Welfare

What It Means

In most countries people who cannot provide for themselves have access to government programs that help them obtain housing, medical care, food, and financial assistance. These various forms of public assistance fall into one of two categories, social insurance or welfare. “Social insurance” refers to programs that provide assistance to people regardless of their income levels. “Welfare,” by contrast, refers to various types of assistance targeted strictly at the needy. Government distributions for social insurance and welfare are called transfer payments. Transfer payments, which also include farm subsidies, for example, are funds the government transfers from tax revenue to the individuals and families to whom it has pledged assistance, without requiring goods, services, or other compensation in return.

Different countries take different approaches to social insurance and welfare. European countries tend to have much more expansive social insurance and welfare programs than countries in the rest of the world, including the United States. The United States has a comparatively small social insurance system, focused mainly on aiding the elderly and the disabled, but its social insurance programs are still much larger than its welfare programs. Welfare in the United States, which centers on Medicaid (medical care), the Food Stamp program (food allowances), and cash aid programs, became subject to widespread criticism beginning in the 1970s and is especially unpopular among political conservatives. After reductions in spending during the 1980s, the U.S. welfare system was significantly overhauled in 1996. Welfare since then has focused on urging the poor to find jobs by limiting their benefits and by tying the remaining benefits to participation in the job market.

When Did It Begin

Modern notions of welfare grew out of England’s Poor Laws, established by Queen Elizabeth in 1601. The Poor Laws were a series of laws providing for the needs of the poor, children, and the sick. Instead of relying on churches, charities, private citizens, and professional organizations to care for those in need, the Poor Laws required local governments to use tax revenues to start orphanages, hospitals, and poorhouses (free housing for the poor), as well as to fund other forms of relief. Growing criticism of the Poor Laws, much of it centering on those able-bodied people who lived off of government aid rather than getting jobs, led them to be revised in 1834.

Traditions favoring individualism and self-reliance led the United States to lag behind most countries in the establishing of social insurance and welfare programs in the early stages of its nationhood. Few resources were forthcoming for the poor prior to the Great Depression, the severe economic crisis that gripped the United States and most other developed countries beginning in 1929. As much as 40 percent of the U.S. population is estimated to have fallen into poverty during the Great Depression. The country’s economic problems necessitated government intervention.

President Franklin D. Roosevelt introduced sweeping legislation intended to combat the Great Depression. The Social Security Act of 1935 created not only the old-age benefits that today go by the name Social Security but also many of the other types of aid that would eventually grow into the welfare system. President Lyndon B. Johnson expanded the welfare system substantially in 1960, during his so-called War on Poverty.

More Detailed Information

Welfare in the United States varies from state to state. The federal government often supplies the bulk of the funds for the programs in each state, with the state supplying additional funds and controlling the administration of the programs. Welfare assistance is normally awarded only to those living below the poverty line, a standard established by the federal government. The poverty line shifts according to family size, and it changes each year to account for inflation (the rising of prices that causes money to decrease in value over time). In 2004, for instance, an individual making around $9,600 a year fell below the poverty line; for a family of four, the poverty line was set at around $19,300 in income.

Most welfare assistance in the United States takes the form of Medicaid, Food Stamps, or direct cash payments under a program called Temporary Assistance to Needy Families (TANF). Medicaid provides free health care to poor people. The federal government supplies the state with grants to fund Medicaid, but the states supply additional funds according to their own policy goals. The states administer and set eligibility requirements individually, so that the program differs substantially from state to state.

The Food Stamp program, which provides assistance with food purchases, also varies from state to state. The program got its name because recipients originally received actual stamps that could be used to purchase food. Today those households that qualify for assistance receive credit cards with values that vary according to the family’s size, income, and individual needs. The credit cards can be used only for food purchases and only at grocery stores that have agreed to accept them as payment.

TANF replaced a program called Aid for Families with Dependent Children (AFDC) as a result of President Bill Clinton’s 1996 welfare reform initiative. Like AFDC, TANF primarily helps single mothers via cash payments. Under AFDC the federal government required states to pay benefits to all families whose income fell below a certain level. TANF, by contrast, allows the states to decide how to determine whether people are eligible for cash assistance or not. TANF is also much more focused on urging welfare recipients to find work than was AFDC. If a recipient of cash aid does not get a job within two years of being on the program, benefits are reduced. Most families are limited to a maximum of five years’ lifetime assistance under TANF.

There are other forms of welfare as well. These include programs geared mainly to the elderly and disabled, programs providing assistance for paying energy bills, public housing programs, programs promoting nutritional well-being for the poor, and, increasingly, tax breaks for the poor.

Recent Trends

Welfare programs in all Western countries grew steadily in the decades following World War II, but beginning in the 1970s, public figures and ordinary citizens began to become more skeptical about the usefulness and expense of welfare. This was especially true in the United States during the presidency of Ronald Reagan (1980–88), who was an outspoken critic of welfare. Notions of welfare recipients as freeloaders living off the fruits of honest working people became common, and many people blamed the welfare system not just for hampering the economy but for various of the country’s supposed cultural ills, including the breakdown of family and community values. Reagan implemented policies calling for reductions in welfare spending in favor of tax cuts intended to stimulate the economy. These often went mainly to wealthy people and to corporations.

Reagan’s successor, George H.W. Bush (1988–92), largely extended the Reagan approach to welfare. It was only under Bill Clinton (1992–2000), however, that substantial reform had the political backing to become a reality. TANF, which his administration enacted, answered many of the criticisms of the welfare system by forcing aid recipients to look for jobs and by making benefits temporary rather than permanent.

Since 1996 the number of people receiving welfare benefits has declined substantially, and there has been a corresponding increase of single mothers in the workplace. This has raised other issues, however. Those who leave the welfare system often qualify only for menial, low-paying jobs. With no way of paying for child care and no health-care coverage through their employers, single mothers sometimes find that their problems multiply once they leave the welfare system.

While welfare remains politically unpopular, social insurance programs have retained the broad support of most Americans. Social Security, which provides cash payments to disabled workers as well as to workers who have reached old age, and Medicare, which provides health-care benefits for retired people, represent a far larger share of the national income than assistance to the poor ever has. Though the economic demands of these programs are much greater than those posed by welfare, they generally do not attract anywhere near the same level of criticism.