Welfare in all developed nations maintain a variety of social welfare programs

Welfare

I

INTRODUCTION

Welfare, programs aimed at helping people unable to support themselves fully or earn a living. Welfare recipients include elderly people, people with mental or physical disabilities, and those needing help to support dependent children. People in the United States most commonly use the term welfare to refer to government-funded programs that provide economic support, goods, and services to unemployed or underemployed people. Professionals in the field of public policy and social work use the term social welfare in a broader sense to describe any program, either privately or publicly funded, that helps people to function more fully in society.

All developed nations maintain a variety of social welfare programs. Countries offer many such programs as rights of citizenship. Governments establish welfare systems to provide a so-called safety net to prevent people from suffering the effects of poverty. However, many people believe that welfare encourages its recipients to become dependent on government support and remain unemployed. As a result, welfare programs have always aroused heated public debate.

II

REASONS FOR WELFARE

In any society, not all people are able to work. Societies recognize that the very young and old have limited capacities to perform work, as do people with severe mental or physical disabilities. In some cases, there are not enough employment opportunities for everyone who is capable and interested in working. Welfare is a means by which societies help support these segments of the population.

In a free-market economy, such as that of the United States and most other nations, a certain percentage of capable, working-age adults will always be unemployed. Unemployment rates vary regionally and from season to season, as technology and desirable job skills change, and as workforces grow or diminish. Unemployment rates also vary considerably from country to country. For example, in late 2002, the unemployment rate was 5.3 percent in Japan and 8.8 percent in France.

Long-term economic changes have also weakened social support systems, which in turn has increased the need for social welfare programs. Into the 19th century, many people lived in large extended families that worked together for generations on family farms. The size of the family—which could include grandparents, cousins, and other relatives—and its stability were important for farm production. During the 19th and 20th centuries, countries around the world shifted from primarily agrarian (farming) to primarily industrial economies. In the late 20th century, some of these nations shifted again and became primarily postindustrial (service- and information-based) economies.

Wherever these shifts occurred, the tradition of people living in large families began to disappear. Many people began living in smaller families, consisting of only married couples and their children. Industrial and postindustrial jobs—in factories, retail stores, and offices—often depend on flexible and mobile workers. Since most of these jobs are away from the home, people must seek work and take it where it is offered. They may have to commute long distances from home to work, and they may have to relocate with certain jobs. Most people in developed countries today have completely separate family and work lives. Small, flexible families are better suited to these kinds of work patterns. Small families do not, however, provide the kind of social support that extended families do. In addition, many countries have a growing number of single-parent households—which provide even less support than do typical nuclear families—and increasing numbers of people living alone.

Fundamental changes in the global economy also create welfare needs. In the second half of the 20th century, capital, expertise, and trade moved across national boundaries with increasing ease, creating both opportunities and risks. Businesses began moving low-skill jobs to countries that could provide cheap labor. They also created many new, higher-skill jobs, such as those in technological and scientific research and computer programming. These changes have affected both developed and developing nations. They often require that people move, learn new skills, or dramatically alter their living arrangements for work. Such shifts leave people in situations where they may need a safety net.

III

HISTORY OF WELFARE

Welfare systems are formalized versions of types of social support that societies have always maintained. In all societies since the beginning of civilization, able-bodied adults have worked to support themselves as well as to provide for young, elderly, and disabled family members and, often, nonfamily members. In ancient societies nonproductive members (the elderly, the disabled, and weaker children) seldom survived for long; in some cases, they were sacrificed for the good of the whole. By the Middle Ages in Europe, such vulnerable individuals were surviving longer and societies began to establish formal economic arrangements for giving charity to those in need. Donations by churches and from local feudal lords and other wealthy individuals supported hospitals, orphanages, and almshouses (publicly funded homes for the poor).

A

The English Poor Laws

The English Poor Laws, a system set up by the government of England in the late 16th and early 17th centuries, attempted to establish a clear public responsibility for care of the poor. Under these laws, government authorities divided the poor into two groups. The “deserving poor” were those deemed unable to work—primarily the disabled, blind, and elderly. The able-bodied unemployed were labeled the “undeserving poor.” Those considered unable to work were generally eligible for cash or other forms of assistance in their homes, known as outdoor relief. Those who could work were provided with what amounted to public-service employment. Such government-funded work was known as indoor relief, because it was usually done inside large public facilities called workhouses. As a last resort, some of those unable to work and provide for themselves sought refuge in poorhouses or almshouses, publicly funded institutions that offered food and shelter.

The Poor Laws made local government the primary administrator of welfare. To keep welfare beneficiaries under the supervision of their providers, the laws also discouraged the migration of the poor among administrative regions, or parishes. From their inception, the Poor Laws generated controversy. Opponents of the laws argued that if the poor received public assistance, some of them might avoid work, not work hard enough, or not save any of their earnings.

Despite such criticism, some Poor Law administrators hoped they could prevent welfare dependency by making people work for benefits. In a major work initiative begun in the late 1700s, administrators assigned relief recipients to work at private farms and businesses. Public funds were used to supplement the wages of those assigned to this work requirement and to those privately employed at starvation wages. This plan became known as the Speenhamland System, after the British parish in which it was pioneered.

In the late 1830s, many local governments also established workhouses, where the able-bodied poor worked when no private work was available. Workhouses were often made to be unpleasant places, so that people would seek even meagerly paid menial jobs before taking workhouse employment.

B

Other Early Programs in Europe

In the late 19th century several European countries instituted social insurance programs. These programs alleviated some of the risks of living and working in rapidly industrializing societies. Governments typically financed social insurance programs with tax funds and direct levies on the wages of potential recipients. Social insurance replaced part of incomes lost when workers became disabled, were laid off, or had reached an age that forced them out of the labor market.

Later, governments of Germany, France, Belgium, Sweden, and other countries developed forms of social insurance that provided population-wide, or universal, coverage. Such forms included children’s allowances, universal health coverage, broadly available childcare, generous aid to those seeking post-secondary education, and other programs that provided income and other essential supports to all citizens. In much of Europe, social insurance programs came to be seen as desirable alternatives to forms of welfare associated with the Poor Laws.

C

Early Welfare Programs in the United States

The American colonists essentially imported the framework of the British Poor Laws. By the early 19th century, states required that counties or municipalities provide for the poor and needy. The local governments carried out this responsibility in one of four ways: by auctioning off the poor to bidders who could use them as workers; by contracting with wealthier families to take care of them, either as charitable acts or for pay or free labor; by placing the poor and needy in public institutions (workhouses); or by providing them with assistance in cash or goods.

Citizens and politicians publicly expressed their concerns about welfare from the country’s beginnings. In the 1820s and 1830s, a reform movement swept many states. Local communities tried to replace all outdoor relief—the giving of cash and goods to the poor—with workhouses. These reforms were intended to rehabilitate the poor and replace frivolous welfare use with a work ethic.

In the 1880s and 1890s, a second wave of reform efforts designed to curb the use of outdoor relief emerged. The scientific charity reform movement emphasized counseling the poor to improve their social functioning. Reformers also encouraged independence through social casework. In this approach, caseworkers visited poor people regularly and instructed them in morality and a work ethic. Supporters of scientific charity opposed the idea of unconditional relief. In some parts of the country these reformers were able to temporarily halt distributions of cash relief almost entirely.

Welfare did not disappear, however. From the mid-1800s to the early 1900s, the Congress of the United States sponsored various programs that expanded public provision for the poor. In 1862 Congress passed legislation for a Civil War Pension Program, which eventually made economic, disability, and old-age benefits available to all Civil War veterans and their families. Between 1911 and 1921, 40 states established mothers’ pensions. In these programs, states offered income support to poor mothers, mostly widows, upholding the notion that motherhood was appropriate as a sole occupation. In the early 20th century, a handful of states experimented with workers’ compensation programs to insure workers against industrial accidents and with unemployment compensation programs to insure workers against labor market uncertainties.

D

Development of the Modern U.S. Welfare System

The modern U.S. welfare system dates to the Great Depression of the 1930s. During the worst parts of the depression, about one-fourth of the labor force was without work. More than two-thirds of all households would have been considered poor by today’s standards (adjusted for inflationary changes in the value of the U.S. dollar). With a majority of the able-bodied adult population experiencing severe financial distress firsthand, Americans no longer could view poverty simply as a personal failing.

U.S. president Franklin D. Roosevelt led a social and economic reform movement as a response to the depression. Part of his New Deal program was the Social Security Act, enacted by Congress in 1935. This act and its 1939 amendments established a number of social welfare programs, each designed to provide support for different segments of the population. Programs included Old-Age and Survivors’ Insurance (OASI) for retired people and their families (to which disability insurance was added in 1954, forming OASDI); Unemployment Compensation for those who lost work temporarily; Aid to Dependent Children (ADC), later known as Aid to Families with Dependent Children (AFDC); and grants to states to provide medical care. In 1946 the government created the Social Security Administration (SSA) to oversee the provisions of the act.

A succession of federal agencies have administered social security programs since the act’s inception. The Federal Security Agency was established in 1939; the Department of Health, Education, and Welfare in 1953; and the Department of Health and Human Services (HHS) in 1980, when the SSA became a separate organization. The government created the Department of Housing and Urban Development (HUD) in 1965. It replaced the former Housing and Home Finance Agency, and provides public housing support for low-income families. The U.S. Department of Labor—created in 1913, predating the Social Security Act—and its Pension and Welfare Benefits Administration manages workers’ benefits programs. Its Employment and Training Administration manages some welfare-to-work programs, as well as job training and placement programs. Other federal government agencies, including the Department of Education, the Department of Agriculture, and the Department of the Treasury, also administer welfare programs.

Funding for welfare programs has significantly increased in recent decades, particularly for working families who remain poor. In 1999, for example, the U.S. government spent $52 billion on a range of supports for low-income working families through tax credits, help with childcare, and other assistance. By contrast, the government spent only $6 billion on comparable programs in 1984, even after accounting for inflation.

IV

FORMS OF WELFARE IN THE UNITED STATES

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.

A

Cash Assistance Programs

In the decades following the passage of the Social Security Act, the scope of the United States’s social welfare safety net grew, modestly at first and then more rapidly beginning in the 1960s. By the beginning of the 1990s, there were about 75 means-tested welfare programs. This collection of programs came to be symbolized, however, by the one known as Aid to Families with Dependent Children (AFDC), which provided cash assistance to parents and children in need of economic support due to the death, continued absence, or incapacity of the family’s primary wage earner (typically the father).

For a quarter-century AFDC remained a relatively small, obscure program. In 1960 fewer than 4 percent of children received AFDC benefits in a typical month, even though about 25 percent would have been considered poor by today’s standards. In 1996, 7.9 million children, almost 13 percent of all children, and about 3.9 million adults received help from AFDC in any given month. As the program grew, it became increasingly unpopular. Critics argued that AFDC discouraged work, encouraged births outside of marriage, and failed to take low-income families with children out of poverty.

In 1996 AFDC cost about $22 billion per year, about 55 percent of that cost covered by the federal government and the rest by state and local governments. This expenditure was a minor part of the U.S. annual budget. Remarkably, although AFDC caseloads rose, the overall costs of the program remained the same from the early 1970s, even after considering inflation. This was possible only because typical benefits fell in value, by about half, after 1970. The average monthly benefit in 1995 was $377, about 60 percent below poverty-level income for most families. Moreover, the size of the typical AFDC family fell from about four members in the late 1960s to less than three in 1994. Larger families received higher benefits than smaller ones, but only marginally so. Some critics of AFDC claimed, however, that this could have been an incentive for parents on welfare to have more children.

In the first half of the 1990s, a national debate raged about how to reform welfare, and particularly AFDC. Finally, in August 1996, President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which replaced AFDC with the Temporary Assistance to Needy Families (TANF) program. Among other things, TANF ended the guarantee of cash benefits to eligible families, established a fixed federal contribution to the program, imposed time limits and strict work requirements, and transferred most program decisions to the states. (For more information on these reforms, see the Welfare Reform section of this article.)

Low-income families with children are not the only group eligible for cash assistance. Adults who are not able to work because of age, blindness, or disability, as well as some disabled children, can receive cash assistance through Supplemental Security Income (SSI). SSI provides more generous assistance than TANF. In 2003 individuals received $552 monthly, roughly 25 percent below poverty-level income, and couples received $829 monthly, or about 18 percent below poverty level. The number of people receiving SSI payments had grown to about 6.5 million by 1995; participation has since remained stable. The federal government spent $33.3 billion on the program in 2001.

B

In-Kind Assistance Programs

Most people on welfare receive more than just cash assistance. For example, many low-income families receive some form of food or nutritional assistance from the government. Cash welfare recipients often participate in programs that provide health services, particularly for their children. More than one-fourth of cash welfare recipients have received housing assistance or live in public housing, and an increasing proportion now participate in programs designed to help them find work.

Medicaid provides medical assistance for people who live in low-income families with dependent children and for individuals with low incomes who are elderly or disabled. Between 1986 and 1991, Congress extended Medicaid coverage to support pregnant women and some children who have no other ties to the welfare system. In 2001 Medicaid covered approximately 34 million people, or about 12 percent of the total U.S. population. Nearly 50 percent of Medicaid enrollees were children. The cost of the program has grown faster than the rate of inflation and was estimated to be $228 billion in 2001. Slightly more than half of that was paid for by the federal government, with the rest covered by state funds.

In 1965 U.S. president Lyndon B. Johnson declared a War on Poverty in his domestic reform program called the Great Society. As part of this program, Congress established Medicare, a social insurance counterpart to Medicaid. Medicare provides medical pensions for all retired U.S. citizens and a small segment of the disabled. The program cost $242 billion in 2001 and covered about 40 million people.

The Food Stamp program, administered by the U.S. Department of Agriculture and financed through the Social Security Administration, provides families with vouchers or electronic benefit cards to purchase food. This benefit is available to both low-income families with dependent children and households without children. The food stamps supplement what participants would normally spend on food, thereby enabling them to obtain an adequate diet. In a typical month in 2001, more than 17 million households participated in the Food Stamp program. Millions of low-income children also receive nutritional help through the National School Lunch Program and the School Breakfast Program, which provide low-cost or free meals to eligible children each school day.

The federal Department of Housing and Urban Development offers a number of programs that provide housing assistance to low-income families. Unlike some other welfare programs, there is no entitlement to this kind of assistance. An entitlement is support that the government must provide if a person qualifies as eligible according to income, assets, and categorical eligibility standards. People who meet eligibility requirements must formally apply for housing assistance, but have no guarantee they will receive it. The government provides eligible applicants with various housing options. They may be provided with apartments in housing projects specifically built for low-income families or adults. Alternately, they may receive subsidized rent in apartments or housing complexes where some of the units are reserved for the poor, or they may receive vouchers that they can use to offset housing costs.

The federal government sponsors a number of other programs for various poor and disadvantaged groups. These include the Women, Infants, and Children (WIC) program, which provides supplemental food and nutrition information primarily to pregnant women and infants who are at risk of nutritional deficiency; various job-training and job-seeking assistance programs; the Head Start early education program for disadvantaged children; the Low Income Home Energy Assistance Program (LIHEAP); supports for former war veterans; and many others.

C

General Assistance

No federal cash welfare programs exist for people who are clearly able to work—single adults and couples who have no dependent children and who are not eligible for a disability program. However, some states or local governments may provide help for such people under what are called General Assistance (GA) programs. Where they exist, GA programs commonly provide limited economic supports and subsidies for medical care.

V

WELFARE REFORM

The general public and government representatives at all levels have grown increasingly critical of the U.S. welfare system during the last few decades. President Johnson’s War on Poverty failed to fully live up to its goals of eradicating unemployment and poverty among those who were not sharing in the post-World War II period of prosperity. In the 1970s and 1980s, many poor people became dependent on welfare, particularly on means-tested and targeted programs, such as the Food Stamp program and AFDC.

By the mid-1990s the government had struggled to reform AFDC, in particular, for almost three decades. Most welfare reform efforts have been motivated by public concerns that welfare causes undesirable behaviors. Many citizens and politicians claim that welfare conditions its recipients to have little motivation to work, to avoid or break marriages, and to have children when they are too young and unprepared. Some reformers, on the other hand, argue that existing welfare programs are woefully inadequate and do not raise recipients out of poverty, particularly the children of families receiving benefits.

In 1996 President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). PRWORA most directly affected the provisions of AFDC (and JOBS, AFDC’s auxiliary work program), which were both replaced by the Temporary Assistance for Needy Families (TANF) program. PRWORA also affected the Food Stamp program, especially its provisions for assistance to adults with no children.

Before PRWORA, the federal government had established eligibility criteria for AFDC benefits and guidelines for the JOBS program. States determined their own benefit levels, which were applied uniformly to all families in similar circumstances. The federal government matched each state’s funds.

In the reform program, the federal government gives annual block grants, or lump sums, to states. Whereas AFDC was an entitlement for recipients, TANF is not. It is an entitlement only for state governments. States may decide how potential recipients must apply for eligibility, and support to eligible applicants is not guaranteed. In addition, AFDC recipients could receive benefits as long as they met eligibility requirements. Under TANF, federal funds cannot be used to provide benefits to families who have been on assistance for five years, with a few exceptions. Furthermore, states must require TANF recipients to work after two years of assistance or the states will lose some of their federal TANF funding. To meet these requirements, states must continue to fund job training, subsidized employment, and childcare programs.

Overall, TANF removes power from the federal government and gives it to the states, reducing the importance of any national policy on how welfare should be handled. The reform program aims to reduce AFDC-type welfare dependency and encourage parents to shift from welfare to work.

Most authorities agree that TANF has worked better than expected, although areas of criticism remain. The TANF caseload dropped from 5 million cases in 1994 to 2.1 million cases in 2001. Participation in the labor force by single mothers, the group targeted by TANF, jumped from 58 percent in 1993 to 74 percent in 2000. The proportion of TANF participants working at least part-time tripled from 11 percent in 1996 to 33 percent in 1999. At the same time, overall poverty and child poverty decreased. Black child poverty fell to its lowest rate in 2000; and the poverty rate among female-headed families fell from 39 percent in 1994 to 30.4 percent in 2000. Finally, the proportion of births to unmarried mothers leveled off in the late 1990s after almost four decades of continuous increases.

Critics point out, however, that many families have left welfare without adequate incomes. Of those leaving welfare, perhaps as many as 20 percent are not earning money or are living with others who are supporting them. Many of these individuals were forced off welfare for not complying with the rules or for exceeding federal or state time limits. Thus, there is some evidence that the most needy families are not faring well under the new reforms.

VI

WELFARE IN CANADA

Canada, much like the United States, imported some aspects of the British Poor Laws. In that tradition, administration of welfare programs in Canada has always been partly regional. Provincial and territorial governments play a significant role in setting policy and administering welfare programs.

A

Changing Welfare Needs

Since the 1980s Canada has experienced fundamental changes in its social and economic structure. The labor market has changed substantially, and the unemployment rate has climbed considerably since the end of World War II in 1945. The rate averaged more than 10 percent in the 1990s, up from about 4 percent in the 1950s.

As is the case in the United States, fewer full-time, permanent jobs are available than in the past, and the education and skill levels required to obtain these jobs has increased. In addition, the employable population is growing with women joining the workforce and increasing numbers of immigrants to Canada. The proportion of two-income families has increased by half in the past quarter-century to over 60 percent of all families.

The proportion of single-parent families also increased from about 11 percent of all families at the beginning of the 1980s to about 15 percent in early 1996. Available data suggest that almost 60 percent of Canadian children in single-parent families are poor and probably need welfare support, compared with 12 percent living with both parents.

In the 1990s rising welfare use and costs fueled calls for reform. Across the country, welfare recipients increased by 63 percent between 1989 and 1995. Also, government social expenditures and the cost of social insurance rose dramatically between the 1960s and the 1990s. Increasingly, Canada’s federal and regional governments have sought to scale back benefits and move unemployed recipients into the labor force. Mirroring developments in the United States, in the late 1990s the Canadian federal government embarked upon radical and often controversial reforms of Canada’s welfare programs.

B

Social Assistance

Canada’s primary welfare system, called Social Assistance (SA), encompasses a number of programs. The federal government set the structure of the SA system with the passage of the Canada Assistance Plan (CAP) in 1966. Parts of SA resemble the former AFDC program in the United States, but SA is much more comprehensive and covers more types of households. Between the early 1980s and the early 1990s, recipients of SA doubled from about 1.5 million people to about 3 million. The legislation for SA also laid out arrangements for the division of welfare administration between the federal and regional governments. Canada’s provincial and territorial governments determined SA needs and managed distributions, while funding and broad policymaking were split between the federal and regional levels.

As part of its reforms in 1996 and 1997, the Canadian government is changing how it administers SA. In the newer system, called Canada Health and Social Transfer, the federal government gives block grants to provinces and territories.

C

Unemployment Insurance

In the early 1970s, the Canadian government greatly expanded the country’s Unemployment Insurance (UI) program, which had existed in other forms since 1940. UI became the most widely used Canadian social security program for adults. The program provides assistance to both unemployed and working Canadians as a supplement, with benefits exceeding those in most other developed nations.

Annual costs for the UI program roughly doubled between 1973 and 1994. In 1996 the federal government reformed UI and renamed it Employment Insurance. This new program of federal block grants to provinces and territories gave work incentives to people having difficulty finding desirable full-time jobs by providing wage supplements to part-time workers. It also provided funding for employers to create jobs, subsidies to employers who hired welfare recipients, and job-seeking assistance.

D

Universal Health Care

The Canadian welfare system is also strongly focused on providing health care to citizens. Between the mid-1950s and the 1970s, Canada’s federal, provincial, and territorial governments progressively joined together to create nationwide health-care programs and programs for the elderly. Unlike U.S. citizens, all Canadians receive health care as part of a national plan. Canada’s Medicare program—no relation to U.S. Medicare—is known as a single-payer system, and is funded primarily by income, corporate, sales, and other taxes. The governments, the so-called single payers, then fund private health-care providers to supply all basic and emergency medical services. Some services remain privately funded.

VII

PROGRAMS IN OTHER DEVELOPED COUNTRIES

Relative to the United States, and to some extent Canada, the social welfare systems in other developed countries, especially in western Europe, are far more comprehensive and better financed. In particular, the Scandinavian countries, Australia, and New Zealand have developed generous public assistance programs.

Except for the United States and South Africa, all developed countries guarantee health-care access to all citizens or subsidize national health care. Coverage often includes both sickness and maternity support. Some nations, including the United Kingdom and the Russian Federation, provide the care directly through some form of national health service, in which the government administers health care through public facilities. Other countries, such as New Zealand and Australia, distribute public funds for privately provided health care.

Several developed countries have established a variety of other programs that are available to all citizens. Money for these programs comes primarily from general government funds. Some of these programs provide support to everyone, rich and poor alike, while others are means-tested or otherwise restricted. For example, Australia, New Zealand, Israel, many western European countries (the United Kingdom, Ireland, Germany, France, and the Scandinavian countries, for example), and some in eastern Europe (for instance, the Russian Federation, Poland, and Romania) offer family allowances. These are payments made to parents to offset some of the costs of raising children. In some cases these programs provide benefits to adult dependents who do not work in the formal economy, such as homemakers, or who continue in school or apprenticeships. In much of Europe, childcare is widely available and publicly subsidized. A few developed countries—such as Australia, New Zealand, and some of the Scandinavian countries—offer universal old age, disability, and survivor benefits. Many governments also subsidize training for workers.

Since international comparisons of poverty were first begun with the Luxembourg Income Study in the early 1980s, it has been found that all other developed nations have lower poverty rates than the United States, particularly for children. For example, poverty rates for children in France have been about four times lower than those in the United States. In Sweden, less than 10 percent of children living with a single parent are poor, while over half of single-parent children in the United States live in poverty.

Achieving low poverty rates can be costly, however. Sweden and Denmark, for instance, spend slightly more than 50 percent of their gross domestic product (GDP) on forms of public support. In France, Germany, the United Kingdom, and many other countries, citizens and politicians question whether their national welfare systems can be maintained into the indefinite future.

Not surprisingly, many European countries—including the United Kingdom, France, The Netherlands, and Denmark—have recently discussed whether U.S.-style reforms that emphasize personal responsibility and work are appropriate for them. The common theme in policy proposals in Europe is to combat what many Europeans call “social exclusion,” the situation in which certain vulnerable groups do not fully participate in society. Policymakers tend to favor initiatives designed to facilitate full participation in society, not necessarily to reduce dependency on government.