Safety Net

Was ‘Welfare Spending’ Up Substantially Before the Great Recession?

In a speech to the Population Association of America earlier this month, economist Robert Moffitt argued that “welfare spending is up—but help for the neediest is down.” The assertion has gotten a fair amount of positive attention from progressive bloggers who have highlighted the “help for the neediest is down” part of the equation. But before embracing Moffitt’s take wholeheartedly, it’s important to closely examine the “welfare spending is up” half of his argument.

Moffitt’s analysis tracks trends through 2007, the year before the Great Recession and major legislation like the Recovery Act and Affordable Care Act. In the discussion below, I’ll stick with his time frame. But a fuller analysis would also track spending trends through both the Great Recession and a return to near full employment, which hasn’t happened yet of course.

The first two charts below track federal spending on what I’ll broadly call income security programs through 2007. Instead of looking at the change in spending on a per capita basis, as Moffitt did, I compare spending to the size of the economy (GDP). This is a common way to examine spending trends, and a common sense way to assess whether we have become “more generous” over time as Moffitt asserts.

Figure 1 shows total federal spending on these programs and the programs individually between 1962 and 2007. To allow for a clearer look at the overall trend, the second chart just tracks the change in total spending (again as a share of GDP) on these programs between 1972 and 2007.

Figure 1. Federal Spending on Income Security Programs as a Percent of GDP, 1962-2007

incomesecurity

Figure 2. Total Federal Spending on Income Security as a Percent of GDP, 1972-2007

totalfedspending

Source: Author’s Analysis of OMB Historical Tables, FY2015 Budget

Looking at Figure 2, it’s hard to see any big change in generosity since the mid-1970s. If you look at the peaks in spending (which occur during recessionary periods) since the mid-1970s, spending has trended downward slightly since its 1976 peak. If you look at the troughs in spending (during low-unemployment periods), spending trended downward slightly through 1989, and then upward modestly in 2000. So, for example, expenditures on income security programs totaled 1.73 percent of GDP in 2007, an amount .18 percentage points higher than in 1979. While .18 percent of the economy isn’t peanuts, it’s hard to see it as a significant expansion in the welfare state.

To thicken the plot further, Figure 3 tracks the change in federal spending on education, training, employment, and social services. There was a large increase (about 1 percent of GDP) between the declaration of the War on Poverty and last years of the Carter Administration. But since then, there has been a substantial decline in federal investments in education, training, employment and social services (about .6 percent of GDP).

Figure 3. Federal Spending on Education, Training, Employment and Social Services as a Percent of GDP, 1972-2007

Screen shot 2014-05-29 at 6.54.58 AM

If you look at the trend in total federal spending on income security plus education, training, employment and social services, the story is more about retrenchment than the expansion story Moffitt tells.

It is also worth noting some of the trends in individual programs. Most notably, as Figure 1 shows, spending on unemployment insurance as a share of the economy has declined steadily since the mid-1970s. Similarly, spending on “family and other support assistance”, primarily the Temporary Assistance program (and its predecessor AFDC), has also declined significantly.

The fact is that our core “unemployment system”—composed of unemployment insurance, the unemployment assistance provided through Temporary Assistance, and reemployment and training services—has gotten smaller over the last few decades, as compared to the size of the economy.

At the same time, we’ve allowed the minimum wage to decline substantially in real terms; labor market institutions like unions that boost wages for the working class have also weakened; and we’ve increased the payroll tax, while expanding two programs, the EITC and Child Tax Credit, that use public dollars in large part to subsidize poorly compensated employment. (A related issue with the EITC is that employers may capture roughly a quarter out of every dollar of EITC benefits through wage reductions, as economist Jessie Rothstein’s research suggests.)

Any comprehensive examination of whether the “welfare state” has become more or less generous over the last several decades needs to take these issues into account. It would also have to take into account distribution of the many social welfare benefits besides the EITC and Child Tax Credit that are provided through the tax system, including: the mortgage interest deduction and the exclusion from income for tax purposes of various employer-provided benefits. As the Congressional Budget Office has documented, the value of these benefits is very large as a share of GDP and most of these benefits go to households with incomes that put them in the top 20 percent of the population. For example, the mortgage interest deduction is a larger program than the EITC and the vast majority of its benefits go to those in the top 20 percent.

And neither my analysis nor Moffitt’s analysis, for the most part, discuss trends in health insurance or pensions. These are also areas where any comprehensive discussion of “generosity” needs to take not just Medicaid, Medicare, and Social Security into account, but also the set of “submerged” welfare state programs, particularly the tax preferences for employer-based health and pension benefits.

To sum up, Moffitt raises important issues about the profound decline in the effectiveness of means-tested Temporary Assistance as an unemployment assistance program for low-income parents. But his blanket claim that means-tested welfare spending was up before the Great Recession is overstated, and his analysis misses the extent to which the non-means-tested unemployment insurance program and other parts of our core unemployment system have been weakened over time.

 

Related

Comments +

Safety Net

Amazon Army, Southeast Kansas

Southeast Kansas is a proud place—a place of earth and agriculture, steeped in coal and hard work—the region covers nearly 7,500 square miles and is home to over 190,000 people. The land is punctuated with wooded hills surrounding deep waterways, scars left from strip mining coal with large steam shovels. One shovel, the second largest of its kind at the time it was in operation, still stands where it was last used, a silent sentinel on the prairie, reminding us of the sacrifice and toil of generations gone by.

We’ve done it before—the people of Southeast Kansas have stood up to their oppressors and caused change.

Around the turn of the century, fathers, brothers, uncles, and sons spent their waking hours in the dark of the coal mines, sacrificing their health, and sometimes their lives, so the rest of America could have coal. They were subjected to suppression and labor exploitation, and families were being destroyed. Finally, the mothers, sisters, aunts, and daughters, of the miners unified, and in 1921, came to be known as the Amazon Army. Holding American flags high, two to six thousand women marched through the coalfields in protest of the unfair and unjust working conditions and labor laws that oppressed the people of the region.  Armed only with red pepper, these women stood toe-to-toe with rifle and shotgun-bearing militia, catapulting the plight of Southeast Kansas coal miners into national newspapers, and forever changing the history of the region. But when the coal ran dry, this place was forgotten. Abandoned by the national eye, it became just another corner of a “flyover state.”

However, people are still here, and we are not flyover people. Southeast Kansans toil in manufacturing, farming, service industries, and education. We have successful business entrepreneurs, quality community colleges, and a Regents University.  However, there is an economic divide that continues to grow. The overall poverty rate reaches up to 23% in one county; the child poverty rate is nearly 29%–as high as 38.8% in one county.  In most school systems, 50 to 75% of the students receive free or reduced-price lunches. Low wages in the region make it difficult to find safe and affordable housing, and 55% of the housing stock is over 54 years old. Our elders are slipping into poverty after retirement, with nearly 10% currently living below the federal poverty line. And our average annual income from wages continues a ten-year declining trend. We are working so hard to make ends meet, that we have had little energy left to question why our economy isn’t growing, why our wages aren’t increasing, and why our civic voice isn’t being heard.

Without the leveraging power of coal, Southeast Kansans have found it difficult to stand up to the continuous attack on our future. The attack comes by way of monetary manipulation within our state legislature, which has passed one of largest tax cuts for the wealthy ever enacted by any state while leaving our schools underfunded, and our most vulnerable without medical access.  They claimed these cuts would boost our economy, but according to the Kansas Department of Revenue, tax revenue in April dropped 45 percent from the prior year—$92 million short of forecasts.

We have also faced the single largest cut to Kansas public education in state history, with more than $104 million sliced from Kansas classrooms; these cuts left school funding levels so low that the Kansas Supreme Court declared them unconstitutional.  Another highly controversial school funding bill literally passed in the middle of the night, stripping teachers of due process rights and handing out corporate tax breaks by cutting funding for at-risk kids.  And most recently, legislators passed a last-minute budget deal to transfer $5 million from early childhood program funds to an agency that invests in bioscience companies.

At the same time that tax cuts for the wealthy are shrinking needed revenues, Kansas has also rejected federal Medicaid expansion, leaving one in six Kansas adults under 65 without health insurance; nearly 100,000 Kansans in more than 150 industries without access to affordable healthcare.

We’ve done it before—the people of Southeast Kansas have stood up to their oppressors and caused change. Today, we hear gunshots ring out as we harvest deer for the year’s meat.  We hear water lapping at the banks of the pits and rivers, as we search for fish to fill our freezers. And people are starting to organize. We are forming organizations and coalitions to take control of our future, grow our own businesses, promote equitable economic development, and solutions to poor health outcomes. Economic development initiatives like Project 17, spanning 17 counties—and the Joplin Regional Prosperity Initiative, spanning 7 counties—are focused on workforce development and living wage job creation. Pittsburg’s Downtown Group and Get Independence are determined to revitalize the central business districts, promoting music, art, and culture. Local farmers and ranchers are being supported through groups like Eat Well Crawford County and the Food Policy Council forming in Iola. And county health rankings are improving, along with our overall quality of life, thanks to groups like Thrive Allen County and Live Well Crawford County.

A movement is beginning to swell—a movement that will create our own version of the Amazon Army and stand toe-to-toe with the income inequality and injustice that is ruining our region, our state, and our country.

 

Related

Safety Net

Getting Pre-K in the USA

We all know there’s a connection between fighting poverty and expanding access to early childhood education. Children who attend pre-K are more likely to graduate from high school, attend college, be employed at age 40 and earn higher wages. Indeed, economists estimate that for every $1 we invest in early childhood education, we yield $7 in return on investment.

Every kid deserves a fair shot in life and that starts with a quality education, early on. So how are we doing?

The short and immediate, look-just-beyond-your nose answer is: not good. Last year, for the first time in a decade, fewer 4-year-olds had access to pre-K than the year before – a modest nationwide decline of 9,000 kids in all, according to the 2013 State Preschool Yearbook, published by the National Institute for Early Education Research at Rutgers University.

But the long-term forecast is a good deal rosier. In state after state, legislators are waking up to more favorable fiscal outlooks at the same time that new coalitions of educators, social scientists, law enforcement officials, pediatricians, nurses and others are singing the praises of early intervention.

The individual empowerment will happen as a result of neighbor talking to neighbor and groups that are fighting for pre-K...

The list of states that have made progress in establishing pre-K is growing longer: Alabama. Arizona. Georgia. Illinois. Maryland. Oklahoma. In other places, like Pennsylvania, the debate is raging. Pollsters Celinda Lake and Christine Matthews recently outlined the debate in an op-ed published in Pennsylvania:

“What we are seeing around the country in the campaigns of many candidates this election season is broad support for access to high-quality pre-k. It was a central issue in the recent New York City mayor’s race, and it’s a simmering one in the hotly contested race for governor in Texas. Why now? And why in such very different political environments?

“Voters strongly value education and believe that pre-K education helps children arrive to Kindergarten (and beyond) ready to learn. Voters believe pre-K can improve a child’s social skills, which helps them through grade school. They see the long-term benefits in terms of better test scores, graduation rates, and lifetime earnings and employment.

“They overwhelmingly agree that the more kids who have access to high-quality pre-k, the better it is for ALL students in kindergarten classrooms, so teachers aren’t stretched doing remediation and classrooms aren’t disrupted.”

Politically, the issue seems to have resonance for two reasons. First, at the local level, education historically has not been viewed as a partisan issue. In fact, if you look at the three states with the highest enrollment of 4-year-olds in pre-K, one state is decidedly red (Oklahoma), one state is decidedly blue (Vermont), and one state is decidedly mixed (Florida).

Second, bipartisan support has emerged – and is strengthening – for pre-K. Again we turn to Lake and Matthews:

“Why does this seem to be a political moment for pre-k? The political will to invest in high-quality pre-k around the nation may also reflect what our research in Pennsylvania tells us: there is broad bi-partisan support for pre-k.

“Eighty-three (83) percent of Democrats, 61 percent of Independents, and 56 percent of Republicans favor ensuring every 3 and 4 year old in Pennsylvania has access to voluntary, high quality pre-K programs. In fact a majority of Pennsylvania voters see the benefit as so clear that they support increased state funding for such programs (59 percent) – Pennsylvania voters, like those in many other states, recognize the results justify the investment.”

So how do we bring this home and make universal pre-K a reality in the U.S.? It is only going to happen through a combination of public education and individual empowerment. The public education is happening – we see it in the letters to the editor and op-eds that, with increased regularity, are appearing in publications across the country.

The individual empowerment will happen as a result of neighbor talking to neighbor and groups that are fighting for pre-K (like Fair Share Education Fund) providing ordinary Americans with a platform to demand action. And it will happen when Americans realize that the benefits of pre-K go well beyond childhood education – they’re good for families and good for the economy.

Just ask Jill McCain Santiago, a lawyer and mother of two who lives in Cambridge, Massachusetts. Massachusetts Fair Share recruited McCain Santiago to tell her story of how pre-K allowed her to go back to work, expand her law practice and hire additional employees. “We’re so thankful to have both boys in safe, caring learning environments that are helping them prepare for kindergarten and beyond,” McCain Santiago said. “This has allowed me to grow my business … I’ve been able to hire two employees and serve more families.  I strongly believe that all families deserve the fair shot that we have been lucky enough to get.”

 

Safety Net

Rebuilding Our Life in an Unfamiliar Town

In June of 2010, I found myself fleeing domestic violence without any money, unemployed, homeless, and with my two children. Scared for my safety and overwhelmed with the responsibility of rebuilding our life in an unfamiliar town, I had no idea where to begin.

A local crisis center referred me to the Blue Valley Community Action Partnership for assistance with food and housing. After listening to my situation, the staff treated me with dignity as they provided my family with nutritious food from the food pantry, clothing, household goods, and new backpacks full of school supplies for my children. My family was enrolled in the Homeless Prevention and Rapid Re-housing Program, which enabled me to find a safe home by providing temporary financial assistance for rent and utilities.

I enrolled in the Supplemental Nutrition Assistance Program, or SNAP, so I could buy groceries. And Medicaid provided us with vaccinations, medical and dental care, prescriptions, and counseling services, which allowed my kids to enroll in a new school.

The security of having a home, food, and medical care was a tremendous weight off my shoulders, allowing me to focus on finding employment in our small rural community. In August, two months after initially receiving help, I obtained a part-time job at a retail store. A few weeks later, I became a full-time employee as a case coordinator for the Homelessness Prevention and Rapid Re-housing Program when it became available at the Blue Valley Community Action Partnership, the same program that originally helped me.

I have now been employed there for more than three years and gained the job skills needed to advance to my current position as a research and development officer.

It has been a struggle to become financially independent; at times I needed to work two jobs and had to rely on income tax credits to make ends meet, but I am fortunate to no longer need assistance for my family’s basic needs.

Related

Safety Net

The Fair Food Program: Worker-Driven Social Responsibility for the 21st Century

When the Coalition of Immokalee Workers (CIW) announced its historic agreement with Wal-Mart on January 16, 2014, Alexandra Guaqueta, the Chairwoman of the United Nations Working Group on Business and Human Rights, traveled from Bogota, Colombia, to Immokalee, Florida, and read a statement on behalf of the UN.  She said, “We are here to support the Immokalee workers and the Fair Food Program, which offers such promise for us all.”  She went on to praise the Program as a “ground-breaking accountability arrangement” comprised of a “smart mix of tools” and “closely aligned with the UN Guiding Principles on Business and Human Rights.”  Finally, she expressed the UN’s eagerness to see the Fair Food Program “serve as a model elsewhere in the world.”

Since its inception in 2011, the Fair Food Program has been in operation in more than 90% of Florida’s $650 million tomato industry, and the changes it has achieved in just three years – identifying and eliminating the bad actors and bad practices that plagued Florida’s fields for decades, and establishing new practices and policies that promote a safer, more humane workplace – have been astonishing.

In a recent front-page feature in the New York Times, Rutgers labor studies professor Janice Fine called the Fair Food Program “the best workplace monitoring program” in the U.S., while Susan Marquis, Dean of the Pardee RAND Graduate School, noted, “Now the tomato fields in Immokalee are probably the best working environment in American agriculture. In the past three years, they’ve gone from being the worst to the best.” The contrast between the Florida tomato industry and other sectors of U.S. agriculture is now stark, a fact that workers themselves are quick to note as they move from crop to crop throughout the year.

Prior to the launch of the Fair Food Program, labor conditions in the Florida tomato industry – including stolen wages, forced labor and slavery, sexual harassment and rape, and endemic violence – were among the most abusive found anywhere. In 2008, Senator Bernie Sanders stated, “I think those workers are more ruthlessly exploited and treated with more contempt than any group of workers that I’ve ever seen and I suspect exist in the U.S.” He added, “the norm is a disaster, the extreme is slavery.”  Senator Sanders was right.  In the fifteen years before the inception of the Fair Food Program, the U.S. Department of Justice prosecuted nine cases of modern slavery in Florida, involving more than 1,200 workers and resulting in prison terms of up to 30 years.  Seven of those prosecutions were done with the help of the CIW.  Conditions were so bad that, in 2003, one federal prosecutor described Florida’s fields as “ground zero for modern-slavery.”

But there have been no cases of modern-day slavery on Fair Food Program farms since the inception of the program, thanks to the severe market consequences for violators of its zero tolerance policy for forced labor.  And today, the Fair Food Program is poised to expand.  Demands on the Program to share its many lessons for the effective protection of human rights in corporate supply chains – as well as to scale up and expand its reach – are growing daily, as news of the model makes its way out of the fields of Florida to communities of workers and human rights organizations from California to Bangladesh.

What is the Fair Food Program?

How did a program born in the small, hardscrabble farmworker community of Immokalee, Florida become a leading model for the protection of human rights on the global level?

Perhaps the best way to answer that question is to ask another question: “What if workers designed a social responsibility program to protect their own human rights?”  What would such a worker-designed social responsibility program look like?

The Fair Food Program is the answer to that question.  Take a moment to think about workers in any labor-intensive industry – garment, assembly, agriculture – given the time and space to study past social responsibility efforts and to build their own from scratch; sitting together, arguing, agreeing, and ultimately constructing a program to protect their own rights from the bottom up.  Some of the elements that might emerge from such a process would likely include:

A Code of Conduct with real rights: With actual workers creating their own code of conduct, it would extend beyond requiring compliance with generic standards like those of the International Labor Organization or local laws and regulations. Workers would include concrete wage increases and identify industry-specific reforms that simply wouldn’t occur to outside architects of social accountability programs.  For example, requiring unpaid work – in agriculture, workers were forced to overfill buckets when paid by the piece – would be prohibited.  Only workers know the more subtle forms their exploitation has taken over the years – the schemes designed by their employers – which comprise the net that has trapped them in poverty for decades.

Enforcement as important as the standards themselves: Most corporate social responsibility programs pay lip service – at best – to the need to enforce their standards, but a worker-designed program would put the emphasis on enforcement, because the very reason for building the program is to end longstanding abuses, not just to elaborate an attractive set of new rights.  The enforcement system would feature an important, driving role for workers themselves, including: a grievance procedure with easy access for workers and an efficient and effective response to worker complaints; wall-to-wall worker education, so that workers themselves can be the 24-hour monitors needed to ensure compliance – if all workers are informed of their rights, abusers have nowhere to safely ply their trade; an audit process that gets behind closed doors, and into the records and policies that workers themselves can’t access, because there is always a percentage of abuses that are outside the sight of the workers, like systematic minimum wage theft through the doctoring of hours.

Enforcement with real teeth: Workers know that the most direct route to getting their employers’ attention is through their bottom line.  So workers would make sure there are real, measurable financial consequences for any human rights violations – market consequences – the ultimate hammer behind the enforcement of their rights.

These are some of the elements that a worker-developed social responsibility program would include, and those are the principal elements that comprise the Fair Food Program’s uniquely successful model.

Theory Meets Reality

Fortunately, we know that this theory of a worker-designed social responsibility program is not simply an idea – it’s now tested and proven to work. In the fields of Florida, a place once called “ground zero for modern-day slavery”, the Fair Food Program is now in its third season of operation, and the results are an unprecedented success.  To date:

  • The CIW has educated approximately 20,000 workers, face-to-face, on their rights within the program;
  • Workers have brought forth over 500 complaints under the Code of Conduct, resulting in the resolution of abuses ranging from sexual harassment and verbal abuse to wage violations;
  • The Fair Food Standards Council (FFSC) – the third-party created to monitor and enforce the Fair Food Program – has conducted over 100 comprehensive audits, visited 50 farm locations, and interviewed approximately 7,000 workers to assess Participating Growers’ implementation of the Fair Food Code of Conduct; and
  • Participating Buyers have paid over $14 million in Fair Food Premiums to boost workers’ sub-poverty wages.

Lastly, there have been no cases of slavery uncovered at Participating Growers’ operations. This absence of slavery cases has held despite the fact that the Fair Food Program has dramatically increased transparency at the farm level. FFSC investigators have significantly more access to workers than ever before, and workers now know their rights and have access to an effective complaint mechanism. In fact, it is precisely because of this significantly increased transparency – and because growers know they will lose the right to sell their tomatoes to twelve of the largest tomato buyers in the world if forced labor is found on their farm – that slavery is, finally, a thing of the past on Fair Food Program farms.

Wal-Mart’s entry into the Fair Food Program has set the stage for the Program’s expansion – both beyond the Florida border and into other crops – in the coming months and years.