types of social welfare policies lo 18.1: compare and contrast entitlement and means-tested social...

Types of Social Welfare PoliciesLO 18.1: Compare and contrast entitlement and means-tested social welfare programs.

• Social Welfare Policies• Policies that provide benefits, cash or in-

kind, to individuals, based on either entitlement or means testing.

To Learning ObjectivesCopyright © 2011 Pearson Education, Inc. Publishing as Longman

Copyright © 2011 Pearson Education, Inc. Publishing as Longman

Types of Social Welfare Policies

• Entitlement Programs• Government programs providing benefits

to qualified individuals regardless of need.

• Means-Tested Programs• Government programs providing benefits

only to individuals who qualify based on specific needs.

LO 18.1

To Learning Objectives

Income, Poverty, and Public PolicyLO 18.2: Assess the extent of economic inequality in America and the role of government in lessening it.• U.S. has one of the world’s highest per capita

incomes.• According to Census Bureau in 2009, the

median U.S. household income was $49,777.• No industrialized country has wider extremes

of income than the United States.



Income, Poverty, and Public Policy

• Who’s Getting What?• Income distribution – The way the national income is

divided into “shares” ranging from the poor to the rich.• In 2008, people whose income placed them in the lowest

20% of households got 3.4% of nation’s income and those in the highest 20% got half of nation’s income.


LO 18.2


LO 18.2



• Who’s Getting What? (cont.)• In recent decades, the share of the highest fifth has

grown while those of the lowest fifths have gotten smaller.

• Relative deprivation – A person perceives that he or she is not doing well economically in comparison to others.


LO 18.2



• Who’s Getting What? (cont.)• Income – The amount of money collected between any

two points in time.• Wealth – Value of assets owned, such as stocks, bonds,

bank accounts, cars, and houses.• ⅓ of wealth is held by 1% of the population, ⅓ is held by

9%, and ⅓ is held by 90%.


LO 18.2



• Who’s Poor in America?• Poverty line – Income below this amount means people

are poor, based on what a family must spend for an “austere” standard of living, set at three times the cost of a subsistence diet.

• 43.6 million people, or 14.3% of population, were poor in 2009, according to Census Bureau.


LO 18.2



• Who’s Poor in America? (cont.)• In 2009, the poverty threshold for a single adult was

$11,161, for two adults it was $14,366, and for a single parent with two children it was $17,268.

• Poverty rates are higher for African Americans, Hispanics, unmarried women, children, and inner-city residents.


LO 18.2



• Who’s Poor in America? (cont.)• Feminization of poverty – The increasing

concentration of poverty among women, especially unmarried women and their children.

• Poverty rate for female-headed families is almost 30%, as opposed to less than 6% for families with two parents.


LO 18.2



• How Public Policy Affects Income• Progressive tax – A tax by which the

government takes a greater share of the income of the rich than of the poor.

• For example, when a rich family pays 50% of its income in taxes, and a poor family pays 5%.


LO 18.2



• How Public Policy Affects Income (cont.)• Proportional tax – A tax takes the same share

of income from everyone, rich and poor alike.• Regressive tax – A tax in which the burden falls

relatively more heavily on low-income groups than on wealthy taxpayers.


LO 18.2



• How Public Policy Affects Income (cont.)• Earned Income Tax Credit – A refundable

federal income tax credit for low income working individuals and families.

• In 2010, workers raising 1 child with incomes less than $16,420 could get up to $3,043 in EITC.


LO 18.2



• How Public Policy Affects Income (cont.)• Transfer payments – Benefits given by the

government directly to individuals either cash transfers, such as Social Security payments, or in-kind transfers, such as food stamps and low-interest college loans.


LO 18.2


LO 18.2


Helping the Poor? Social Policy and the Needy

• “Welfare” As We Knew It• Social Security Act of 1935 created the Social

Security program and the Aid to Families with Dependent Children program.

• In 1964 President Lyndon Johnson declared a War on Poverty, and added welfare programs to the policies that fight poverty.

LO 18.3




• “Welfare” As We Knew It (cont.)• In 1981, President Ronald Reagan declared

war on antipoverty programs, and persuaded Congress to cut welfare benefits and lower the number of Americans on the welfare rolls by arguing that welfare had proved to be a failure.


LO 18.3



• Ending Welfare As We Knew It: The Welfare Reform of 1996• Personal Responsibility and Work

Opportunity Reconciliation Act is the welfare reform law of 1996, which implemented the Temporary Assistance for Needy Families (TANF) program.


LO 18.3



• Ending Welfare As We Knew It: The Welfare Reform of 1996 (cont.)• TANF replaced Aid to Families with Dependent

Children as the program for public assistance to needy families.

• TANF requires people on welfare to find work in 2 years and sets a lifetime maximum of 5 years.


LO 18.3


Social Security: Living on Borrowed Time

• The Growth of Social Security• In 2010, average monthly check for retired

workers was $1,100.• 1st check was $22.54 in 1936 to Ida Fuller

of Brattleboro, VT.• Social Security Trust Fund – The

account that Social Security contributions are put into and used to pay eligible recipients.

LO 18.4




• The Growth of Social Security (cont.)• Current payroll taxes are 12.4%.• Workers contribute 6.2% of their wages up

to $102,000, and their employers match it.• Trust Fund must invest money in U.S.

Treasury bonds, which has been earning about 6% a year.


LO 18.4



• The Growth of Social Security (cont.)• Social Security – Most expensive public

policy in the U.S.A.!• A recipient’s benefits require a Social

Security payroll tax of 10.3% per worker (31/3 = 10.3).

• Cost to each worker may rise to 15.5% of earnings (31/2 = 15.5).


LO 18.4



• Reforming Social Security• President Bush – Proposed diverting ⅓ of

individuals’ Social Security contribution to private retirement funds, such as a private account, a stock, a bond, or another investment.

• President Obama – More likely to propose raising payroll taxes.


LO 18.4

Social Welfare Policy ElsewhereLO 18.5: Distinguish American social welfare policy from that of other established democracies.

• Most industrial nations tend to be far more generous with social welfare programs than the United States.• Greater generosity is evident in programs

related to health, child care, unemployment compensation, and the elderly.



Social Welfare Policy Elsewhere

• We see poverty and welfare as individual concerns, and Europeans support greater governmental responsibility for these problems.• 71% of Americans believe that the poor

could escape poverty if they worked hard enough, compared to 40% of Europeans.


LO 18.5



• Europeans often have a more positive attitude toward government.

• Americans are more likely to distrust government action in areas such as social welfare policy.


LO 18.5



• Europeans pay a high price for generous benefits.• Tax rates in Western European nations far

exceed those in the United States; in some cases top tax rates exceed 50% of income.

• Funding problems are greater in Europe due to level of benefits and shrinking populations.


LO 18.5


Understanding Social Welfare Policy

• Democracy and Social Welfare• In the social welfare policy arena, the competing groups

are often quite unequal in terms of political resources.• The elderly are relatively well organized and often have

the resources needed to wield significant influence in support of programs they desire.

LO 18.6




• Democracy and Social Welfare (cont.)• The elderly are usually successful in protecting and

expanding their programs.• Influencing political decisions is more difficult for

the poor because they vote less frequently and lack strong, focused organizations and money.


LO 18.6



• Social Welfare Policy and the Scope of Government• Nothing more clearly accounts for the growth of government

than social welfare spending.• Growth of government is driven by the growth of social welfare.• American social welfare system grows generation by

generation.


LO 18.6

types of social welfare policies lo 18.1: compare and contrast entitlement and means-tested social...

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