Welfare's effect on poverty
The effect of social welfare on poverty is controversial. Since the goal of welfare programs is to reduce poverty, it has been debated, primarily in the United States, whether or not welfare programs achieve this goal.
Proponents argue welfare has reduced poverty in developed countries while opponents argue welfare creates a negative incentive to not find work and thus sustains or even creates poverty.
Proponents of welfare reducing poverty
Studies have shown that in welfare states poverty decreases after countries adopt welfare programs. In 2013, the Organisation for Economic Cooperation and Development asserted that welfare spending is vital in reducing the ever expanding global wealth gap.
Table of welfare effect on poverty reduction
Timothy Smeeding used data from the Luxembourg Income Study to determine the effectiveness of anti-poverty and welfare programs on poverty reduction. The data for all the countries was from the year 2000 with the exception of the United Kingdom and the Netherlands for which the data was from 1999.
|Country||Social expenditures on non-elderly[Notes 1]
(as percentage of GDP)
|Total percent of
Table of poverty levels pre and post welfare
Two studies compare countries internationally before and after implementing social welfare programs. Using data from the Luxembourg Income Study, Bradley et al. and Lane Kenworthy measure the poverty rates both in relative terms (poverty defined by the respective governments) and absolute terms, (poverty defined by 40% of US median income) respectively. Kenworthy's study also adjusts for economic performance and shows that the economy made no significant difference in uplifting people out of poverty.
The studies look at the different countries from 1960 to 1991 (Kentworthy) and from 1970 to 1997 (Bradley et al.). Both these periods are roughly when major welfare programs where implemented such as the War on Poverty in the United States. The results of both studies show that poverty has been significantly reduced during the periods where major welfare programs were created.
|Country||Absolute poverty rate (1960–1991)
(threshold set at 40% of U.S. median household income)
|Relative poverty rate
Opponents of welfare reducing poverty
Opposition to welfare programs has been primarily in the United States. Members of both the Republican and Democratic Party (as well as third parties such as the Libertarians) have favored reducing or eliminating welfare. The landmark piece of legislation which reduced welfare was the Personal Responsibility and Work Opportunity Act under the Clinton administration.
Conservative and libertarian groups such as the Heritage Foundation and the Cato institute assert that welfare creates dependence and a disincentive to work. This dependence is called a "culture of poverty" which is said to undermine people from finding meaningful work. Many of these groups also point to the large budget used to maintain these programs and assert that it is wasteful.
Some Socialists and Marxists argue that welfare states and modern social democratic policies limit the incentive system of the market by providing things such as minimum wages, unemployment insurance, taxing profits and reducing the reserve army of labor, resulting in capitalists have little incentive to invest; in essence, social welfare policies cripple the capitalist system and increase poverty. By implementing public or cooperative ownership of the means of production, socialists believe there will be no need for a welfare state.
In 2013, a NBC News/Wall Street Journal poll found that a plurality of Americans (24 percent) said “too much government welfare that prevents initiative” was the leading cause of poverty.
- Cloward–Piven strategy
- Social programs in the United States
- Social Security debate (United States)
- War on Poverty
- Welfare queen
- Debate over Welfare Reform Lingers 10 Years Later, PBS Newshour
- The Federal Welfare Debate: Is Congress Deserting Working Families?, Brookings Institution
- Kenworthy, L. (1999). Do social-welfare policies reduce poverty? A cross-national assessment. Social Forces, 77(3), 1119-1139.
- Woolf, Steven; Aaron, Laudon. "U.S. Health in International Perspective". National Research Council and Institute of Medicine. pp. 171–172. Retrieved April 8, 2013.
- Bradley, D., Huber, E., Moller, S., Nielson, F. & Stephens, J. D. (2003). Determinants of relative poverty in advanced capitalist democracies. American Sociological Review, 68(3), 22-51.
- Kevin Drum (26 September 2013). We Can Reduce Poverty If We Want To. We Just Have To Want To. Mother Jones. Retrieved 28 September 2013.
- Gould, Elise and Wething, Hilary (24 July 2012). "U.S. poverty rates higher, safety net weaker than in peer countries." Economic Policy Institute. Retrieved 26 July 2013.
- Wealth Gap Widens In Rich Countries As Austerity Threatens To Worsen Inequality: OECD. The Huffington Post. Retrieved 26 July 2013.
- Timothy S. (2006). Poor People in Rich Nations: The United States in Comparative Perspective. Table 4, "The Antipoverty Effect of Government Spending: Percent of All Persons Poor"
- 2008 Indicators of Welfare Dependence Figure TANF 2.
- Republican Party on Welfare & Poverty, On The Issues
- Democratic Party on Welfare & Poverty, On The Issues
- Issues: Poverty and Welfare
- Confronting the Unsustainable Growth of Welfare Entitlements: Principles of Reform and the Next Steps", The Heritage Foundation
- Niskanen, A. Welfare and the Culture of PovertyThe Cato Journal Vol. 16 No. 1
- Murray, Charles (1984). Losing Ground: American Social Policy 1950–1980. Basic Books. p. 58, 125, 115.
- Encyclopedia of Marxism: Glossary of Terms
- Market Socialism: The Debate Among Socialists, by Schweickart, David; Lawler, James; Ticktin, Hillel; Ollman, Bertell. 1998. (P.60-61): "The Marxist answers that market socialism cannot exist because it involves limiting the incentive system of the market through providing minimum wages, high levels of unemployment insurance, reducing the size of the reserve army of labour, taxing profits, and taxing the wealthy. As a result, capitalists will have little incentive to invest and the workers will have little incentive to work. Capitalism works because, as Marx remarked, it is a system of economic force (coercion)."
- Wolff, Richard D. (15 April 2013). A New Political Strategy. Democracy at Work. Retrieved 28 July 2013. "...the best solutions to pressing social problems lie in going well beyond the state and welfare (“socialist”) reforms of the past in the precise sense of changing the organization of enterprises, democratizing them into WSDEs (workers' self-directed enterprises)."
- "Poll: Americans blame ‘government welfare’ for poverty," msnbc.com