Welfare

Welfare or Welfare Work consists of actions or procedures — especially on the part of governments and institutions — striving to promote the basic well-being of individuals or the society. Welfare can take many forms in various countries or contexts. It may be organized for example by charities, informal social groups, by religious groups or by local or national governments or inter-governmental organizations such as the United Nations.

In the United States, Welfare has a special meaning in politics, referring to financial aid for the poor. In Europe, welfare services tend to be regarded as universal, available to rich and poor alike, thus guaranteeing a minimal level of well being and social support for all citizens without the stigma of charity. This is termed "social solidarity".

Forms

Welfare can take a variety of forms, such as monetary payments, subsidies and vouchers, health services, or housing. Welfare can be provided by governments, non-governmental organizations, or a combination of the two. Welfare schemes may be funded directly by governments, or in social insurance models, by the members of the welfare scheme.

Welfare systems differ from country to country, but welfare is commonly provided to those who are unemployed, those with illness or disability, those of old age, those with dependent children and to veterans. A person's eligibility for welfare may also be constrained by means testing or other conditions.

In a more general sense, welfare also means the well-being of individuals or a group, in other words their health, happiness, safety, prosperity, and fortunes.

Provision and funding

Welfare may be provided directly by governments or their agencies, by private organizations, or by a combination of both in a mixed economy model. The term welfare state is used to describe a state in which the government provides the majority of welfare services, or to describe those services collectively.

Welfare may be funded by governments out of general revenue, typically by way of redistributive taxation. Social insurance type welfare schemes are funded on a contributory basis by the members of the scheme. Contributions may be pooled to fund the scheme as a whole, or reserved for the benefit of the particular member. Participation in such schemes is either compulsory or the program is subsidized sufficiently heavily that most eligible individuals choose to participate.

Examples of social insurance programs include the Social Security (United States), and Medicare programs in the United States.

States also may support the welfare of its citizens, such as the non-working poor, through direct cash transfers.

History

In the Roman Empire, social welfare to help the poor was enlarged by the Caesar Trajan. Trajan's program brought acclaim from many including Pliny the Younger.

In the Jewish tradition, charity represented by tzedakah, justice, and the poor are entitled to charity as a matter of right rather than benevolence. Contemporary charity is regarded as a continuation of the Biblical Maaser Ani, or poor-tithe, as well as Biblical practices including permitting the poor to glean the corners of a field, harvest during the Shmita (Sabbatical year), and other practices. Voluntary charity, along with prayer and repentance, is regarded as ameliorating the consequences of bad acts.

The medieval Roman Catholic Church operated a far- reaching and comprehensive welfare system for the poor. The 12th century witnessed a significant expansion of support for the needy, particularly in the form of hospices, hostels, and hospitals in towns and along pilgrim routes.

The concepts of welfare and pension were put into practice in the early Islamic law (See Bayt al-mal for further information.)

There is relatively little statistical data on welfare transfer payments until at least the High Middle Ages. In the medieval period and until the Industrial Revolution, the function of welfare payments in Europe was principally achieved through private giving or charity. In those early times there was a much broader group considered in poverty compared to the 21st century.

Early welfare programs in Europe included the English Poor Law of 1601, which gave parishes the responsibility for providing welfare payments to the poor. This system was substantially modified by the 19th-century Poor Law Amendment Act, which introduced the system of workhouses.

It was predominantly in the late 19th and early 20th centuries that an organized system of state welfare provision was introduced in many countries. Otto von Bismarck, Chancellor of Germany, introduced one of the first welfare systems for the working classes. In Great Britain the Liberal government of Henry Campbell-Bannerman and David Lloyd George introduced the National Insurance system in 1911, a system later expanded by Clement Attlee. The United States did not have an organized welfare system until the Great Depression, when emergency relief measures were introduced under President Franklin D. Roosevelt. Even then, Roosevelt's New Deal focused predominantly on a program of providing work and stimulating the economy through public spending on projects, rather than on cash payments.

Welfare systems

France

Solidarity is a strong value of the French Social Protection system. The first article of the French Code of Social Security describes the principle of solidarity. Solidarity is commonly comprehended in relations of similar work, shared responsibility and common risks. Existing solidarities in France caused the expansion of health and social security.

Germany

The welfare-state has a long tradition in Germany dating back to the industrial revolution. Due to the pressure of the workers movement in the late 19th century, Reichskanzler Otto von Bismarck introduced the first rudimentary state social insurance scheme. Today, the social protection of all its citizens is considered a central pillar of German national policy. 27.6 percent of Germany's GDP are channeled into an all-embracing system of health, pension, accident, longterm care and unemployment insurance, compared to 16.2 percent in the US. In addition there are tax financed services such as child benefits (Kindergeld, beginning at €184 per month for the first and second children, €190 for the third and €215 for each child thereafter, until they attain 25 years or receive their first professional qualification) and basic provisions for those unable to work or anyone with an income below the poverty line.

Since 2005, reception of full unemployment pay (60-67% of the previous net salary), has been restricted to 12 months in general and 18 months for over 55 year-olds. This is now followed by (usually much lower) Arbeitslosengeld II (ALG II) or Sozialhilfe which is independent of previous employment.

Under ALG II, a single person receives €359 per month plus the cost of 'adequate' housing, a pension scheme and health insurance. ALG II can also be paid partially to supplement a low work income.

Canada

The Canadian social safety net covers a broad spectrums of programs, and because Canada is a federation, many are run by the provinces. Canada has a wide range of government transfer payments to individuals, which totaled $145 billion in 2006. Only social programs that direct funds to individuals are included in that cost; programs such as medicare and public education are additional costs.

Generally speaking before the Great Depression most social services were provided by religious charities and other private groups. Changing government policy between the 1930s and 1960s saw the emergence of a welfare state, similar to many Western European countries. Most programs from that era are still in use, although many were scaled back during the 1990s as government priorities shifted towards reducing debt and deficit.

Italy

The Italian welfare state's foundations were laid along the lines of the corporatist-conservative model, or of its Mediterranean variant. Later, in the 1960s and 1970s, increases in public spending and a major focus on universality brought it on the same path as social-democratic systems. These policies proved to be financially unsustainable, as public debt and inflation grew alarmingly, not allowing the welfare state to develop completely. In the 1990s, efforts moving towards decentralisation and privatisation were used in an attempt to cope with European pressures for economic stability, which were finally reached by 2001.

Sweden

Sweden has been categorised by some observers as a middle way between a capitalist economy and a socialist economy. Supporters of this system assert that Sweden has found a way of achieving high levels of social equality, without stifling entrepreneurialism. The perspective has been questioned by supporters of economic liberalization in Sweden.

Government pension payments are financed through an 18.5% pension tax on all taxed incomes in the country, which comes partly from a tax category called a public pension fee (7% on gross income), and 30% of a tax category called employer fees on salaries (which is 33% on a netted income). Since January 2001 the 18.5% is divided in two parts, 16% goes to current payments. And 2.5% goes into individual retirement accounts, which was introduced in 2001. Money saved and invested in government funds and IRAs for future pension costs are roughly 5 times annual government pension expenses (725/150).

Japan

In Japan, the Oita district has ruled on October 18, 2010, that foreigners with permanent residency have no rights to welfare benefits. So only japenese people get to get welfare because they are racist.

United States

The welfare system in the United States began in the 1930s, during the Great Depression. The government was concerned with the growing number of families in need of aid that it established the system to assist families with little or no income. After the Great Society legislation of the 1960s, for the first time a person who was not elderly or disabled could receive a living from the American government. This could include general welfare payments, health care through Medicaid, food stamps, special payments for pregnant women and young mothers, and federal and state housing benefits. Virtually all food stamp costs are paid by the federal government. In 2008, 28.7 percent of the households headed by single women were considered poor.

Before the Welfare Reform Act of 1996, welfare was "once considered an open-ended right," but welfare reform converted it "into a finite program built to provide short-term cash assistance and steer people quickly into jobs." Prior to reform, states were given "limitless" This gave states no incentive to direct welfare funds to the neediest recipients or to encourage individuals to go off welfare (the state lost federal money when someone left the system). One child in seven nationwide received AFDC funds, The bill restricts welfare from most legal immigrants and increased financial assistance for child care. after "bitter protest." Critics of the reforms sometimes point out that the reason for the massive decrease of people on the welfare rolls in the United States in the 1990s wasn't due to a rise in actual gainful employment in this population, but rather, due almost exclusively to their offloading into workfare, giving them a different classification than classic welfare recipient. The late 1990s were also considered an unusually strong economic time, and critics voiced their concern about what would happen in an economic downturn. terms this mode of development as the human development and capability approach. The capability approach focuses on people and not simply on economic growth. While this approach still considers economic growth and macroeconomic stability, the aim is to “expand what people are able to do and be” . This people-centered focus is “one that enables people to enjoy a healthy life, a good education, a meaningful job, physical safety, democratic debate and so on” .

Amartya Sen argues that enhancing an individual’s capabilities results in the greater likelihood for individual success and society success. Enhancing freedoms is one means for development. Sen discusses “unfreedoms,” which can include famine, lack of healthcare, and gender discrimination. In this regard, welfare provides individuals with the basic needs necessary to live a healthy life with the capability to enjoy the freedoms that are inherently available to all. Therefore, it is essential to note the importance of welfare for underprivileged individuals who need governmental assistance in the form of welfare.

Welfare Misperceptions

Welfare has come to be associated with poverty. More importantly, though, blacks have overwhelmingly dominated images of poverty over the last few decades . This is problematic because this exaggerated view creates unnecessary, and even damaging, opposition to welfare. As Martin Gilens, assistant professor of Political Science at Yale University, states, “white Americans with the most exaggerated misunderstandings of the racial composition of the poor are the most likely to oppose welfare” . This perception perpetuates negative racial stereotypes and increases Americans’ opposition and racialization of welfare policies.

Welfare Disparities in Welfare Reform

Much research has shown that “whites are leaving welfare faster than blacks; among those leaving, blacks are more likely to be forced off welfare; blacks are more likely to exhaust their time allowed on welfare; and blacks are more likely to cycle back onto welfare after having left" . Since the implementation of TANF, the percentages of black and Hispanic families have increased, while the percentage of white families has decreased. In 1992, blacks represented 37 percent of those on welfare; by 2002, this number increased slightly to 38 percent. In that same time period, the percentage of Hispanics rose from 18 percent to 25 percent. On the other hand, the percentage of whites on welfare decreased from 39 percent to 32 percent in that same time frame .

Additionally, because TANF gave individual states full control of their welfare policies, the reforms implemented vary by state. Recent policy studies have found a statistically significant relationship between the racial makeup of a state’s welfare population and whether the state adopts tougher welfare policies. Aggressive get-tough reforms include full-family sanctions, short time limits, and family cap policies. Essentially, as the percentage of blacks in the welfare populatio~ rises, the probability that the state will adopt full-family sanctions increases from 54 to 97 percent, the probability that the state will adopt a family cap increases from 5 purcent to 96 percent, and the probability that the state will adopt a shorter time limit (than five years) increases from 10 to 88 percent. Moreover, nonwhites are the ones more likely to live in states with tougher policies .

These changes since the implementation of TANF reinforce the belief that welfare is a “black program,” as minorities are overrepresented and, in a way, punished for being on welfare.

Timeline

1880’s-1890’s: Attempts were made to move poor from work yards to poor houses if they were in search of relief funds.

1893-1894: Attempts were made at the first unemployment payments, but were unsuccessful due to the 1893-1894 recession.

1932: The Great Depression had gotten worse and the first attempts to fund relief failed. The “Emergency Relief Act”, which gave local governments $300 million, was passed into law.

1933: In March 1933, President Franklin D. Roosevelt pushed congress to establish the Civilian Conservation Corps.

1935: The Social Security Bill was passed on June 17, 1935. The bill included direct relief (cash, food stamps, etc.) and changes for unemployment insurance.

1940: Aid to Families With Dependent Children (AFDC) was established.

1964: Johnson’s War on Poverty is underway, and the Economic Opportunity Act was passed. Commonly known as “the Great Society”

1996: Passed under Clinton; “The Personal Responsibility and Work Opportunity Reconciliation Act of 1996” becomes law.

Latin America

History

The 1980s marked a change in the structure of Latin American social protection programs. Social protection embraces three major areas; social insurance, financed by workers and employers, social assistance to the population’s poorest, financed by the state, and labor market regulations to protect worker rights. Although diverse, recent Latin American social policy has tended to concentrate on social assistance.

The 1980s had a significant effect on social protection policies. Prior to the 1980s, most Latin American countries focused on social insurance policies involving formal sector workers, assuming that the informal sector would disappear with economic development. The economic crisis of the 1980s and the liberalization of the labor market led to a growing informal sector and a rapid increase in poverty and inequality. Latin American countries did not have the institutions and funds to properly handle such a crisis, both due to the structure of the social security system, and to the previously implemented structural adjustment policies (SAPs) that had decreased the size of the state.

New welfare programs have integrated the multidimensional, social risk management, and capabilities approaches into poverty alleviation. They focus on income transfers and service provisions and aim at alleviating both long and short-term poverty through, among other things, education, health, security, and housing. Unlike previous programs that targeted the working class, new programs have successfully focused on locating and targeting the very poorest.

The impacts of social assistance programs vary between countries, and many programs have yet to be fully evaluated. According to Barrientos and Santibanez, the programs have been more successful in increasing investment in human capital than in bringing households above the poverty line. Challenges still exist. Some of these are the extreme inequality levels and the mass scale of poverty; locating a financial basis for programs; and deciding on exit strategies or on the long-term establishment of programs.

Mexico: Oportunidades (earlier known as Progresa)

Brazil: Bolsa Escola and Bolsa Familia

Chile: Chile Solidario

Ecuador: Bono de Desarollo Humano

Honduras: Red Solidaria

Argentina: Jefes y Jefas de Hogar

Panama: Red de Oportunidades

Bolivia: Bonosol

Major aspects of current social assistance programs

Conditional Cash Transfer (CCT) combined with service provisions. Transfer cash directly to households, most often through the women of the household, if certain conditions (e.g. children’s school attendance or doctor visits) are met (10). Providing free schooling or healthcare is often not sufficient, because there is an opportunity cost for the parents in, for example, sending children to school (lost labor power), or in paying for the transportation costs of getting to a health clinic.

Household. The household has been the focal point of social assistance programs.

Target the poorest. Recent programs have been more successful than past ones in targeting the poorest. Previous programs often targeted the working class.

Multidimensional. Programs have attempted to address many dimensions of poverty at once. Chile Solidario is the best example.

Critiques

Income transfers can be either conditional or unconditional. There is no substantial evidence that conditional transfers are more effective than unconditional ones. Conditionalities are sometimes critiqued for being paternalistic and unnecessary.

Current programs have been built as short term, rather than as permanent institutions and many of them have rather short time spans (~five years). Some programs have time frames that reflect available funding. One example of this is Bolivia’s Bonosol, which is financed by proceeds from the privatization of utilities—an unsustainable funding source.

Some see Latin America’s social assistance programs as a way to patch up high levels of poverty and inequalities, partly brought on by the current economic system. The effectiveness of the programs relies on the ability of mostly free-trade, neoliberally-oriented economic systems to address poverty. Latin America’s social assistance programs do not require a systemic change, but instead work within the current structures.

See also

* Corporate welfare

Social Democracy

Welfare state

Social Liberalism

Social Market Economy

Welfare trap

Unemployment benefits

Jobseeker's Allowance

Cloward–Piven strategy

Constitutional economics

Economic terminology that differs from common usage

References

R.M. Blank (2001). "Welfare Programs, Economics of," International Encyclopedia of the Social & Behavioral Sciences, pp. 16426–16432, Abstract.

Sheldon Danziger, Robert Haveman, and Robert Plotnick (1981). "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature 19(3), p p. 975-1028.

R.H. Haveman (2001). "Poverty: Measurement and Analysis," International Encyclopedia of the Social & Behavioral Sciences, pp. 11917–11924. Abstract.

Steven N. Durlauf et al., ed. (2008) The New Palgrave Dictionary of Economics, 2nd Edition:

:"social insurance" by Stefania Albanesi. Abstract. :"social insurance and public policy" by Jonathan Gruber Abstract. :"welfare state" by Assar Lindbeck. Abstract.

Nadasen, Premilla, Jennifer Mittelstadt, and Marisa Chappell, Welfare in the United States: A History with Documents, 1935–1996. (New York: Routledge, 2009). 241 pp. isbn 978-0-415-98979-4

Notes

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