Thursday, September 8, 2011

Misconceptions about the Poor

So, the radio show this morning picked up the topic of Michigan's cut in maximum time on welfare to four years.  My opinion on this is simply that it isn't going to save much money (very few people reach lifetime limits as is and welfare is quite cheap) but it is going to hurt some people quite badly.  That said, most of the people that are being hurt are the ones that would have hit the five year mark anyway, so it doesn't change all that much.  I just can't get excited about it.

What I do find interesting though is hearing the opinions first hand of what people who have no idea what they're talking about think of welfare.  I already know the far right stereotype, people sponging off the system who refuse to get jobs, and I was pretty sure this was widespread.  But I spend too much time on political sites to be sure of this, hearing it today on the radio confirmed this.

So, what are the misconceptions I was hearing?  First, welfare fraud.  Apparently, we know know welfare fraud is rampant.  Depending on how welfare fraud is defined, this is either true or completely false.  It is true in the sense that most people on welfare have some unreported income, most people on welfare do some under the table work or get some help from family members.  This often amounts to about a third to a half of total income and they are supposed to report it.  Most don't.

However, listening to callers, this isn't what people think of when they hear welfare fraud.  They think of people gaming the system to get multiple checks and using welfare as their sole source of income.  This form of welfare fraud is rare, and newsworthy when it happens.  It does happen, but rates of fraud involving multiple checks, false identities, or receiving a check when well above the poverty line are in the low single digits.  Hardly rampant.

The second myth is that these people are receiving assistance instead of working for long periods of time.  Most people on welfare are only on for a few months.  Only about a fifth are on it for more than a year.  However, someone who has received welfare once is quite likely to have another short spell on welfare within five years.  This is because most welfare recipients are marginally employable and are in sectors that have high turnovers.

This makes them unsympathetic but leads to the problem of what to do with these people.  They have few skills but how are they supposed to get any if receiving welfare, which gives them far less than the poverty line and has asset limits, seems like a good option?  You can't save up for college at a minimum wage job, it just isn't enough money.  Training programs are inadequate and often have conflicting goals.  While long term studies are unfortunately rare, what I've read on the subject generally seems to agree that there is a trade off between two program designs.  One, aims at teaching job search skills and tends to have the higher rate of immediate employment and gets people off the rolls.  The second is longer term and skills focused, rather than focused on training people to just get a job, any job.  This kind of program tends to do very little to get people off the rolls or to get them jobs after graduating the program.  But studies that follow individuals more than five years out finds that the second kind of program leads to higher employment, more wages, and less likelihood of welfare after that time.  Training people in skills works, but not quickly and not on any politicians time frame.

  Especially if you have kids, which people on welfare probably do.  It's true that most of these people made their own mess but this doesn't mean that we have other options.  If the kids are consistently deprived because the parent's can't earn enough to give them proper nutrition then we just end up with another generation of welfare cases.

It's easy to complain about them buying beer and cigarettes, but these things aren't that expensive.  Studies show that welfare recipients spend about 6% of their income on entertainment (Jencks, Rethinking Social Policy, from memory so I may be off by 1 to 2%, single digits is correct though).  If they were perfectly responsible and never spent this money needlessly they'd probably be better off, but very few of us are perfect in our habits, why would the poor be any better than most of us?

Then there is the issue that many people on welfare have a lot of problems.  It's easy to say that cases will be examined to make sure the truly needy (what would have been called deserving a generation ago) continue to receive assistance but these groups are quite restrictive and don't include a lot of people who are going to chronically need some form of welfare if they function at all.  It's easy to say that we'll cover people who can't work at all, but this is just about nobody.  The people on welfare are mostly people who can't work regularly.  Health issues, especially mental health issues are common.  Someone might be fine and hold a job for a couple of years, then they have an episode and lose their job.  Welfare is what gets them by until they can work again.  But these people aren't picked up by work rules that tend to have a simple can work/can't work dichotomy which matches poorly with how health, and other kinds of, problems actually effect people (though it matches well with people's prejudices who tend to think that those that could work at one point still could if they tried).  These are the kinds of people on long term welfare, people that have a lot of trouble functioning in regular society.

None of this is to say welfare is a great thing.  It pays below the poverty line, it must be supplemented by work for someone to lead a decent life.  The problem with shortening or trying to get rid of welfare is when the question of what the alternatives are.  They don't simply go and get jobs when the welfare check runs out, being on welfare really sucks, these people are either trying to get jobs or thoroughly discouraged.  A greatly discouraged person is hardly going to be encouraged by being told they no longer even qualify for assistance.  Putting someone out on the street is hardly going to end dependency for someone with, at best, minimal levels of skills.  It's hard to get a job with no residence (not to mention the people on welfare who don't have a home, it really isn't enough to cover shelter in many areas without additional assistance).  Taking care of homeless people costs money, both for police who have that much more work to do and for the health care costs they rack up with every visit where they are treated for exposure.  Then there's always incarceration, which costs a fortune.

In the end, welfare isn't a great program and it's hard to like, but it is cheaper than the alternatives and cash assistance leads to less long term problems.  It's not great, but it is better.

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