Welfare Reform

A Comparative Assessment of the French and U. S. Experiences

Antoine Parent, Rosemary A. Stevens

• Publisher: Routledge
• Year: 2017
• eBook ISBN:
  9781351299503
• Topic: Política y relaciones internacionales
• Subtopic: Política

Since the late 1980s welfare policies in France and the United States have increasingly been shaped by a strong emphasis on citizens' obligations to work and be independent, and a weakening of entitlements to income maintenance. Throughout the advanced industrialized nations, welfare reforms incorporate work-oriented measures such as financial incentives, insertion contracts, training, and requirements to search for and accept jobs. The evidence in this volume suggests that while the details may vary, welfare reforms in France and the United States have more in common than is often acknowledged. Welfare Reform provides an in-depth analysis of the development and structure of modern welfare programs and how they function. The dynamics of welfare reform are illuminated by focusing on two programs: the Revenu Minimum d'Insertion in France and Temporary Assistance for Needy Families in the United States. Taking various analytic approaches, contributors examine the relations between poverty and work, how U.S. and French models of income support have been transformed in recent times, the relative impacts of economic growth and policy reforms on rates of welfare participation, and what happens to recipients who leave the welfare rolls. Welfare Reform will help researchers and policymakers gain perspective on where they are headed and how best to get there as they journey down the highway of welfare reform. Neil Gilbert is Chernin Professor of Social Welfare at the School of Social Welfare, University of California at Berkeley, and co-director of the Center for Child and Youth Policy (CCYP). His numerous publications include 25 books and over 100 articles that have appeared in The Public Interest, Society, Commentary, and other leading academic journals. Antoine Parent is associate professor of economics at the University of Paris 8, associate researcher at MATISSE, University of Paris 1--Sorbonne, and research program manager at the Research Division of the French Ministry of Social Affairs.

Part 1

Poverty and Work in the United States and France

1

Social Policy for the Working Poor: U.S. Reform in a Cross-National Perspective^*

Gary Burtless

Introduction

Europe and the United States face a number of common social problems. One of the most challenging is assuring that working-age families do not fall into severe hardship and achieving this in a way that does not undermine workers’ incentives to care for themselves. Differences in popular attitudes and labor market institutions mean that common problems are reflected in different ways on the two sides of the Atlantic. Both Europe and the United States appear to face shrinking overall demand for workers with below-average skills. This problem is suggested by high overall unemployment in Eu-rope and declining relative wages among the least skilled in the United States. The steep fall in the absolute and relative wages of unskilled American workers has slowed and possibly reversed in the past five years, as U.S. joblessness has reached a thirty-year low. However, both the real and the relative earnings of unskilled workers remain far below their level twenty years ago.

Low wages and long spells of joblessness can push affected workers and their children into poverty. Sinking wages can force increased numbers of marginal workers below the poverty line, even if they work on a full-time schedule. Disappearing employment opportunities can also depress family incomes. Young and middle-aged workers who are intermittently employed in temporary jobs or who are unable to find any employment at all can fall into poverty unless the state or their extended family provides an income cushion for the jobless worker to fall back on. Joblessness and intermittent employment are forms of marginalization that have become prevalent in Europe, especially among young workers who have not yet become established in the job market.

This chapter examines the relationship between trends in family composition, labor market institutions, social policy, and their impact on poverty among children and the working-age population. I discuss the relationship between social developments in the United States and those in Europe, especially with respect to developments that have changed the composition of households and hurt the employment prospects available to young and other unskilled workers. I also examine public policies established to address the problem of working-age poverty, including new policies to reduce the problem of long-term public dependency. Some of these policies in the United States are designed to push able-bodied adults into the work force by making joblessness less appealing, even though declining market wages have made employment less attractive. Others are designed to boost family incomes or child well-being without imposing any extra burdens on employers who give jobs to low-skill breadwinners.

The plan of the chapter is as follows. The first section examines the impact of household compositional shifts on the prevalence of poverty in the United States. The next section analyzes the effects of labor market structure and labor market trends on poverty among children and in the working-age population. The third section considers the impact of public tax and transfer policies on the level and distribution of hardship. In each of the first three sections, the effects of U.S. trends and policies are evaluated in light of evidence from other industrialized countries, especially France and the United Kingdom. Many of the social and economic trends that have contributed to rising child poverty in the United States are evident to some degree in other industrial countries. But no other rich country suffers from such a high rate of hardship among children. The comparison of the United States with leading countries in Europe sheds light on the distinctive features of U.S. social and political life that contribute to high rates of poverty among American children and their parents. The next section examines recent reforms in U.S. social assistance policy and considers their impact on poverty and employment patterns in the affected population. The chapter concludes with a brief summary.

Shifts in Family Composition

U.S. assistance policy for the working-age population is aimed at reducing severe financial, nutritional, and medical deprivation among children and physically and mentally handicapped adults. Working-age adults who are neither disabled nor caretakers of dependent children do not receive substantial support under the system. Benefit levels under the current system are not generous. They are far too low to eliminate poverty among the main target populations—indigent children and disabled adults.

Figure 1.1
Percentage of U.S. Children Who Are Poor under Official and Alternative Poverty Thresholds, 1960-2000

Source: U.S. Census Bureau.

The focus of this chapter is on the system that aids working-age families containing children. In comparison with assistance systems in other rich countries, the American system places exceptional reliance on family self-support and breadwinner earnings to remove children from poverty. This approach to poverty alleviation has not been conspicuously successful in holding down indigence among children (see figure 1.1). Under the nation’s official poverty measure, slightly more than 16 percent of children under age 18 were classified as poor in 2000, a slightly larger percentage than was poor in the early 1970s and a greater prevalence of poverty than was found in other age groups. The official standard for measuring U.S. poverty has important defects (Burtless and Siegel, forthcoming). Many experts are harshly critical of the U.S. poverty thresholds and the present method used to calculate who is poor. Most informed observers would agree, however, that child poverty is a more serious problem in the United States than it is in other industrialized countries, regardless of the exact method used to calculate poverty.

The high prevalence of child poverty is the result of three distinctive features of the American environment. An exceptionally large percentage of U.S. children live with only one rather than both of their parents. One-parent families find it more difficult than two-parent families to earn high wages, because it is hard for a single parent to combine child rearing with long hours on a job. In addition, many youngsters, even in families containing two parents, are maintained by a working parent who has few job skills. A sizeable percentage of low-skill U.S. parents earn wages below the poverty threshold, even if they work year-round on a full-time schedule. In comparison with other industrialized countries, the United States has a very unequal distribution of wages, increasing the percentage of low-skill parents who earn extremely low annual incomes. Finally, as just noted, government programs in the United States offer parsimonious transfers to working-age families with low incomes. Virtually all countries in northern Europe provide more generous benefits to working and non-working adults who support child dependents.

Figure 1.2
Distribution of Related Children under Age 18, by Family Type, March 2001

Source: U.S. Census Bureau.

A child in a single-parent family faces an elevated risk of being poor. In March 2001 about 52 million U.S. children under age 18 were members of married-couple families. Just 8 percent of these children were members of families with an income below the official poverty thresholds. In the same month, 15.4 million youngsters were being raised in families headed by a woman without a spouse in the home. Almost 40 percent of these children were members of families with incomes below the poverty line. Figure 1.2 shows the distribution of American children across three main types of families. Slightly less than three-quarters of children live in families maintained by a married couple. More than one-fifth are members of families maintained by a woman who does not live with a spouse. Five percent of youngsters are members of all other types of families, including families maintained by a man who does not live with a spouse.

The living arrangements of poor children are strikingly different from those of children in general. Well over half of poor children are members of families maintained by women who do not live with a marriage partner. Fewer than four poor children in ten live in married-couple families. Empirical research also suggests that poor children in married-couple families suffer less severe financial hardship and are likely to escape poverty more easily than poor youngsters in lone-parent families.

Figure 1.3
Poverty Rate of Families with Children, by Type of Family and Age of Family Head, 2000

Figure 1.3 shows the combined effects of a family head’s age and marital status on the family’s poverty status. All of the families included in the tabulations contain at least one related child under age 18. Among married-couple families, just 6 percent are poor. The poverty rate among single-mother families is more than five times higher, or 33 percent. The impact of a parent’s age on his or her capacity to earn money is straightforward. Older parents command higher wages in the labor market and so are more likely to earn enough money to keep their families from falling into poverty. The effect of a family head’s age on the risk of being poor is striking. More than half of all 18-24 year-old female heads are poor, whereas only one in five female heads between the ages of 45 and 54 is poor. Although age also has a sizeable effect on the poverty status of married-couple families, the prevalence of poverty among two-parent families is much lower at every age than it is among single-mother families. Note, for example, that the prevalence of poverty among 45-54 year-old single female heads is greater than it is among 18-24 year-old married couples. Single mothers who are near the peak of their work careers face a higher risk of being poor than married-couple parents who have just entered the work force.

Figure 1.4
Marital Status of Parents of AFDC Children, 1996*

* Percent of all children receiving AFDC who live with parent.

Source: Committee on Ways and Means, 2000 Green Book.

Single-parent families are not all created equal. Some one-parent families form as the result of an out-of-wedlock birth to a mother who has never been married. Others are created as the result of a divorce or separation, which removes one parent from the household. In a small number of cases, a parent dies. Figure 1.4 shows the distribution of marital status among the custodial parents of children who received benefits under Aid to Families with Dependent Children (AFDC) in 1996. Children who collect benefits under AFDC and its successor program, Temporary Assistance for Needy Families (TANF), are among the most severely disadvantaged in the United States. Most AFDC recipients in 1996 were members of families headed by a never-married parent (almost always a mother). One-quarter of children were cared for by a parent who was separated or divorced, while a tiny number were in the care of a widowed parent. A small percentage of AFDC children were members of families containing two married parents. These families were eligible to receive benefits if one of the married parents was unable to provide support to the family as a result of incapacity or prolonged unemployment. Clearly, however, two-parent families do not constitute a large fraction of the families receiving support from the nation’s main cash assistance program for children. The overwhelming majority of children receiving cash public aid are cared for by never-married, separated, or divorced mothers.

The prevalence of poverty among single-mother families is high. In light of this fact, the shift in American living arrangements toward single-parent households and away from two-parent families has noticeably increased the fraction of youngsters at risk of becoming poor. Figure 1.5 shows the long-term trend in living arrangements of U.S. children. In 1960, just 8 percent of children were reared in mother-only families; 88 percent were members of married-couple families. By 2000, 22 percent of children were members of mother-only families; the percentage of children in two-parent families had fallen to 69 percent.¹ Because the risk of being poor is five times higher for children in one-parent families than for children in married-couple families, the shift in family composition might account for as much as a quarter of the U.S. child poverty rate in 2000.

Figure 1.5
Living Arrangements of U.S. Children, 1960-2000

Source: U.S. Census Bureau.

The growth in single-parent families is not unique to the United States, of course. Other industrialized countries have experienced a similar trend as divorce and separation have become more common and births outside of marriage have accounted for a larger proportion of births. Table 1.1 shows living arrangements of children under age 16 in three rich countries, France, the United Kingdom, and the United States. Bruno Jeandidier and Etienne Albiser (2001) performed the tabulations using comparable micro-census files for the years 1993 or 1994. The estimates for France and the United Kingdo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Acknowledgments
• Introduction
• Part 1 Poverty and Work in the United States and France
• Part 2 Development and Structure of Welfare Policies Welfare Reform
• Part 3 The Evaluations of U.S. Welfare Reforms and Their Implications
• Part 4 The Relationship between Economic Growth and Poverty
• Part 5 Work-Oriented Reforms: How Well Do They Work?
• Contributors
• Index