Who Does the U.S. Benefit System Benefit the Most?
The system reduces poverty the most for the disabled and the elderly and least for several groups among the nonelderly and non-disabled. Over time, we find that expenditures have shifted toward the disabled and the elderly, and away from those with the lowest incomes and toward those with higher incomes, with the consequence that post-transfer rates of deep poverty for some groups have increased. We conclude that the U.S. benefit system is paternalistic and tilted toward the support of the employed and toward groups with special needs and perceived deservingness.
This paper by researchers from the University of Wisconsin, Madison, and Johns Hopkins University is worth looking at—especially during an election year when there’s a question about how effective President Obama has been on reducing poverty. I’ve only skimmed the study so far, but one interesting thing the paper discusses is behavioral responses to benefit programs, for example, the idea that people “reduce their work effort to increase their benefit levels, since most programs pay higher benefits to those with lower income.” That may be true in some cases, but I think we can all agree that nobody wants to be poor.
Mike, I think they’re talking about the real problem of benefit structures where small increases in work/pay would actually equivalently reduce benefits. When you’re a single mother living on a very small salary, it might not seem worth it to work more if a cut in benefits means no or a very small change in income and more time away from your children (for example). When people are stuck in bad situations, these kinds of decisions make rational economic sense if benefit programs aren’t structured properly.
Nobody wants to be poor, and nobody would turn down a large salary to go on higher benefits, but that’s not what the researchers are talking about and not a choice that many people in these situations have.
@msafiri
Completely agreed. I think Mike’s reaction is sort of defensive because it’s that very fact that conservatives use to rail against benefits like this. But, of course, the system is structured in such a way that doing that can make sense. So…change the structure but not get rid of the benefits?
@Weasley Exactly! It frustrates me to no end that the counterpoint to conservative anti-benefit arguments is that the system is perfect and shouldn’t change. The system is not perfect. We shouldn’t get rid of it, but we can and should make it better so it can more effectively help people.
@Weasley @msafiri Thanks guys. Yes, I was being a little defensive because I do think the U.S. needs a social safety net. I didn’t want to go into anything too deeply because as I mentioned, I didn’t read the study in full, but I don’t think anyone actually thinks the system is perfect and shouldn’t change (a perfect system would be well on its way to eliminating poverty, and clearly, we still have a lot of work to do).
@msafiri That isn’t the counterpoint to the conservative anti-benefit argument. Also the conservatives aren’t anti-benefit.They are anti benefits for people that they incorrectly identify as moochers. The pro-benefit liberals (if we are going to polarize people)know the system has its flaws and want reform not complete desertion of necessary benefits.
@Cnj I often hear that argument from anti-benefit conservatives, but did not mean to imply that all conservatives are anti-benefit. I should have been clearer, but I was referring to politicians/policy makers, not your average conservative/liberal citizen. I think the problem is that when this discussion happens on the Hill, it does become polarized into “get rid of them/drastic cuts” versus “don’t change anything” at the expense of reasonable nuance.
There’s a middle ground of reasonable changes to make things more effective without hurting people who need the system, but that discussion doesn’t happen in Congress because people in favor of the system (mostly liberals/Dems), don’t want to open the door to changes for fear of it leading to drastic cuts. This makes sense in terms of political strategy, but to justify it the rhetoric becomes ‘the system isn’t broken.’ The system is broken. It’s better than nothing, but it is broken.
@msafiri
My mum was in almost this exact situation, are you me?
She came home one day and told me she had been given a $2000 pay rise and then sighed and slumped on the couch. I didn’t understand why she was upset until she explained the concept of tax brackets to me and that she was now at the bottom of a higher tax bracket instead of at the top of a lower one.
Her take-home pay was significantly less due to higher taxation and she no longer qualified for any of the childcare benefits she had previously. This totally blew my tiny, 8-year-old mind.
I know a young woman in exactly this situation: she has a painful, chronic, genetic disease (for which she requires regular treatment she can’t afford on her own) that makes it very difficult for her to get health insurance. Right now, she qualifies for Medicare, but she really doesn’t make enough money to live on. If she gets another job and makes more money (and can therefore pay her rent comfortably and relax a little), she will no longer qualify for Medicare. Short of her landing a job with really great health benefits (which is hard because she misses work regularly to deal with her health situation), she’s kind of screwed. The system is broken in such a way that she doesn’t have a viable option to get out of poverty, no matter how hard she’s willing to work.