Impact of American Welfare Program on Poverty Reduction

Impact of American Welfare Program on Poverty Reduction
  1. Introduction

Nearly $1 trillion of the annual federal budget is being allocated to the 126 federal welfare programs, which were intended to alleviate poverty in America (Tanner 2). Most of the welfare programs involve means testing, where low income status is the broad criterion for eligibility (2). The rest of the welfare programs target recipients in impoverished communities or specific disadvantaged groups, including single mothers and migrant workers (2). In the aftermath of the financial crisis, welfare eligibility was relaxed to expand the coverage of welfare programs (8). Use of categorical eligibility gave the states flexibility qualifying entire families for welfare benefits without the recipients going through individual eligibility screening (8). Even so, the poverty level remains at 16%, to indicate that welfare efforts appear to have no significant impact on poverty(8). In this context, the nil impact of welfare programs on poverty reduction can be explained by the notion that the American welfare program encourages abuse and entitlement. As such, the American welfare program prevents conditions that secure genuine poverty reduction. The discussion posits 10 supporting arguments.

Impact of American Welfare Program on Poverty Reduction

  1. Supporting Arguments

 The current welfare program encourages abuse and entitlement by neglecting empowerment. The debate over welfare dependence pits the liberal with the conservative perspective. “Liberals claim that social conditions do not permit the poor to work while the conservatives do not” (Mead 348). As such, the liberal thinking advocates welfare expansion in contrast with the conservative advocacy of welfare contraction. While “conservative arguments and rhetoric, that were in the margin of the political debate in the early 1980s, have been naturalized in the mainstream discussion on welfare and poverty in the US” (De Goede 317), current practice is leaning towards the liberal perspective.  Welfare expansion means more funds but the system reinforces dependence. In pursuing policies on social welfare, addressing people’s ability for self-help is ignored. “Government debates tend to be abstract and impersonal arguments about justice or fairness among citizens, in which poor people’s ability to “get ahead” is taken for granted” (Mead 348). When social welfare acts as a buffer for low income families without being linked to empowerment, this encourages dependent attitudes that breed abuse.  

The welfare program in the U.S. encourages abuse and entitlement by altering the resilient attitude of vulnerable groups. “Members of vulnerable populations have often displayed remarkable resilience and ingenuity in addressing their own needs” (Jansson 5). In low income communities, informal support systems are usually in place. Neighbors and church members help each other. For some groups, demand for welfare services is even lower. “Foreigners have lower health expenditures than native-born Americans and contribute more to the economy, both in productivity and taxes, than the public service they may receive” (Viladrich 825). When welfare programs broadly target certain groups without considering particular needs for purposes of determining eligibility, the attitude of resilience can shift to dependence. “In a welfare state context, multiculturalism may not be beneficial for immigrants at all, because it may lead to dependence on welfare-state arrangements and thereby to social and economic marginalization” (Koopmans 2). Dependence can lead to abuse.  

The American welfare program encourages abuse and entitlement in not addressing social barriers to employment. Welfare recipients commonly face “low or few job skills, low educational attainment, lack of jobs in the community, and problems with transportation as barriers to finding and sustaining employment” (Blalock, Tiller, and Monroe 134). Welfare is only one component of the poverty alleviation formula. These barriers have to be addressed simultaneously in order to improve the condition of marginalized groups. However, “for some families, individual and structural barriers to success might prove overpowering” (Blalock, Tiller, and Monroe 129). In one study, “findings suggest that some welfare recipients will not be able to support their families through employment. For these families, a network of permanent services should be provided” (Taylor and Barusch 183). When the American welfare program works separately from other social policies, the program serves as a buffer for groups that are barred from finding employment but without working on ways of removing these barriers. Welfare recipients are tied to their dependent status, which encourages entitlement.

The American welfare program encourages abuse and entitlement because of its poor commitment to helping people get work. The priority of the American welfare program is the provision of benefits to people who belong to the low income groups or people who have no work. Welfare benefits are distributed to households based on the broad eligibility criteria of inclusion in low income group. “Means-tested programs […] pay benefits to those who first demonstrate limited economic resources. Entitlement has nothing to do with whether claimants have had prior earnings or have ever paid taxes” (Thompson 6). By not considering prior employment as criterion for eligibility, there is no incentive for people to find employment, especially when income opportunities are limited. People who qualify for welfare programs that are broad in scope benefit by not finding work. In a study of single parents, the results showed that “net compensation rate in unemployment has a significant impact on women’s propensity to leave the labor force” (Pedersen and Smith 271).

The American welfare program also encourages abuse and entitlement through disincentives for people to improve their income conditions.  “Social welfare can discourage work effort […] thereby creating a dependence on the welfare state” (Sefton, Van De Ven, and Weale 556). Even if policy makers did not intend to discourage people from targeting better income opportunities, the welfare program can have this effect. In some forms of welfare, the same rate of benefit is received regardless of the difference in income level.

“In health insurance and flat pension benefit programs, higher-wage workers contribute more than lower-wage workers but everyone receives the same benefits. In most public pension programs, […] the lower wage workers tend to get back proportionately more than the higher-wage workers, sometimes much more.” (Thompson 5)

These scenarios could discourage people from working harder to raise their income level. Complacence towards improving one’s income level by working harder reflects welfare dependence. 

Abuse and entitlement can also result from ignoring education for welfare recipients. “Majority of the welfare programs is means-tested” (Tanner 2), which means that the broad eligibility criterion of low-income status is the controlling consideration. Welfare recipients are not required to achieve minimum levels of education. There are also no incentives for recipients to go back to school, especially to pursue higher education. At the same time, limited support makes it hard for recipients to pursue higher education even if they wanted to go to college. “Welfare-to-work policies and practices create a nexus of obstacles that include active discouragement and harassment of their post-secondary educational aspirations.” (Polakaw 11) In the case of single mothers, welfare support is hardly sufficient so that higher education is not an option. “Harsh and discriminatory public policies restrict their educational opportunities and threaten their autonomy, their children, and their economic self-sufficiency” (Polakaw 12). Without an educational component, the American welfare program pegs welfare recipients to their position, leaving them dependent on welfare entitlement.

The American welfare program encourages abuse and entitlement when racial inequality influences welfare distribution. “America has failed to create welfare state that would treat blacks and whites alike. The problem of race and the failure to create broadly inclusive social policies have become intertwined” (Brown 3). African Americans and minority groups have been identified as the primary targets of welfare programs because higher poverty rates exist for these groups. Racial inequality emerges when welfare does not reflect this reality. The trend in welfare is that:

“States with a 25% African American proportion are predicted to give families of three 31% more money than in states with a 75% African American proportion, a difference of over $100. […]. As the proportion of Latino increase by one standard deviation […] the states are expected to decrease benefits by 26%.” (Fellowes and Rowe 368)

When race becomes an issue in entitlement, eligibility becomes an issue of majority vs. minority instead of the people most in need. This situation would likely lead to abuse by people who believe they are entitled by reason of race and abuse by people who think minority groups are getting too much support.

Lapses in the management of the American welfare program allow abuse. Limited people working on many cases can lead to lapses when it comes to checking the eligibility of applicants. “It was often difficult to check on the bona fides of applicants or to monitor recipients for changed circumstances.” (Prenzler 1) As such, “states with more slack resources allow more clients to continue receiving benefits while not meeting traditional work requirements”. (Fellowes and Rowe 368) At the same time, personal and emotional factors could also lead to lapses that create opportunities for abuse. “State policymakers react compassionately to growing need, by showing more flexibility to welfare clients.” (Fellowes and Rowe 368)

The American welfare program also encourages abuse when the penalty is less than the expected benefits.  “An amoral utility maximizer, who is ineligible to participate in the program, but whose expected penalty for dishonest claiming is low enough to induce participation, might participate in the program more intensively.” (Yaniv 447) The value of expected benefits can be measured by the amount attributed to fraud. “Health care fraud and abuse reportedly accounted for 10 percent of total spending on health care, or about $120 billion per year” (Hyman 531). As such, the possibility of receiving welfare support regularly with a small chance of detection makes a recipe for abuse.

The American welfare program also encourages abuse when the rules do not effectively detect fraud for purposes of prosecution and deterrence. Many cases of fraud do not actually involve criminal intent. Many cases of fraud “arises as a result of errors and misunderstandings made in the context of an astoundingly complex bureaucratic system composed of some 800 rules” (Mosher and Hermer 18). At the same time, the focus of anti-fraud rules is towards reporting of cases. Reporting is only one aspect of fraud deterrence. Real cases of fraud can be deterred if “less effort were directed towards the enforcement of reporting regulations and work requirements in welfare programs, and more resources shifted to enforcing eligibility conditions and combating dishonest claiming” (Yaniv 435). By simplifying the rules on eligibility evaluations, information disclosure and application processing, the seemingly fraudulent activities that were the result of errors and misunderstandings can be eliminated. This strengthens the prosecution process to penalize those who commit welfare fraud and deter other people from committing the same act.

  1. Conclusion

The discussion explored the notion that the American welfare program encourages abuse and entitlement in the context of failed efforts to lower poverty levels amidst welfare expansion. Based on the supporting arguments, the American welfare program is not perfect. It is subject to abuse and entitlement by unintentionally encouraging dependence and counter-productive attitudes towards employment and higher education. The racial inequality in welfare distribution, poor management of the welfare system, the low penalty relative to expected benefits of fraud, and the weak detection and deterrence effect of anti-fraud rules also facilitate abuse and entitlement. These factors account for the failure of the expanded welfare program to reduce poverty levels. As such, the American welfare program can give rise to conditions that secure genuine poverty reduction when welfare improvements target the factors that encourage abuse and entitlement.

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