Does Welfare Work?

That, my friends, is a billion dollar question with no easy "one size fits all" answer.

For starters, "welfare" as commonly defined consists of a number of totally independent programs, including unemployment compensation, food stamps, Temporary Assistance to Needy Families (TANF), Medicaid, and Section 8 (HUD) housing. It is entirely possible that some of these are more effective than others. It is also possible that the same program is effective for some segments of the population and not for others -- or even for specific individuals and not for others.

A sophisticated analysis would necessarily include both "macro" and "micro" viewpoints. In other words, both the aggregate impact of these programs nationally and the impact on specific people (or at least sub-population groups) would need to be considered. Another complicating factor is that statistics on the number of people living in poverty or taking advantage of various forms of government assistance, by themselves, do not lead to incontrovertible conclusions. Trend analysis helps, but sometimes the question still remains: what would the statistics be if the programs didn't exist? What would the statistics be if the programs were fully funded and accessible to all those eligible who desire to participate (which they aren't)?

A short blog post clearly cannot do justice to this infinitely complex issue. However, a few interesting points can be considered.

Let's start with a little macro-analysis. If social welfare programs work, then countries with more extensive programs should report a smaller percent of their population living in poverty. And that is exactly what we find. According to UNICEF, the percentage of children living in poverty in 2005 was: Denmark, 2.4%; France, 7.5%, Norway, 13.4%; Canada, 14.9%; United Kingdom, 15.4%; United States, 21.9%. (Thank goodness for Mexico -- 27.7%.)

The Human Development Index (HDI) measures general well-being, with special emphasis on child welfare. Ratings released in 2009, covering the period up to 2007, reveal the following: the U.S. ranks 13th, in a virtual tie with Austria, Spain, and Denmark, surpassed by some countries noted for extensive welfare programs: Norway, Canada, the Netherlands, Sweden, France, and Finland.

Here's a statistic that might surprise some detractors of welfare programs; among all households receiving food stamps, almost twice as many include at least one working adult as those that don't. In other words, receipt of this particular type of government aid does not discourage work (at least in many families); it supplements a wage that is inadequate to provide the essentials of life. (An anonymous commenter to this blog recently accused me of being "deluded" because I get my information from the Washington Post and the New York Times. I plead guilty to the latter and not guilty to the former. But the information in this paragraph comes from the Food and Nutrition Service of the U.S. Department of Agriculture.)

According to the Food Research and Action Center, only 56% of people eligible for food stamps nationwide actually receive benefits. Some people are not aware that they are eligible; others are dissuaded from participation by misunderstandings about the nature of the program and/or difficulties in getting to offices during the work day.

Tired of macro-analysis? If you are unaware that literally millions of individuals (including some people who made six-figure incomes prior to the bursting of the bubble in late 2008) are out of work through no fault of their own and hanging onto life itself only by virtue of the social service safety net, then you're out of touch with reality.

Should all this matter? It only matters if we Americans truly believe in the principles enunciated by our founding documents. (Remember the Pursuit of Happiness? Have you tried doing that on an empty stomach? Recall that business about Promoting the General Welfare? I don't think the founders had bankers and sellers of financial derivatives in mind when they wrote that.) According to a study published recently in the American Journal of Public Health, poverty actually results in a loss of 8.2 "years of perfect health" -- exceeding the effect of either obesity or smoking.

Since welfare apparently works at least some of the time for a large number of people, how should we pay for it? Should it be voluntary (charitable), as "anonymous" recently recommended? Tune in next week for my thoughts on the matter.