History of Welfare in the U.S. A. Depression (1929-1942) Unemployment rate: 20% Decreased to 15% (before war) Election of 1932: Franklin D. Roosevelt (“New Deal Democrats”) B. Relief Plan 1) cash assistance to families federal gov. to state: “emergency grants” 1934: 1/6th pop. receives assistance 2) Civilian Conservation Corps 3)(phased out direct relief) 4) WPA (Works Progress Administration) (1935) 5) Federal government continues to support certain categories of people: a) blind b) physically/mentally challenged c) elderly d) mothers w/no husbands

Welfare System Continued 6) Social Security Act (1935) Requirements: a) must contribute to system for 10 years before receiving benefits b) retired persons receive pensions Entitlements c) disabled received benefits d) widows/orphans receive benefits e) unemployment (up to 26 weeks) “Means Tested”: only available to people below certain income AFDC; TANF Old Age Benefits: open to all incomes.

Welfare System Continued 7) Age of Shared Prosperity: After WWII SS paying out large sums to the elderly Critique: system taxes current workers to pay retirees Critics of domestic economic affairs John Kenneth Galbraith (The Affluent Society, 1958)—economist new affluence: problems associated with it. new type of poverty. Who is affected? 1) people w/physical handicaps 2) people living in “islands of poverty” (ex: subsistence farmers, rural poor, inner-city slums) His main point: linked to ss and economic prosperity

Welfare System Continued Michael Harrington (1962): The Other America: Poverty in the United States Critique: economic prosperity worsens situation Other Americans are “the victims of the very inventions and machines that have provided a higher living standard for the rest of society. They are up side down in the economy, and for them greater productivity often means worse jobs; agricultural advance becomes hunger (12).” C. Kennedy Administration (heir to the New Deal Democrats) Developed anti-poverty programs Kennedy and Johnson Administrations improve ss. and welfare. 3 programs: Food stamps Medicare Medicaid

Calculations for the Poverty Rate Background on how poverty lines are set: Kennedy and Johnson administrations (1961-1968) focus on an anti-poverty agenda. Johnson: “War on Poverty” (1960-1970’s) 1961 Anti-poverty agenda: accurately evaluate the problem of poverty. Develop an official definition of poverty. Kennedy administration adopted a standard developed by Mollie Orshansky, economist at the Social Security Administation.

Orshansky’s Information for Calculation Two pieces of information obtained from the Department of Agriculture: Cost (minimum) to feed an adequate diet to a family of four (working father, full-time homemaker, and 2 children) Proportion of income that an average family spent on food Assumption was that low income families spent about 1/3 of income on food

Actual Calculation Poverty line was set by multiplying the cost of this “economy” food plan by three. In the early 1960’s, the poverty line for a family of 4 was $3,000. poverty line is adjusted by the size of the family and is adjusted for inflation. In classifying a family today, the same calculations are used with adjustments for inflation. In classifying a family above/below poverty line, only before-tax cash income is considered. (Census Bureau used this to determine how many people are poor in U.S.)

Thrifty Food Plan (TFP) Developed by the Dept. of Agriculture in 1950’s. Calculated to represent the lowest possible cost for a nutritionally adequate diet. Based upon this diet and calculation, the poverty line was established: 1960: 22% Americans were poor ($3,000). 1995: 13.8% “ “ “ ($15,600) 2006: 12.5% “ “ “ ($20,444) 2007: 12.5% “ “ “ ($21,203)

Critiques of Orshasky Standard It was only suppose to be used on a temporary basis (Plan 1). [USDA survey found that 90% of families spending the amount allowed under the plan were not obtaining a nutritionally adequate diet.] [Average family of 4 living close to the poverty line uses only 18% of income on food.]

Critiques Continued 2) For an extra 25 cents more, the plan could provide the nutrition necessary for the long-term health of the family (Plan 2). 3) Both plans worked off the assumption that the family cook was a sophisticated dietician and who would never waste anything.

Kennedy’s Council of Economic Advisors’ Decision Go with plan I. Why? Plan 2 would result in a higher poverty line; a larger percentage of people who are poor. Decision based upon politics, not nutrition. Plan 2 is referred to as 125% of the poverty line.

Four Measures of Poverty In US Poverty Measure Poverty Line % # of Poor Official $20,444 12.5 125% $25,555 150% $30,666 210% $42,932 ½ median income $24,100 Median “ $48,201

Health Insurance In the U.S.: the number of people without health insurance coverage declined from 47 million (15.8 percent) in 2006 to 45.7 million (15.3 percent) in 2007. 2) The number of uninsured children declined from 8.7 million (11.7 %) in 2006 to 8.1 million (11.0 %) in 2007. 3) In 2006 there were just over 1 million uninsured people living in Michigan. 10.5 percent of state’s population; approximately 116,000 were children under the age of 18 approximately 8,000 were individuals aged 65 and over.

Race and Health Coverage for Uninsured 2007 Whites decreased: 10.4% (20.5 million) Blacks decreased: 19.5% (7.4 million) Asians increased: 16.8 %. Hispanics decreased: 32.1 (14.8 million) Native Americans and/or Alaska Natives: 32.1% Native Hawaiians/Pacific Islanders: 20.5%

Regions and Uninsured 2007 Midwest: 11.4% Northeast: 11.4% West: 16.9% South: 18.4% States: Texas (highest rate) 24.4% Mass.; Hawaii (lowest) 8.3% Minn. 8.5%; Wis. 8.8%; Iowa 9.4%; Maine 9.5% (recall MI: 10.5%)