Welfare

welfareWelfare is financial assistance or other aid that a government provides for poor or needy people. Many welfare programs issue cash payments to people who live in poverty. Others provide medical care, housing, child care, or temporary unemployment benefits. People who receive welfare include children, the elderly, people with disabilities, and others who cannot adequately provide for themselves or their families. Welfare programs are sometimes called public assistance, social assistance, or social welfare programs.

Welfare programs differ from social insurance, or social security, programs. Social insurance programs provide pension and health benefits to people whether or not they are poor. A nation’s system of welfare and social insurance programs is sometimes called a welfare state or safety net of assistance. The term welfare state may also refer to a nation whose government assumes most responsibility for its people’s financial needs. See Welfare state.

Welfare in the United States

In the United States, the term welfare is most commonly used to describe government programs that provide cash aid to the poor. But the federal and state governments in the United States also serve the needy through a number of other public assistance programs. Such programs include Supplemental Security Income (SSI), Medicaid, the Earned Income Tax Credit, and the Supplemental Nutrition Assistance Program (SNAP).

Welfare mainly helps people who live below the poverty line, an income level established by the federal government. The poverty line is adjusted annually to account for inflation. For the poverty line for families of various sizes, see Poverty (table: Poverty in the United States).

Cash aid programs provide money to poor people who are unable to support themselves or their dependents. Temporary Assistance for Needy Families (TANF) provides aid to families with children. The funding for TANF comes from both the federal and state governments. Program eligibility and the size of payments vary from state to state. Most families that qualify have just one parent in the home, but benefits may also be available to two-parent families under certain circumstances. Most recipients of cash aid must work a minimum of 30 hours per week to receive assistance. In addition, most families can receive no more than five years of cash assistance during the lifetime of the head of the family.

SSI provides aid to needy people who are at least 65 years old, or are blind or disabled. The federal government finances and administers SSI programs in most states, but some states supplement the federal payment and administer their own programs.

Medicaid pays for medical care to low-income adults and their children. The program is funded jointly by the federal and state governments. Each state administers its own Medicaid program, and eligibility varies from state to state. Much of Medicaid’s expenses are for the aged. Most of these expenses pay for nursing home care.

The Earned Income Tax Credit (EITC), also known as Earned Income Credit or EIC, is a federal program that allows low- or moderate-income households to receive credits or refunds on their income taxes. The size of the tax reduction is based on family size and income. The EITC is financed and administered by the Internal Revenue Service.

The Supplemental Nutrition Assistance Program (SNAP) helps low-income households buy more and better food than they could otherwise afford. Participating households receive a plastic card resembling a credit card that can be loaded with a monetary value. The value varies depending on the household’s size, income, and expenses. Cooperating grocery stores accept the card for food purchases only. Funds are then electronically transferred to the stores from special accounts for each family. Before the use of the cards, participants used coupons called food stamps to make their purchases.

Other public assistance programs include public housing and energy assistance. Public housing provides low-cost rental apartments in government-owned buildings. Other federal housing programs provide funds to help low-income families rent privately owned housing. Energy assistance, which is federally financed but administered by the states, helps people pay heating and cooling bills.

The federal government also administers nutrition programs for low-income families and financial aid programs for college students from needy families. In addition, many assistance programs include work supports, which help people hold jobs and manage other responsibilities. Important work supports may include subsidized child care and transportation programs.

State and local governments fund and administer their own general assistance programs as well. These programs provide financial aid for needy people who do not qualify for other welfare. People waiting to receive assistance from other programs also may get temporary emergency aid from general assistance.

Welfare throughout the world

Most nations provide some form of welfare, but the types and amounts of assistance vary. A country’s welfare system is greatly influenced by the nation’s economic conditions, the opinions and beliefs of the people, and the political leanings of the government.

Canada, Australia, New Zealand, and most European countries provide cash aid and other forms of assistance for those who are disabled, elderly, unemployed, or otherwise in need. In addition, many countries have national social insurance programs that provide a variety of benefits for all citizens. In the United Kingdom, for instance, low-income families are eligible for benefits through the Income Support and Jobseeker’s Allowance programs, as well as through the national health and retirement programs. The Scandinavian countries have traditionally had especially comprehensive welfare and social insurance systems. Developing nations maintain some welfare or public assistance programs, although these programs are more limited in scope and generosity than programs found in developed nations. For example, many Latin American countries offer modest cash assistance benefits to poor elderly populations or as incentive to engage children in education and public health programs.

Criticism of welfare systems

Criticism of the welfare system ranges over a number of economic and social issues. Many people believe that welfare systems are too complex and costly to administer. In the United States, for example, each program has its own eligibility requirements and ways of calculating benefits, and these rules vary from state to state. Public officials must collect and maintain detailed information about applicants to determine their status. This process is time-consuming and costly.

Some people criticize welfare programs for not providing sufficient benefits to lift families out of poverty. Others claim that welfare programs encourage idleness and irresponsibility by providing payments that people have not earned through work. Many people argue that public assistance programs should do more to address poverty’s root causes, such as low wages, inequality in education, and lack of career opportunities.

Since the late 1900’s, many countries—including the United States, the United Kingdom, and Australia—have reformed their welfare systems. Most of the reforms aimed to reduce costs and to emphasize the need for recipients to find employment.

History

The beginnings of public assistance. Prior to the 1800’s, families, neighbors, and religious groups were the primary sources of assistance for the poor. Governments seldom took action to relieve poverty. When governments did act, laws usually treated the poor harshly. For example, the Statute of Laborers, passed in England in 1349, prohibited charity because it might encourage idleness. In 1601, the English Parliament passed the Act for the Relief of the Poor, also known as the Elizabethan Poor Law. The law made communities and local government units responsible for assisting their own poor.

Early welfare systems recognized two main forms of assistance—outdoor relief and indoor relief. Outdoor relief was cash or other assistance given to the needy in their own homes. Indoor relief was assistance provided through residence facilities called poorhouses or workhouses. People who sought indoor relief were expected to work in the poorhouses. But the terrible conditions in most poorhouses discouraged all but the most desperate individuals from seeking relief. Outdoor relief was a vital resource for many people.

Early welfare in the United States resembled the English Poor Law system. Local governments and community organizations were responsible for aiding the poor through indoor and outdoor relief. In the early 1900’s, responsibility for providing welfare in the United States shifted from local to state governments. During these years, many local and state governments created Mothers’ Aid or Mothers’ Pension programs, which provided cash aid to widows and many single mothers. Mothers’ Aid programs did not require recipients to work. Instead, the programs encouraged women to stay in their homes and care for their children.

National welfare systems. During the early 1900’s, many national governments found it necessary to address conditions of poverty and other problems associated with the expansion of industrial cities. The need for national welfare systems increased dramatically during the Great Depression of the 1930’s, an economic slump that brought joblessness and poverty to millions of people. In the following years, many governments adopted or expanded national welfare programs.

In the United States, the Social Security Act of 1935 established federal assistance programs for the blind, the elderly, and the unemployed. The act also created the Aid to Dependent Children program, which was later renamed the Aid to Families with Dependent Children (AFDC) program. Modeled after the Mothers’ Aid programs, AFDC provided financial help to low-income families with children. Under AFDC, states determined benefit levels and administered the program. The federal government set many of the rules for determining who qualified for benefits, and it paid about half the costs of the program.

After World War II (1939-1945), many welfare systems continued to expand. In the early 1960’s, the U.S. government modified welfare laws to make it easier for families to qualify for assistance. The federal government also greatly increased its financial support to the states for funding of their welfare programs. As a result, the number of households receiving welfare grew significantly. In addition, several new welfare programs were created during the 1960’s as part of President Lyndon B. Johnson’s War on Poverty program. New programs included the Food Stamp Program and Medicaid. Existing programs also received more funding. The SSI and EITC programs began in the mid-1970’s.

Welfare reform in the United States. By the 1990’s, many U.S. policymakers believed that the welfare system had become too expensive and needed to be reformed. Congress made major changes in the system in 1996, when it passed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). The act replaced AFDC with the TANF program and changed the way that benefits were provided. Under TANF, the federal government gives cash payments directly to the states and allows each state to determine who receives cash assistance. The act requires states to reduce benefits for most recipients if they do not start working within two years and to cut off benefits for most families after five years. Since passage of the 1996 legislation, welfare caseloads have fallen significantly.