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Benefits, Work, and Poverty

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Category: History & Sociology

Via: bob-nelson • 6 years ago • 7 comments

Back in 2014 Paul Ryan declared that the War on Poverty had failed, so it was time to slash spending on anti-poverty programs. Last week the Trump Council of Economic Advisers declared not only that the War on Poverty has in fact substantially reduced poverty – which is what progressives have been saying all along – but that poverty is “largely over”. (Do these people ever visit the real world?)

Lynne Sladky/Associated Press

And because poverty is over, they say, we should impose lots of work requirements on Medicaid and food stamps, which would have the effect of slashing spending on these programs. Somehow a completely opposite reading of the facts leads to the same policy conclusion. Funny how that works.

But are benefits like Medicaid and food stamps really discouraging a lot of people from working? One way to answer that question is to look at who is receiving benefits without working. The White House analysis claims that many of those non-working adults could work; but I put a lot more trust in the Kaiser Family Foundation, which finds only a small number of potential workers among benefit recipients.

Anyway, another way to answer the question is to look at the international evidence. True, cross-country comparisons aren’t controlled experiments; but given how much Republicans like to talk about the “failing welfare states of Europe,” it might be worth asking whether prime-age adults are, in fact, a lot less likely to work in countries where benefits are far more generous than they are in the United States.

So here’s a chart, using OECD data, that compares in-kind benefits as a percentage of GDP with the employment rate for adults aged 25-54, for a selected group of countries:

Hmm. Prime-aged Americans are actually less likely to be employed than residents of those failing welfare states. And that’s despite the fact that U.S. macroeconomic policy has been better, and we’re much closer to full employment.

On the other hand, high social expenditures do seem to be associated with low rates of poverty (measured using the international standard of half median income):

So do anti-poverty programs discourage work, as conservatives incessantly claim? If there is such an effect, it’s small enough to be invisible in the data. One thing anti-poverty programs do seem to do, however, is … reduce poverty.