Social welfare policy that facilitates reduction of poverty and inequality in US

1. Introduction

In the past two decades, the international community has made poverty eradication as their number one priority. Over a decade ago, Breton wood institutions came up with an objective of minimizing cases of income – poverty in less developed countries from over 30% to less than 15% by 2015 (Bourguignon 2).

Escalation in global poverty has led to emergence, fusion, and dispensation of new economic models which focuses on economic stability, liberalization, privatization of public institutions, and exploration of market solutions in supplying public goods. These approaches marked the era of policy making in both developed and developing nations in their effort to promoting living standards of the poor nations and the eradication of poverty globally (Bourguignon 3).

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Most studies investigating inequalities between countries assume all citizens from these nations have similar mean income. Most of these studies suggests that majority of the Asian countries grew first towards the mean income while the rest of developing nations are moving further away (Glazer 3).

These studies show that the income of the richest members of the population which constitutes of about 20% has rose to over 80%. Therefore, the increasing global inequality has been a constant feature over the past three decades, with a noticeable scenario from 80s to date and there is diminutive evidence that this condition will change (Glazer 4).

With exclusion of china, the reduction of inequality in the global arena has not been realized since 1975. Since the end of 70s, US have experienced spectacular increase in economic inequality. United States is considered to be the most unequal nation among the world richest economies. In spite of the scale of the increase in the inequality, the political class in the US rarely discusses this subject in the public.

Throughout the history of the United States of America, its populace has struggled considerably with the paradox of poverty amidst riches (Weil and Kenneth 2). This has left many people wondering why a nation endowed with such magnitude of wealth still witness its own citizens struggle while there are enormous opportunities and excellent economy. Are the poor to be to be blamed or they are just victims of social inequality dogged with racism and bigotry, or economic system that favors the affluent over the struggling population?

The paradox of the American poverty runs down to a long time and the only news is the amount of public policy concentration aimed towards the poor. A lot of attention is being paid now than before and one of the major reasons for this is the restructuring of the welfare system.

The American income safeguarding system is categorized into two based on their relationship with the workers; one of the category is the social security which includes unemployment compensation program, disability insurance among others which is linked to the payroll deduction or contributions from the income to the public programs.

The other category is the social welfare programs whose suitability is centered on the welfare earning and accumulated affluence. Welfare programs are mostly for the needy and the poor people in the society (Glazer 3).

Personal Responsibility and Work opportunity Reconciliation Act (PRWORA) of 1996 led to the overhaul of the welfare system. One of the major reform programs was the Aid to Families with Dependent Children (AFDC). This program offered cash incentives to the families which had children but earned low income (Weil and Kenneth 4-5).

There were other legislations that sought to terminate all of the above government programs that assisted the low-income earners/ the poor by encouraging self-reliance and personal responsibility. PRWORA put in place stringent measures that limited the cash assistance, enforced work requirements, and promoted matrimony and nuclear family as a basis for raising children (Trattner 6).

Welfare reforms in the US have been a big achievement, in any case by considering the reduction in the welfare problems. The number of families that got assistance from the welfare programs decreased by more than half between the year 1994 and the year 2000. By the year 2000, only 2.1% of the US populace was receiving support from the government welfare program known as the Temporary Assistance for the Needy Family program (TANF).

Successes of these programs were promoted by the flourishing economy at that time. This welfare programs helped in poverty caseloads reduction even in the single families with women as the head. The year 2002 saw the re-authorization of the welfare reform bill as a result of the protests from the poverty and welfare rights group. The right group argued that PRWORA placed a lot of focus on minimizing caseloads instead of prioritizing poverty reduction (Glazer 3).

2. Statistics of the poor Americans

According to the studies carried out in the year 2000 it was established that the poor Americans constituted of about 11% of the population. This study was carried by the US office of management and Budget. This was the lowest rate since 70s and only 4.4% lived below the poverty line.

There is diminutive evidence to support the critics who opposes PRWORA claiming that it has impoverished the populace more. In a matter of fact, the average income of the American families within the bracket of bottom 20% increased from 12600 dollars to over 14000 dollars. The growing incomes among the poor and the rich reinforced the euphoria over the improving economy and authenticating claims that welfare reform was successful (Glazer 3).

Activists representing the poor argue that income benchmark used by the federal government to measure poverty was too low to cover the basic needs. In the year 2000, single mothers with two children required only 14000 dollars to be counted out of the poor population while a nuclear family with two children required 17500 dollars.

In contrast, the median income for the American families was approximately 51000 dollars. Analyst argues that personal income at or above the economic poverty income threshold cannot support an individual in the world biggest cities like London, Washington D.C, among others since housing is beyond their reach (Bourguignon 2).

Considerable difference in living costs in different geographical regions forms the basis for criticism against a single national income standard for defining poverty. Other limitations on the official definition of poverty are its failure to account for other source of income or support such as food stamps (Trattner 6).

Child poverty rates dropped by almost 20% in the early 1990s to the year 2006 according to the national survey carried out in 2007. About 11.5 million children and 3.4 million adults of age 65 and above live in poverty making almost half of the poor population in America. Children and elderly persons are considered as eligible poor who deserves state’s assistance.

They cannot be held responsible for their poor status. America’s racial minorities still constitute the poorest in the American society (Glazer 3). The racial structure and composition of the poor Americans have not changed over the past ten years. In early 90s, 50% of the poor populations were non-Hispanic white. This figure went down by 3% in the year 2000 to 47%.

America’s increasing racial diversity has taken place at the same time with the waning poverty rates across racial and ethnic minority groups. Between 1990 to date poverty, rates have gone down from 28% to 19% among the Hispanic, and from 12% to 10% among Asian and Islanders.

Reduction in poverty rates dropped steeply among the African American from about 40% in the year 1990 to about 20% in the year 2006. However, poverty rates among the African American and the Hispanics is still about twice the national average (Trattner 7).

Wage inequality between male and female have persisted coupled with the escalation in single motherhood. This has underpinned the perception that the growing poor Americans are women (Bourguignon 2). In the year 2000, the poverty among women was 25% higher than men and this gender difference has remained constant over the years. The sex difference has persisted despite of the increasing female employment rate, increase in income and reducing wage difference between male and females (Trattner 6).

About half of the America’s poor families are headed by women although families headed by women only represent quarter of the all families with children. In the year 2000, the rate of poor families headed by women was six times higher than the rate for married couple (Trattner 6).

After the enactment of the PRWORA, this rate started to decline from 47% to nearly 30%. The main goal for this welfare program was to encourage work and economic self-reliance among the poor particularly among the unwed mothers with children. Therefore, welfare reforms forced large percentage of female beneficiaries into the labor force. Although employment does not protect an individual from poverty, people who area employed are likely to be less poor (Glazer 3).

3. The personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)

The personal Responsibility and Work Opportunity Reconciliation Act was signed by President Clinton in 1996 into law to fulfill his promise of ending the welfare problems facing the poor Americans at that time. This law transformed the entire national welfare system both substantially and administratively.

This law also eliminated the previous welfare system which had been advocated against by people from all walks of life since it was increasing state expenditure while leaving the poor on the mercy of the government donations (Caraley 5). The main purpose for the introduction of personal Responsibility and Work Opportunity Reconciliation Act was to minimize over dependence on welfare, bringing forth children out of wedlock and promoting nuclear type of families.

In line wit the above preconditions, the act required that the beneficiaries to look for job opportunities within two years of receiving support, and placed a five-year limit on the lifetime a person should be entitled to these benefits. In addition, the act (Weil and Kenneth 7)

3.1 Brief history of the law

PRWORA eradicated the previous welfare program known as the AFDC (Aid to Families with Dependent Children) which was enacted in 1935 following the great depression that engulfed the US and the global financial arena. AFDC welfare benefits were based on eligibility. This means that families who met their conditions were entitle to the benefits for as long as they needed it.

In addition, the federal share of the AFDC funds fluctuated in accordance with the caseloads. At first people saw the program as a helping hand to the justified widows as it helped them to raise their children. On the other hand, critics felt that this program encouraged dependency among the escalating class of single mothers, besides creating inflated and incompetent bureaucracy (Weil and Kenneth 9).

In 1970s large number of women started joining the workforce as the Americans started becoming hungry at the single mothers whom they viewed as undeserving the benefits of the program.

Besides, the welfare beneficiaries stated to grow at an alarming rate thus increasing the cost of the program. Racial subjects also played a big part in the switch as the African-American women became stereotyped as welfare mothers (Weil and Kenneth 7). The US government in the year 1980s, started to issue waivers to the to some of its states that considered to test their own welfare programs.

Some of these states enforced work obligations and limited time for receiving benefits thus tried to transform the behavior of the beneficiaries by granting or denying benefits inline rules set in their programs. Some of the American conservatives also argued that the welfare programs increase d poverty instead of reducing it since many people became over-dependent on the program (Bourguignon 8).

When President Clinton was elected he continued to support states that wanted to test their own social welfare programs to replace the then entitlement program.However, when the republicans won the majority sits in congress in 1994, they proposed a plan to introduce their own principals into the welfare program. This pressurized President Clinton to pass a considerable welfare restructuring legislation so as to demonstrate his record as a moderate politician (Bourguignon 9).

However, President Clinton rejected two republican welfare-restructuring bills in the year 1995 that he felt were too inconsiderate. In the year 1996, both the republicans and the democrats were under pressure to conclude the welfare reform agenda before the forthcoming general election.

As a compromised bill, congress submitted PRWORA to the president who signed it into law despite of his doubts over certain clauses. A number of high-level officials resigned to protest the signing of the bill arguing that the bill would cause escalation of poverty and inequality during recession (Weil and Kenneth 7).

3.2 Main provisions of the personal Responsibility and Work Opportunity Reconciliation Act

The act creates Temporary Assistance for the Needy families (TSNF). TANF substitutes previous eligibility program for instance Aid to Families with Dependent Children. The act devolves responsibility of welfare programs from federal government to the state/ local governments and non-profit making private organizations.

The act uses time restrictions and work conditions to stress the move from welfare to work. The law stiffens entitlement standards for Supplementary Security Income (SSI) child disability benefits. The act also requires state to impose strict child maintenance programs for collecting child funds from the absent fathers (Weil and Kenneth 5).

This act restricts entitlement and other public benefits to the newly immigrants. The act also denies illegal immigrants most of the benefits except under emergency cases. The state is required to provide federal cash support to the legal migrants in the country and to use government funds to assist immigrants not entitled to federal funds.

PRWORA provides funds for foster care data system and national child welfare custody research. The law provides for unit fund to enable states to offer childcare for the working parents. The act transforms entitlement criteria and benefits for child nutritional programs. The law has put forth strict standards for food stamps and other benefits.

PRWORA minimizes benefit level and refutes most benefits to able persons unless they are working or in school. Finally, the law limits entitlement for TANF beneficiaries. The law sets up five-year deadline for beneficiaries and deters persons convicted of drug related crimes from accessing this program in their lifetime (Weil and Kenneth 7).

3.3 Assessing Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA)

Before the enactment of the bill, the number of people under the welfare program had already fallen. This number continued to fall significantly after signing of the bill into law. Between the period when the bill was signed and the year 2000, the figure of the people under the welfare program went down by almost half, even though caseloads in majority of the states started to go up again by 2001 and continued to vary moderately.

Besides, the rate of poverty fell to the lowest recorded level of 19% from 22% in 1994, though this rate never went down remarkably as the figure of the beneficiaries (Trattner 14).

In spite of the encouraging figures, the welfare of those under the PRWORA program was never clear. By the end of 2002, many people who were former beneficiary of the welfare program were by then working low paying jobs with minimal benefits. These people were no longer granted food stamps or medical cover even in cases where they were eligible.

In most cases, the underpaying job opportunity for the poor meant loss of the benefits from the welfare program. Majority of the former beneficiaries thus lingered beneath the poverty line. Almost half of the former beneficiaries who left the program in search of jobs went back within a year since they were not able to access jobs or consistent child care (Trattner 15).

In addition, almost half of the people who left the welfare program did not have jobs or were not working at all. Some of these people got discouraged from applying for the program; majority had their benefits cut trimmed down or terminated by failing to meet the required threshold while others just vanished from the system (Carale 2).

Majority of the beneficiaries of the former welfare program (TANF) had considerable obstacles for employment including illiteracy, health problems, and drug / alcohol problems among others. Even though PRWORA provided no apparent policy guidelines to assist these people overcome such obstacles, beneficiaries faced set time deadline on assistance (Weil and Kenneth 9).

3.4 lawful Challenges that pretentious the personal accountability and Work Opportunity Reconciliation Act

PRWORA brought about a welfare system which was triggered by the level of reforms, though its execution was met by several challenges of the law. Supreme Court ruled against the lesser benefits that was being accorded to the citizens who were moving from state to state since it violated their right of movement.

In addition, there were cases of successful petition against the unjust Welfare officers who were mistreating the beneficiaries. These cases revolved around those officers who were trying to discourage the needy from applying for help, denying them access to the program or giving them unfair hearing in cases where they violated the law. (Weil and Kenneth 10).

Nevertheless, some of these court petitions never bared fruit. Examples of such cases include incidences where the applicants tested positive for illegal drugs which is against the law. Other legal challenges have focused on the aid organizations of choice. The law requires the state to include religious organizations when contracting out welfare administration (Trattner 25).

3.5 The reorganization of the PRWORA

It was back in the year 2002 in the month of October when PRWORA mandate expired, but was later on reauthorized by the congress. Within the same year, President Bush increased the working hours for the employees under the program. In addition, President Bush laid down a plan to increase the number of beneficiaries in the work force from 50% to70% before the end of his term.

The president also offered to finance state programs that encouraged marriage and unmarried adolescent from engaging in premarital sex. The president’s proposals were passed in May the same year (Trattner 5).

June 2002 saw the senate finance committee passing a more accommodative bill that raised childcare funds, widened the description of work activities, and allowed state to provide welfare benefits to the legal immigrants. On the other hand, the senate refused to pass the bill. Being unable to reach a compromising ground on the same subject, the Congress passed an abiding resolution to retain TANF until 2003 thus leaving the bill to the subsequent congress (Caraley 5).

4. Conclusion

United States is considered to be the world richest economy ad has the greatest share of money in the international monetary fund. With all that wealth it is unbelievable to realize that some of the American citizens still live in poverty. This is a paradox since the median income of the Americans is about 59,000 dollars. This inequality led to a number of social welfare programs to help the poor and the needy.

These efforts started in the late 30s following the great depression but the turning point in the America’s welfare reforms took place when President Clinton signed personal Responsibility and Work Opportunity Reconciliation Act into law in the year 1996. This was a major milestone in the quest for welfare reforms although the act also had some loopholes. The rate of the poor Americans have dropped significantly since the introduction of the bill.

Work cited

Bourguignon, Francois. The Poverty-Growth-Inequality Triangle. Washington D.C: World Bank, 2004. Print

Caraley, Demetrios James. Ending Welfare As We Know It: A Reform Still in Progress. Political Science Quarterly 116, no. 4 (2001): 525.

Glazer, Sarah, Are Former Welfare Recipients Better Off Today? CQ Researcher 11, no. 27 (Aug. 2001).

Trattner, Walter. From Poor Law to Welfare State: A History of Social Welfare in America. 6th ed. New York: Free Press, 1999.

Weil, Alan and Kenneth, Finegold. Welfare Reform: The Next Act. Washington, DC: Urban Institute Press, 2002. Print.

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