Tuesday, January 20, 2015

The Road to a Welfare Benefited Society | The United States' Growing Reliance on Welfare Benefits in the Last 30 to 50 Years

This is from Nicholas Eberstadt at National Affairs, Winter 2015:
... Over the half-century between 1963 and 2013, entitlement transfers were the fastest growing source of personal income in America — expanding at twice the rate for real per capita personal income from all other sources, in fact. Relentless, exponential growth of entitlement payments recast the American family budget over the course of just two generations. In 1963, these transfers accounted for less than one out of every 15 dollars of overall personal income; by 2013, they accounted for more than one dollar out of every six. 
The explosive growth of entitlement outlays, of course, was accompanied by a corresponding surge in the number of Americans who would routinely apply for, and accept, such government benefits. Despite episodic attempts to limit the growth of the welfare state or occasional assurances from Washington that "the era of big government is over," the pool of entitlement beneficiaries has apparently grown almost ceaselessly. The qualifier "apparently" is necessary because, curiously enough, the government did not actually begin systematically tracking the demographics of America's "program participation" until a generation ago. Such data as are available, however, depict a sea change over the past 30 years. 
By 2012, the most recent year for such figures at this writing, Census Bureau estimates indicated that more than 150 million Americans, or a little more than 49% of the population, lived in households that received at least one entitlement benefit. Since under-reporting of government transfers is characteristic for survey respondents, and since administrative records suggest the Census Bureau's own adjustments and corrections do not completely compensate for the under-reporting problem, this likely means that America has already passed the symbolic threshold where a majority of the population is asking for, and accepting, welfare-state transfers.  
Between 1983 and 2012, by Census Bureau estimates, the percentage of Americans "participating" in entitlement programs jumped by nearly 20 percentage points. One might at first assume that the upsurge was largely due to the graying of the population and the consequent increase in the number of beneficiaries of Social Security and Medicare, entitlement programs designed to help the elderly. But that is not the case. Over the period in question, the share of Americans receiving Social Security payments increased by less than three percentage points — and by less than four points for those availing themselves of Medicare. Less than one-fifth of that 20-percentage-point jump can be attributed to increased reliance on these two "old age" programs.

Overwhelmingly, the growth in claimants of entitlement benefits has stemmed from an extraordinary rise in "means-tested" entitlements. (These entitlements are often called "anti-poverty programs," since the criterion for eligibility is an income below some designated multiple of the officially calculated poverty threshold.) By late 2012, more than 109 million Americans lived in households that obtained one or more such benefits — over twice as many as received Social Security or Medicare. The population of what we might call "means-tested America" was more than two-and-a-half times as large in 2012 as it had been in 1983. Over those intervening years, there was population growth to be sure, but not enough to explain the huge increase in the share of the population receiving anti-poverty benefits. The total U.S. population grew by almost 83 million, while the number of people accepting means-tested benefits rose by 67 million — an astonishing trajectory, implying a growth of the means-tested population of 80 persons for each 100-person increase in national population over that interval. 
In the mid-1990s, during the Clinton era, Congress famously passed legislation to rein in one notorious entitlement program: Aid for Families with Dependent Children. Established under a different name as part of the 1935 Social Security Act, AFDC was a Social Security program portal originally intended to support the orphaned children of deceased workers; it was subsequently diverted to supporting children from broken homes and eventually the children of unwed mothers. By the 1980s, the great majority of children born to never-married mothers were AFDC recipients, and almost half of AFDC recipients were the children of never-married mothers. The program's design seemed to create incentives against marriage and against work, and it was ultimately determined by bipartisan political consensus that such an arrangement must not continue. So with the welfare reforms of the 1990s, AFDC was changed to TANF — Temporary Aid to Needy Families — and eligibility for benefits was indeed restricted. By 2012, the fraction of Americans in homes obtaining AFDC/TANF aid was less than half of what it had been in 1983. ...
The entire report is absolutely worth reading, here.