The Welfare Trap

Just as spending on the Great Society programs took off in the 1970s, many measures of poverty and moral standing among a significant segment of the population took a decided turn for the worse. Latent poverty (the number of poor before government transfers are taken into account) decreased continuously from 1950 until 1968, but then began increasing again with increased spending on poverty programs. Economic independence decreased and with it the quality of family life.

When one looks at the problem demographically, we see that it is largely confined to a particular segment, young blacks. From 1950 to 1980, blacks over the age of 25 were well employed (unemployment among blacks age 35-55 decreased by 32%), median income doubled and white collar employment tripled. During the same period unemployment among young black males increased by 19% for ages 20-24, 40% for age 18-19 and 72% for age 16-17. From 1960 to 1980 black murder of blacks rose from 35/1000 to 60/1000, the illegitimate birth rate grew from 20% to 48% (now approaching 70%, most of it teen mothers) and by 1980 over 70% of the black poor lived in single mother households. What caused such a dramatic tear in the social fabric?

Until the 1970s, popular wisdom was hostile toward welfare (it makes people lazy), toward lenient judges (they encourage crime) and toward “socially responsible” schools (too busy busing kids to teach them how to read). Welfare changed all that and the social engineers knew that it would.

In 1968 the federal government began the Negative Income Tax experiment that was meant to show the social benefits of the Great Society welfare programs. The study included 8700 poor people and lasted ten years. In half the group the subjects were provided with welfare payments to bring their income to a particular level. The control group received no such payments. The results were the opposite of what they hoped for. In the subsidized group, 9% of the husbands and 20% of the wives stopped working. And divorce in the subsidized group was 36% higher for whites and 42% higher for blacks than in the control group. The results were damning yet the programs persisted and the expenditures grew exponentially.

The problem had to do with pride. Status and money are the most influential rewards that society uses to manage behavior. One function of status is to reward the virtuous at all economic levels. America has historically been a nation of poor people or children of poor people and status was derived from the simple act of taking care of oneself and one’s family. With “means testing” virtually all low income families became welfare recipients and status was withdrawn from low-income independent, working families and from the behaviors that engender escape from poverty.

Self-sufficiency was no longer taken as an intrinsic obligation of healthy adults. For the first time in American history it became socially acceptable within poor communities to be unemployed because working families were also receiving welfare. When working no longer provides either adequate income or status, the man who keeps working is considered a chump.

Getting rid of the stigma of welfare was a deliberate goal. Since the system is to blame, all people on welfare are equally deserving of the handouts. When it came to the poor, all must be victims. And this unwillingness to acknowledge moral inequality was a hallmark of Great Society programs.

Yet a poor family with pride is happier in every meaningful sense than an equally poor family without pride. What a racist society once taught a young black about living with his inferiority was now taught by the “benevolent” social welfare system. And just imagine the difficulty of black parents who try to counter those messages when their children are hearing them at school, on the TV, from the intellectual class and the Democratic Party.

What a terrible problem!

The data for this four part series and many of the “money” quotes were provided in the landmark study by Charles Murray in his book Losing Ground: American Social Policy 1950-1980. Murray has recently published a book with the solution to this seemingly intractable problem. I can’t wait to read In Our Hands: A Plan to Replace the Welfare State.