Welfare Policy in the States

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Welfare Policy in the States

• Social Welfare 4/23-4/27 SGB(14)
•  
• Berry, William D., Richard C. Fording and Russell
  Hanson. 2003. "Reassessing the 'Race to the
  Bottom' in State Welfare Policy." Journal of
  Politics 65, no. 2(May) 327-349.
•  
• Setting the Terms of Relief Explaining State
  Policy Choices in the Devolution Revolution, Joe
  Soss Sanford F. Schram Thomas P. Vartanian
  Erin O'Brien American Journal of Political
  Science, Vol. 45, No. 2 (Apr., 2001), pp. 378-395
•  

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Social Welfare Programs in the United States

• Social Insurance
• universal in coverage eligibility based on
  contribution
• Public Assistance
• categorical eligibility based on need
  (means-tested)

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Social Welfare Programs in the United States

• Social Security Act of 1935
• Social Insurance
• Old Age Insurance (OAI) (Social Security)
• Unemployment Insurance(UI)
• Public Assistance
• Aid to Families with Dependent Children (ADC)
• Old Age Assistance (OAA)
• Aid to the Blind (AB)

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Public Assistance Programs Today

• Cash benefits
• TANF
• SSI
• In-Kind benefits
• Medicaid
• Food Stamps
• Misc. other (housing, nutrition, etc.)

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Food Stamps

• 1964 Food Stamp Act
• 1973 all communities reqd to adopt
• federal govt pays all benefits and shares
  administrative costs
• about 24 million recipients (2004)
• avg. benefit is about 86 per person (2004)
  (overview of FSP)

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Food Stamp Recipients, 2004
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Food Stamp Recipients, 2004
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Supplemental Security Income (SSI)

• Purpose To provide cash assistance to the aged,
  blind and disabled who are poor
• Historical Origins
• Social Security Act of 1935 (OAA AB)
• ATPD (1950)
• Nixon consolidated and federalized OAA, AB and
  ATPD in 1974

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Supplemental Security Income (SSI)

• Administration and Financing
• Administered by SSA
• Financed by federal government (general revenue)
• States have an option to supplement

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Supplemental Security Income (SSI)
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Supplemental Security Income (SSI)
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Temporary Assistance for Needy Families (TANF)

• Historical Development
• Social Security Act 1935 (ADC)
• Numerous attempts to reform AFDC (including FSA
  of 1988)
• PRWORA - TANF(1996) welfare reform

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Temporary Assistance for Needy Families (TANF)

• Population potentially eligible
• Originally poor children (1935-50)
• Children single parent (1950-67) (AFDC)
• Children parent(s) (1967-88)
• Children parents (1988-96)

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Temporary Assistance for Needy Families (TANF)

• Calculation of Payments
• income test, assets
• Payment Max. benefit level - net family income
• Allowed deductions from income (e.g. work
  expenses, child care, and some earnings)
• No minimum benefit level
• No COLAs

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Poverty Thresholds in the U.S.

• Poverty thresholds 2006

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Source U.S. Census Bureau
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What is the Race to the Bottom ?

• Welfare Magnet Hypothesis
• Predicts that poor persons will migrate from
  states with low welfare benefits to those with
  more generous welfare policies

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What is the Race to the Bottom ?

• Benefit Competition Hypothesis
• Predicts that states regularly compete with
  surrounding states to offer the least generous
  welfare assistance to try to discourage poor
  people from moving to their state (and thus avoid
  becoming welfare magnets)

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What is the Race to the Bottom ?

• Benefit Competition Hypothesis
• Potentially explains differences between U.S.
  welfare state compared to other Western
  democracies
• Leads to less than desirable benefit levels
• Used to justify call for uniform benefit levels
  set be federal government
• What about decline in welfare generosity over
  time within U.S.?

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What is the Race to the Bottom ?

• Residency requirements
• The race to the bottom began in earnest after the
  1969 Supreme Court decision which declared
  residency requirements unconstitutional

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What is the Race to the Bottom ?
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Is there a Race to the Bottom?

• Welfare magnet effect
• Mixed evidence
• Benefit competition effect
• Most studies find a neighbor effect
• Wide variation in magnitude of the effect
• Decrease in neighbor benefit of 1 estimated to
  lead to decrease in a states benefit of anywhere
  between .06 1.00
• Not enough to explain most of the benefit decline
• Can this explain welfare reform?

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Distinguishing Features of TANF (Compared to AFDC)

• Block grants (based on 1994-1995 spending)
• 75 MOE
• Time limits
• lifetime limit 60 months
• Work reqs
• Must be enforced after 2 years
• cant enforce if no child care provided
• Some recipients may be exempted
• Work participation rates (all families)
• 2002 50
• Unwed mothers lt18 must live with guardian
• Allows Family Cap
• Benefits denied based on felony drug conviction
  (possession, use, distribution)

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The Impact of Welfare Reform (TANF)

• Caseload decline? Why?
• Work participation rates
• Welfare dependency (time limits?)

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