Welfare

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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 in need. These efforts usually strive to improve the financial situation of people in need but may also strive to improve their employment chances and many other aspects of their lives including sometimes their mental health. In many countries, most such aid is provided by family members, relatives, and the local community and is only theoretically available from government sources.^{[citation needed]}

In American English, welfare is often also used to refer to financial aid provided to individuals in need, which is called benefit(s) or welfare benefits in British English

Contents 1 Forms 2 Provision and funding 3 History 4 Welfare systems 4.1 France 4.2 Germany 4.3 Canada 4.4 Italy 4.5 Sweden 4.6 United States 4.7 Latin America 4.7.1 History 4.7.2 Latin America’s most recent shift in social policies 4.7.3 Major aspects of current social assistance programs 4.7.4 Critiques 5 See also 6 References 7 Notes

[edit] Forms

This section requires expansion.

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.

[edit] Provision and funding

This section requires expansion.

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.^[1]

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

[edit] History

In the Roman Empire, social welfare to help the poor was enlarged by the Caesar Trajan^[2]. Trajan's program brought acclaim from many including Pliny the Younger.^[3]

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 concepts of welfare and pension were put into practice in the early Islamic law^{[4][not in citation given]} of the Caliphate as forms of Zakat (charity), one of the Five Pillars of Islam, since the time of the Rashidun caliph Umar in the 7th century. The taxes (including Zakat and Jizya) collected in the treasury of an Islamic government were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058–1111), the government was also expected to store up food supplies in every region in case a disaster or famine occurs.^[4][5] (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.^[6] 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,^[7] 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.

[edit] Welfare systems

[edit] 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.

[edit] Germany

The welfare-state has a long tradition in Germany dating back to the industrial revolution. 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 only 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 kind thereafter, until they attain 25 years or receive their first professional qualification)^[8] and basic provisions for those unable to work or anyone with an income below the poverty line.^[9]

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.

[edit] 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.^[10] 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.

[edit] 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.

[edit] Sweden

Sweden has been categorised by some observers^[who?] as a middle way between a capitalist economy and a socialist economy^{[citation needed]}. 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).

[edit] United States

From the 1930s on, New York City government provided welfare payments to the poor.^[12] By the 1960s, as whites moved to the suburbs, the city was having trouble making the payments and attempted to purge the rolls of those who were committing welfare fraud.^[12] Twenty individuals who had been denied welfare sued in a case that went to the United States Supreme Court, Goldberg v. Kelly. The Court ruled that those suspected of committing welfare fraud must receive individual hearings before being denied welfare.^[12] Journalist David Frum considers this ruling to be a milestone leading to the city's 1975 budget disaster.^[12]

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.^[13] 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.^[13] In 1968, 4.1% of families were headed by a woman on welfare; by 1980, this increased to 10%.^[13] In the 1970s, California was the U.S. state with the most generous welfare system.^[14] Virtually all food stamp costs are paid by the federal government.^[15] In 2008, 28.7 percent of the households headed by single women were considered poor. <http://www.npc.umich.edu/poverty/>

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."^[16] Prior to reform, states were given "limitless"^[16] money by the federal government, increasing per family on welfare, under the 60-year-old Aid to Families with Dependent Children (AFDC) program.^[17] 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).^[18] One child in seven nationwide received AFDC funds,^[17] which mostly went to single mothers.^[15]

After reforms, which President Bill Clinton said would "end welfare as we know it,"^[15] amounts from the federal government were given out in a flat rate per state based on population.^[18] Each state must meet certain criteria to ensure recipients are being encouraged to work themselves out of welfare. The new program is called Temporary Assistance to Needy Families (TANF).^[17] It also encourages states to require some sort of employment search in exchange for providing funds to individuals and imposes a five-year time limit on cash assistance.^[15][17][19] The bill restricts welfare from most legal immigrants and increased financial assistance for child care.^[19] The federal government also maintains an emergency $2 billion TANF fund to assist states that may have rising unemployment.^[17]

Millions of people left the welfare rolls (a 60% drop overall),^[19] employment rose, and the child poverty rate was reduced.^[15] A 2007 Congressional Budget Office study found that incomes in affected families rose by 35%.^[19] The reforms were "widely applauded"^[20] after "bitter protest."^[15] The Times called the reform "one of the few undisputed triumphs of American government in the past 20 years."^[21] 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.^[15]

Aspects of the program vary in different states; Michigan, for example, requires a month in a job search program before benefits can begin.^[15]

The National Review editorialized that the Economic Stimulus Act of 2009 will reverse the welfare-to-work provisions that Bill Clinton signed in the 1990s and again base federal grants to states on the number of people signed up for welfare rather than at a flat rate.^[18] One of the experts who worked on the 1996 bill said that the provisions would lead to the largest one-year increase in welfare spending in American history.^[21] The House bill provides $4 billion to pay 80% of states' welfare caseloads.^[17] Although each state received $16.5 billion annually from the federal government as welfare rolls dropped, they spent the rest of the block grant on other types of assistance rather than saving it for worse economic times.^[16]

Timeline

1880’s-1890’s: There were attempts made to try and 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 has gotten worse and the first attempts to fund relief failed. The “Emergency Relief Act” was passed into law. It gives local governments $300 million.

1933: In March 1933 Roosevelt pushes 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 Dependant 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.

^[22]

[edit] Latin America

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[edit] 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.^[23] 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.^[23]

[edit] Latin America’s most recent shift in social policies

The economic crisis of the 1980s led to a shift in social policies, as understandings of poverty and social programs evolved (24). New, mostly short-term programs emerged. These include:^[24]

• Mexico: Opportunidades (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 Opportunidades
• Bolivia: Bonosol

[edit] 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.

[edit] 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.

[edit] See also

Look up welfare in Wiktionary, the free dictionary.

• 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

[edit] 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

[edit] Notes