Welfare Forms in the United States
Forms of Welfare in the United States
Introduction to Welfare Forms
The U.S. government provides welfare in a number of basic ways. Some programs distribute direct cash assistance that recipients may spend as they choose. Other programs provide specific goods, such as public housing; or the means to obtain them, such as subsidized rents, vouchers to offset private housing costs, or coupons to purchase food. Still others provide services or the means to obtain services. Welfare services include health care, childcare, and help coping with drug or alcohol dependency. Goods and services, as opposed to direct cash assistance, are known as in-kind benefits. Other welfare programs create or subsidize jobs for the unemployed. In addition, the government also provides a tax discount to the poor, known as an Earned Income Tax Credit (EITC), which some people consider a welfare program. If calculated as an expenditure-although it is in part actually money the government does not collect-EITC is one of the more costly U.S. welfare programs, with expenditures exceeding $30 billion annually.
In the United States, as in many other nations, the government decides how much welfare support to provide, and to whom, based on measures of economic well-being. These measures are themselves based on national mean income figures. Mean income is an estimate of how much a typical person earns over a given period of time, usually a year. People whose incomes are less than a determined amount below the national mean are considered to be living in poverty. Welfare programs targeted to people with relatively little income and few assets are called means-tested welfare programs. Other forms of income support are referred to simply as non-means-tested.
In virtually all cash welfare programs and many in-kind programs, benefits rapidly fall as a recipient’s income increases. These programs are said to be targeted, or restricted, to people with little or no income and few assets. Some programs further restrict benefits to those meeting additional, nonincome requirements, known as categorical targets. For example, benefits might depend on a recipient being a single parent with dependent children or a juvenile in foster care.
Eligibility for certain forms of welfare is based on membership in specific groups. The elderly and people with mental or physical disabilities, for example, receive several types of support that the government provides specifically to them. Eligibility for social insurance programs, meanwhile, depends upon individuals having made prior financial contributions to a fund, which can be drawn on later. The most prominent examples of this form of welfare in the United States are social security programs. These programs provide support to workers and their families when they lose employment, retire, or become disabled.
In theory, welfare targets make sense, since they direct support to those most in need. Targeting, however, creates problematic incentives. For example, if welfare recipients begin to earn money, or more money than they had been earning, their benefits may fall and their taxes rise. This can be a powerful incentive for recipients to remain on welfare and not seek work. In effect, this situation creates a penalty for welfare recipients who take work, especially in any of the many low-wage jobs typically available to them. Working at a minimal wage, minus taxes, often cannot offset the loss of welfare benefits. Targeting welfare benefits to certain groups also creates incentives for people to change their behavior in order to become eligible for benefits. A young parent may be less inclined to marry or stay married if single parenthood makes it easier to claim welfare benefits. The dilemma of balancing compassion for the poor with a desire to promote socially approved behaviors-work and marriage, for example-has defined public policy debates over welfare for several centuries.” (1)
Resources
Notes and References
- Information about Welfare Forms in the Encarta Online Encyclopedia
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