Welfare can be defined as the happiness, health, and good fortune of an individual or group. It is also the financial support that is given to people who are in need, through social efforts, legislation, and statutory procedures.
In essence, welfare programs are a government subsidy that is paid directly to people with a qualifying income. In the United States, qualification requires a household income falling below a specific percentage of the poverty level. To qualify for welfare in 2018, a family of four in the U.S. must earn $25,100 or less for the entire year.
There are currently 6 welfare programs available in the United States right now: SSI, TANF, Medicaid, Food Stamps (SNAP), EITC, and Housing Assistance. The federal government pays for the services, which are then administered by state governments. States have the option to supplement these supports if they wish.
Welfare is often seen as an entitlement program. They are not, as they do not require prior contributions to qualify.
Here are the biggest pros and cons of welfare under its current structure.
List of the Biggest Pros of Welfare
1. It is intended to help people get back on their feet.
Welfare programs are not intended to be a long-term solution for people to sit and collect checks. It is intended to help people get back on their feet if something happens to their income. These programs also provide a safety net for those who experience a disability which prevents them from working for some reason. Because of this, many programs cap the benefit time or amount that is awarded to qualifying applicants.
2. It can help to reduce crime levels in low-income neighborhoods.
Welfare programs are often associated with higher levels of crime. The opposite tends to be true. C. Fritz Foley examined 12 major American cities in 2011 and found a direct correlation to the effects of neighborhood crime and the cycles of welfare payments. The lowest levels of crime in each city, in each low-income neighborhood, occurred during the time when households had the most access to their welfare benefits. Higher levels of crime occurred during extended delays in receiving benefits, suggesting that most crime occurs because of a direct financial motivation.
3. It supports children more than any other demographic.
In the United States, a majority of the people who receive benefits through the 6 welfare programs are children. According to the Department of Health and Human Services, about 50% of their total caseload involves child-only cases. 3 out of 4 household applications to TANF involves children. 89% of families with children received some type of medical welfare benefit. In 2015, the average TANF payment to a family with one child was $332 per month. 84% of those families also received SNAP, 12% received subsidized housing, and 8% had subsidized childcare.
4. It offers help to the families who typically need it the most.
In 2017, a group of 12 people were prosecuted for $20 million in food stamp fraud. The case involved 8 small convenience stores in southern Florida, creating an illegal benefits exchange system. Although fraud is possible in any welfare program, especially if there is lax oversight for the program, the majority of people who receive benefits need them. A vast majority of people who receive welfare benefits are in a financial position where it is needed.
5. It supplements the income of people who are already working.
People who are already working receive welfare benefits to help supplement their income. 29% of low-wage employees are single parents. To become part of the “working poor,” individuals must often pass a drug test. They may be required to have their credit be at a certain level. Employment references are often mandatory. Certain criminal offenses may directly disqualify someone from many employment opportunities. Many who receive these benefits are working in jobs that range from $7.50 to $9 per hour.
6. It is only made available to qualified applicants.
Undocumented workers and illegal immigrants are not generally permitted to receive welfare benefits. A work visa must be provided as evidence for an individual’s ability to work, at minimum, to apply for certain programs. In many instances, if a worker with a visa loses their job, cannot find a job, or does not maintain a certain standard of living, then their permission to stay is revoked. Some countries take this provision a step further, requiring anyone who receives welfare benefits to be a naturalized citizen at minimum.
Some undocumented workers or illegal immigrants in the U.S. may have spouses or children that are citizens. Because the spouse or the children are citizens, they would qualify for benefits.
7. It lessens the risk of catastrophe for everyone.
Let’s say you own a home. You don’t know when it might burn down, experience a flood, or have a tree fall through the roof. It might never happen. It might happen tomorrow. To prevent financial losses, you obtain an insurance product and pay monthly premiums into a general fund. There are other homeowners like you who are doing the exact same thing.
Then, if something happens, you can draw upon that fund because you’ve been paying into it. Because the risks are spread out along the entire population of homeowners, the actual costs are minimal instead of catastrophic if the unexpected happens.
That is what welfare programs provide to people as well. In a free market system, good people can lose their jobs through no fault of their own. By providing a form of “social insurance,” the risks of losing a job are less because there is a fund to draw upon.
8. It supports better health in those who receive benefits.
Roger Arnold, who contributes regularly to RealMoney, suggests that there is a direct correlation between an individual’s health and their ability to earn an income. Those who don’t have a job or healthcare typically have a shorter lifespan. Many benefit programs require specific healthcare requirements as part of the qualification requirements. WIC, for example, requires blood tests for children to ensure they are receiving the correct nutritional profile to continue paying benefits.
9. It reduces that amount of income inequality which occurs.
Critics of welfare programs often point to the fact that people receive benefits for doing nothing. That takes money away from people who are working hard to earn it. The reality of the modern welfare program, however, is that it replaces what used to be built into the tax structures of an economy in the first place – especially in the United States. It wasn’t that long ago that the top tax income bracket in the U.S. was over 90%. Today, with the Trump Administration cuts, it has dropped to 37%.
10. It reduces poverty.
According to the Kaiser Foundation, in 1992, just 14% of people above the age of 65 lived in poverty in the United States. In 2016, just 9% of people in the 65+ age demographic lived in poverty and the overall poverty rate declined to just 13%.
In Minnesota, the poverty rate for the 65+ age demographic is just 5%. Social security benefits and welfare programs are believed to be contributing factors to this reduction of poverty in the 65+ age demographic.
That is why the rates of poverty are double that for children in the U.S. in comparison. In states like Mississippi, a child is 3 times more likely to be living in welfare than someone who could enroll in AARP. Welfare programs close the gap on poverty and provide help to those who need the most help.
List of the Biggest Cons of Welfare
1. It is an ineffective support system.
In 2018, the federal poverty income requirement to receive welfare for an individual was just $12,140. An additional $4,320 is added per individual within the household. The combination of income and family size becomes problematic for many households that are attempting to qualify for welfare benefits. If one working parent has 4 children and a spouse that stays at home, earning $16.50 per hour will disqualify that household from qualifying for most welfare benefits on the federal level.
2. It creates unnecessary negative societal stigmas.
People who accept welfare benefits are often treated as being an inferior part of society. They are viewed as being lazy, unwilling to find a job, and generally unworthy. To reduce those stigmas, many state governments have looked at stiffening the requirements to receive welfare benefits. Work or training qualifications may apply. Drug testing may be required. The purpose of these actions is to empower people to lift themselves out of poverty. In reality, it causes those who receive benefits to be treated as secondary citizens.
3. It offers inconsistent supports.
In the United States, the states are permitted to set many of their own rules on who receives benefits. That means a family might qualify for welfare benefits in one state, but not another state. This inconsistency can restrict access to welfare programs because families may think they don’t qualify for benefits, based on their previous experiences. The inconsistency also means that some states may not offer access to certain benefits and programs. When Medicaid expansion was permitted through the Affordable Care Act, 18 states have so far decided against providing the extra services.
4. It does not address the issue of why poverty exists.
We live in times that are changing rapidly. Technologies are changing the way we can be productive. In the next 10 years, automation, AI, and other forces could put up to half of the current workforce into unemployment. For that reason, a basic income guarantee has been proposed as a way to counter this issue.
Even that form of welfare does not actually address the root cause of poverty. People need certain skills to be competitive in any job market. They also need access to basic living supplies to support themselves. As the world transitions to a high-skill requirement, providing rudimentary benefits are not as effective as providing free vocational training, educational access, or other programs that support a chance to adjust to these changes for those who wish it.
5. It can create patterns of dependence in some individuals and households.
Proponents of welfare programs suggest it is our responsibility as a society to provide for those who cannot provide for themselves. Critics of these programs point to the fact that meeting someone’s needs, without any requirements, creates a system of dependency. There is no incentive for someone to work or learn a new skill if they are satisfied having their basic needs met. To limit dependence, many programs cap the number of benefits that can be paid to households over a specific time period.
6. It is a system that can be abused by those who don’t need financial help.
Every business and program experiences losses because of fraud each year. A good rule to practice is to budget a 6% cost for losses due to undesired consumer activity. Welfare abuse schemes have been in place since the programs began. In a 2012 committee examining only Social Security disability benefits, out of 300 cases examined, 25% of payment recipients were receiving benefits based on evidence that was incomplete, insufficient, or contradictory.
That’s not to say everyone is attempting to commit fraud when they receive welfare. In some counties, the rates of welfare fraud are well below 1%. When there are billions of dollars at stake and households that do need these supports, rooting out the fraud must become a top priority.
7. It encourages family cycles of welfare dependence.
Children who live in families that depend on welfare benefits are more likely to find themselves on welfare programs as an adult. With an average daily benefit of just $25, in all available benefits, that puts a U.S. household receiving welfare into the top 20% of global income earners. From reporting by the Washington Post, there are 11 states where government aid can pay more than the average pre-tax wages for a teacher. In Hawaii, the highest total value of welfare benefits is over $49,000 per year.
8. It requires people to apply for the programs to receive benefits.
Welfare benefits are not handed out to families unless they provide an application and are approved for the program. In the United States, many families who are eligible to apply for programs aren’t doing it. Before welfare program reforms were implemented in 1995, 84% of families who were eligible for benefits participated in programs. By 2005, just 40% of qualifying families were actually participating in cash assistance programs offered by state and national governments.
9. It is costly.
The total amount spent on all means-tested welfare programs in the United States, including state and federal funding, is $1.03 trillion per year. About half of the costs are directed toward healthcare. Another 40% is directed toward food, housing, or cash assistance. As of 2011, that was more than the annual budget for all services in needs in more than 180 countries.
I recommend that you read these 15 welfare statistics that support some of these pros and cons.
The biggest pros and cons of welfare attempt to balance the need to provide basic benefits for people who fall on hard times, while stopping fraud and encouraging households to eventually get off the system. Some will always see welfare programs as a government bribe that keeps people from working. Others will see these programs as a way to provide care options for those who may need it.