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Welfare Does Not Breed Persistent Poverty
Matt Singer on May 30, 2006 - 11:00pm
One of the stated defenses of cutbacks in aid to poor families in the last decade in the US was the idea that welfare spending traps families in poverty from generation to generation. But new studies, as detailed in this week's Economist magazine (subscription) show that countries with MORE spending on the poor have LESS persistent poverty than in the US.
Contrary to many Americans' self-image, there is less social mobility from generation to generation in the United States than in supposedly class-bound Europe-- and the European states like Sweden and Norway with the highest welfare spending also had the most people born in poverty becoming middle class when they grew up:
Around three-quarters of sons born into the poorest fifth of the population in Nordic countries in the late 1950s had moved out of that category by the time they were in their early 40s. In contrast, only just over half of American men born at the bottom later moved up. This is another respect in which Britain is more like the Nordics than like America: some 70% of its poorest sons escaped from poverty within a generation...
The obvious explanation for greater mobility in the Nordic countries is their tax and welfare systems, which (especially when compared with America's) deliberately try to help the children of the poor to do better than their parents...to the extent that redistribution is an explanation, it implies...that social mobility is a product of high public spending, a bit like the low incidence of poverty or longer life expectancy (on both of which Europe also does better than America).
The other advantage for the poor in Nordic countries seems to be a better education system that provides a more equal education for the poor compared to the United States.
US Policy Went the Wrong Way: What these studies indicate is that US welfare policy went in exactly the wrong direction in the last decade. For decades, we had much lower spending on the poor and the results were less economic opportunity than in European countries. And instead of improving the system, the US merely cut off aid to many families, leaving them even more trapped in poverty, as groups like the Center for Budget Policy Priorities have highighted:
- [M]ost studies have found that between 50 to 75 percent of welfare leavers remain poor two to three years after leaving welfare.
- 42 percent of welfare leavers remain poor five years after leaving welfare compared to a 55 percent poverty rate in the first year after leaving welfare.
- A recent study of Michigan women who received TANF in 1997 found that by the fall of 2001, only one-quarter were working in “good jobs.”? [jobs paying at least $7.50 per hour with health insurance or $8.50 per hour without]
- A HHS-funded study of welfare reform in Wisconsin ”” a state often cited as having a particularly innovative welfare reform program ”” found that the net income of welfare leavers in the year after they exited welfare is lower than their income prior to leaving.
Many US political leaders engage in happy talk that welfare reform was a success, but the documented reality is that both over the last few years and over the last few decades, the low level of US spending to help the poor has meant less opportunity for the children of the poor to attain the dream of a better life than the poor in Europe, where more welfare spending and fairer education systems gave them a chance to join the middle class.
A lot of rightwing propanda promoted the idea that somehow spending less to help poor people would make their lives better, but it was all a lie used to justify tax cuts for the wealthy and cuts in social programs.
As more and more evidence rolls in of the failure of "welfare reform", it's about time that we return to a commitment to spend the money to give every poor child the opportunity to reach the American Dream when they grow up.