Whites 38.9% Blacks 37.2% Latinos 18%

Family Size: Avg. AFDC family was the same size or smaller than typical family Avg. of 2.9 kids 73% had 1 or 2 kids

Welfare Fact and Fiction

“Nearly half the children on welfare in any given month were born to parents who were married at the time of their birth, and most of these parents had enough money to scrape by while they were married”(Jencks 2002)


Welfare Dependency

Just how long did a typical recipient stay on welfare…?

Hospital Metaphor?

Welfare Dependency: Fact and Fiction

Hospital Metaphor 13 beds hospital, 12 filled with chronic cases 13th bed used by 52 people in a year Any given day, 85% were long term

welfare recipients Over course of year, 80% were short term

recipients

For most, welfare helped them through “spells of poverty” 30% received welfare for less than 2 years 50% off in less than 4 years 15% are more than 5


Generational Welfare 80% of daughters who grow up in highly dependent homes

did not become dependent. 64% never received welfare.

But there was a correlation between having been on welfare as a kid and the likelihood of being dependent on welfare as an adult.

Children who grow up in households that receive welfare are more likely than people who don’t to receive welfare

Why?


Generational Welfare 80% of daughters who grow up in highly dependent homes

did not become dependent. 64% never received welfare.

But there was a correlation between having been on welfare as a kid and the likelihood of being dependent on welfare as an adult.

Children who grow up in households that receive welfare are more likely than people who don’t to receive welfare

Why? For all the reasons we’ve been discussing, they’re more likely to be poor

“Welfare” today…

What happened to AFDC in 1996?

“Welfare” state redefined

Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)

Federal guarantee (AFDC) was abolished and replaced with Temporary Aid for Needy Families (TANF)

Federal Government Now Provides Grants to States in effect creating 50 different programs

Work requirements States are required to move people into workforce

5 year lifetime maximum Federal money ends after 5 years State can make exceptions for hardship cases

TANF…

What impact did the new policy have on the number of people receiving “welfare?”

Numbers go up, down, stay the same?

Rolls dropped…

Welfare rolls have dropped significantly

1994 5 million families

2004 2 million families

TANF today

Race

Beneficiaries

Family Size

Avg. 1.9 kids

78% have two or less 49 % have 1 kid 28% have 2

TANF Money Spend Differently, Approximately 60%

of TANF recipients now work

In best case scenarios, money is spent on efforts to support work

Child care, training, etc.

Welfare and Work

A) Did this act seem to reduce the number of people on the welfare rolls? Yes

B) What types of jobs do you think ex-welfare recipients ended up with?

People enter low wage labor market…

Employment Rates are up for single mothers 1990 61.7% to 69.1% in 2005

Income was “often only slightly above what it had been while they were receiving welfare benefits” (Icleand 2003: 132)

Urban Institute finds median hourly wage of a former welfare recipient: $6.61 $8,000 to $12,000 annually (Iceland, p.132)

The most successful programs have been those that increase assistance to working mothers…break the hustling backward syndrome

More $ for Child care, Health-care, etc.

Welfare and Work

A) Did this act seem to reduce the number of people on the welfare rolls? Yes

B) What types of jobs did ex-welfare recipients end up with? Low wage

C) Did the transition from welfare to work pull most people out of poverty?

Poverty has not been reduced…

Off of welfare, but not out of poverty

Many still depend on other government programs (Food stamps, Medicaid, Housing Vouchers, etc.)

86% of those leaving welfare in Milwaukee were still in poverty

FL study finds 40% can not put food on table at some point during year

Welfare Reform?

“…more than half — 57 percent — of the caseload decline during the first decade of welfare reform reflects a decline in the extent to which TANF programs serve families that are poor enough to qualify, rather than to a reduction in the number of families who are poor enough to qualify for aid.” http://www.cbpp.org/8-17-06tanf.htm#f1

“A recent report from the U.S. Department of Health and Human Services shows that just 48 percent of families who are poor enough to qualify for TANF cash assistance and who meet the other eligibility requirements receive that assistance” http://www.cbpp.org/1-22-02tanf2.htm

Less people receiving Aid…Poor but not getting help

Bottom Line of Welfare Reform “Moved a good many mothers off of the

welfare rolls, but that nearly all are still struggling to live on meager incomes” (Jencks 2005: 11)

Research puzzle…

Rolls Remain low, despite difficult economy for working class

Welfare down…YET food stamps, poverty and unemployment up…

“One of the great mysteries of social policy in the last few years is why welfare caseloads have stayed essentially flat or declined in much of the country despite the economic downturn.”

A puzzle…? How come…Any theories?

A Puzzle…

Change in culture and norms New work ethic Greater Stigma attached to welfare

Skills: Former recipients are more entrenched in labor market? Gained real work experience including skills

Policy: New rules and regulations intimidate people? “In some states, the application process is so

difficult or complex that it may discourage people from seeking public assistance for which they are eligible.”

Federal Budget

6. Handler concludes that the “problem of welfare dependency is not the recipients. Rather, the problems are the job market and the conditions of work.” Please explain what this means, being sure to incorporate a quote or evidence from the text.

Another Important Public Policy

Earned Income Tax Credit (EITC)

a tax credit for people who work, but do not earn high incomes.

If they qualify and claim the credit, they could pay less federal tax, pay no tax or even receive a refund beyond the amount of tax withheld. http://www.irs-eitc.info/SPEC/

Effect of EITC

In 2003, 22.1 million households received $39.2 billion in EITCs — or an average of $1,782 per household (or $2,100 for a family with children).[8]

Census data show that without the EITC, everything else being equal, an additional 4.4 million people would have been in poverty, including 2.4 million children.

According to the Center on Budget and Policy Priorities, “Census data show that the EITC lifts more children out of poverty than any other single program or category of programs.”[9]

Bipartisan Support for the Earned Income Tax

President Ronald Reagan once called the EITC “the best anti-poverty, the best pro-family, the best job creation measure to come out Congress.” http://www.cbpp.org/4-10-06tax.htm

Next…

Poor People’s Movements

Documents

Outline Review Questions…many were lacking…your grades reflect it. Deadline for class withdrawal without academic penalty is Wed, Mar 31, 2010 Fundraiser…what