-

Recommended browser for this blog: Chrome

Follow Economystified on facebook
All posts by Dan Whalen,
Providence, RI (resume)

Tuesday, April 29, 2014

"Welfare" myths

Welfare.  There are few America public institutions with such passionate advocates, and such passionate detractors.

Liberals see Welfare as a tool for balancing the playing field, a mechanism for giving the poorest among us the resources necessary to just to get by. 

Conservatives see Welfare as a device that unfairly redirects earning from the paychecks of the hardworking, straight into the wallets of the lazy and unmotivated.

Diametrically opposed interpretations, right?  Both camps look at the same institution, the same program, but see two very different things.

But what if I was to tell you that BOTH of these narratives  INTRINSICALLY incorrect?  That neither of these viewpoints can be true based on their own merits?

Both liberals and conservatives miss the mark when it comes to the Welfare debate.  Why?  Simple:

"Welfare" as people talk about it – the indefinite doling out of cash directly into the hands of the poor – DOES NOT EVEN EXIST.  It's an urban legend, a fairy tale...and yet, that doesn't seem to stop the political among us from developing strong opinions of it, does it? 


The Myth

Whether it be on TV, in the classroom, or around the dinner table, debates about Welfare are a common occurrence throughout the US.

But whether or not the debaters support the program, their starting assumptions about what Welfare actually is always the same.  Typically, something along the lines of:

"If they're broke, anyone in the US can just go down to the county office, and collect themselves some Welfare money.  Welfare recipients can collect that money as long as they want, with no strings attached... in fact, some people are on Welfare their whole lives!"

So this premise (or something very similar), gets thrown out there... 

...and invariably, the liberal in the room defends the program, siting the virtue of sacrifice for the sake of other's well-being...

...and the conservative in the room leaps to the defense of the the taxpayer, pointing out that the whole thing is just a scheme to take money from those who are willing to work, and give it to the Welfare Queens who aren't.

The thing is, both arguments are mute!  There just is no govt program in existence that exactly matches the one I described above.  


The Reality: TANF

If you look though the US Federal budget, you won't find a spending item for "Welfare".  But you will find something called "TANF".

Since TANF is the closest thing out there to this mythological "Welfare," I'm going to assume when people say "Welfare," they really mean TANF.

(Note: There's a handful of other programs - food stamps, section 8, SSI, disability, etc. - that I think also get grouped together as "Welfare" in people's minds. 

These programs are each administered separately, by different govt departments, and have their own budgets.  I guess they're kinds of 'welfare programs,' however they provide specific benefits and services, not spend-as-you-please money.  For the purpose of this post, I'm ignoring these other programs, and only focusing on the cash-in-hand concept of "Welfare.")


What is TANF?

So TANF provides a monthly allowance to those with low incomes.

However...
  • TANF is only available to families - applicant's must have children and/or spouses.  Single people without kids can't collect TANF (the "F" is for "Families," remember?).
  • There are time limits.  People can only collect TANF 24 months at a time, and can collect no more than 60 months total over their lifetime.  (You can request an extension based on "hardship."  However, Federal law stipulates that no more than 1/5 of a state's Welfare recipients can go over the 60 month limit, making extensions relatively rare.)
  • Anyone receiving TANF money is required to spend 30 hrs a week doing "work activities" (20 if they have young children).  The definition of "work activities," varies state-to-state, but things like job hunting, technical training, babysitting, volunteering, taking a GED prep course, or interning typically counts.
TANF's overarching guidelines and goals are set by the Fed.  However, its up to the individual states to implement them.  As a result, there is a lot of variation among states in terms of benefits, eligibility, and how the money can be spent.  What I've listed above are all Federal guidelines - additional restrictions my apply in your area.  (For more details, check out the CBPP's "Policy Basics: An Introduction to TANF.")

BUT...REGARDLESS OF YOUR STATE...Are you single, without kids?  You CANNOT receive TANF.  Been on the dole for 5 years total over the course of your life?  You CANNOT receive TANF.  Not currently looking for a job, or honing your skills?  You CANNOT receive TANF.

You see now why I say that the "Welfare Queen" doesn't really exist?  The idea that there's a class of people out there just living off of govt gravy train, passing decades loafing at home, is untrue.  The program is temporary, reserved for families, and designed to wean people away from itself.


How TANF is administered

Because eligibility requirements vary so much by state, there is no one form you fill out, or one website you visit to apply for TANF.

Applicants instead must go down to the local county seat, and ask for an interview with a caseworker.  The caseworker will review the applicant's present income, work history, savings, assets and family situation, and make a judgement as to whether or not the applicant meets the state standards.

Once a person has been deemed eligible for TANF, they get a pre-paid "EBT card."  Their TANF allowance is loaded to the card monthly (as is their 'food stamps' credits, if they are receiving that as well).

Like a lot social safety net type programs, the states and Federal govt fund TANF, at pretty much
a 50/50 split. 

This means that taxes taken out of an employed person's paycheck (by both the state and the Fed) are used to fund TANF.

For the last few years, the Fed has spent somewhere to the tune of $17 billion annually, the 50 states have been kicking in a total of $15 billion annually on TANF.


How many people are on TANF?

1.8 million families, constituting 3.2 million children, and 1 million parents.  (Source)


How much TANF pay?

The states have a lot of latitude when it comes to setting pay-out rates.  The state's cost of living is factored in, as is the size of the family.

However, each state does set monthly maximums, and boy to they vary.  A family of 3 in Alaska can collect as much as $923 a month.  But in Mississippi, they'd be capped at $170.  Click here (and check out Pg 108, Table II.A.4) for a more detailed breakdown of the max's.

Of course, the maximum pay-out and the typical pay-out aren't the same.  I can't find a state by state list of average TANF pay-outs (which is weird...it has to be out there...if you find it, please share in the comments below).

However...according to the Dept of Health and Human Services (the Federal dept that administers TANF):

"The average monthly amount of assistance for TANF recipient families was $392 in FY 2010.  Monthly cash payments to TANF families averaged $327 for one child, $412 for two children, $497 for three children, and $594 for four or more children."  (Source)



How does the money get spent?

It is illegal to spend TANF money on stuff like gambling, cigarettes and alcohol (enforcing that rule is kind of tricky, though).

Now, 82% of TANF recipients also receive food stamps.  97% receive Medicare, Medicaid and/or Veterans medical benefits.  Many can get section 8.

Despite this, a lot of TANF money winds up paying for people's living expenses (the type of stuff food stamps and Medicaid are supposed to cover).  EBT cards are swiped most often at grocery stores, bus/train stations, and medical facilities.

Also, don't forget that TANF is only available to families.  People with kids have the additional expenses of cell phone bills, utilities, clothes and school supplies, all of which soak up even more TANF dollars.


The origin of the "Welfare Queen" myth 

"Welfare" (or more accurately "TANF") is not big money.  It cannot be collected indefinitely, it's only available to families, and isn't open to those uninvolved with the working world.

So where did this idea of "Welfare-livin' for the lazy at heart" come from?

When Reagan was campaigning for president in the late 70s, he promised to eradicate America's "Welfare Queens" if elected.  These were theoretical individuals whose primary source of income was Welfare money.  And they were living the highlife, on your dime - so the story went.

Ok, so to be fair to Reagan, AT THE TIME, yes - many of the these Welfare restrictions were NOT in place.  It was possible for people to collect Welfare for long periods of time, etc.  There was a period of time (several decades ago) that the Welfare you're thinking exists actually did.

Reagan didn't change that, but in 1997, Congress passed the Personal Responsibility and Work Opportunity Act".  The act replaced the old Welfare system, which had remained relatively the same since its inception in 1935.  The PRWOA created the restrictions I've covered in today's post.

The goal of these restrictions was to "end Welfare as [they knew] it," changing it from an easily exploited program that fostered dependence, to the temporary, work-placement initiative that it is today.

So the Welfare that people tend to argue over today is a Welfare that already ended 18 years ago.  But Regan's "Welfare Queen" narrative was so powerful, and so polarizing, that his characterization of Welfare just sort of stuck, even long after changes were made.

The result: when people today say the word "Welfare", they are often referring (unwittingly) to the Welfare of a bygone era.  They mistakenly think that the paradigm they're familiar with is the one still salient today.

It isn't.

5 comments:

  1. I'm confused, is the argument you suggest one you've actually encountered, Dan, or a straw man? I remember being almost hyper aware of the PRWOA war in the 1990's, and even discussing it in 'political science' classes. I remember when we were freshman in the honors program, having heated debates about the restrictions on TANF (which were only six years old at that point).

    Admittedly, my family was on food stamps, Medicaid and unemployment benefits (but I do not think ever TANF), so perhaps my history has always made me more aware of what was going on with public aid...

    ReplyDelete
  2. Interesting stuff. However: the conservative rhetoric I've heard (and not been able to answer, lacking the info), is that disability is a system that's hugely taken advantage of (i.e. it's easy to come up with a disability - even for children with ADHD, then you're set for life). So, I'd be interested to hear more about that. Having looked into food stamps and section 8 housing myself, I know that those systems are not necessarily easily accessible and have various restrictions in place, and it seems like most of these "welfare" type programs strongly favor assistance to people with children. (Though, that of course only supports the other common rhetoric about "welfare moms" - the idea that people are having kids to boost their welfare income. Of course, the math doesn't work out on that one at all, but that's the rhetoric.)

    ReplyDelete
  3. Randi,

    You bring up an EXCELLENT point. Disability insurance (which is a whole other scheme run by the Social Security Admin) has been slowly becoming a de facto Welfare, one much more similar to the "fantasy" Welfare.

    Cuz here's the thing: you go out on disability if your health makes it impossible for you to work GIVEN YOUR QUALIFICATIONS.

    Meaning a computer programmer tethered to an oxygen tank would have a harder time getting disability than a machinist with just a HS degree who has the same ailments.

    (This American Life did a really good story about this phenomenon. You can hear it at: http://www.thisamericanlife.org/radio-archives/episode/490/trends-with-benefits)

    Additionally, there's something called SSI (also from the Social Security Admin), that pays out assistance to adults with mental/cognitive disabilities, or to families with kids with mental/cognitive disabilities. This is also can be a "flat amount of cash indefinitely" situation.

    I think the things that get exaggerated though are:

    1) the size of the payouts (most social assistance programs payout a few thousand dollars annually to recipients at best), and

    2) how easy it would be for people to get off assistance. In the case of SSI, well, you'll probably need that income supplement for life. As for disability, yeah, the ailment might not be severe, but if the individual is poorly educated/connected/trained/experienced/located, disability might just be the best option for an income.

    All the same, it doesn't really help anyone for people to be on disability for life. Its costly for the public, but its also can be depressing for the person living at home.

    Another weird issue: America pours lots of money into educating the public, and lots of money helping people out when they can't find gainful work.

    But we don't spend much in helping people who have fallen out of the workforce get back in. From The Economist:

    "In 2011 America spent a paltry 0.1% of GDP on “active” labour measures designed to put the unemployed back to work; the OECD average was 0.6%"
    http://www.economist.com/news/united-states/21597925-want-make-america-less-unequal-here-are-some-suggestions-memo-obama

    ReplyDelete
    Replies
    1. This comment has been removed by the author.

      Delete
  4. Does American really pour lots of money into educating the public though? Education cuts seem to be a recurring theme in American conservative politics to line the pockets of those in military spending.

    ReplyDelete