Rethinking Welfare

Welfare is a common feature of many advanced capitalist nations. However, it has commonly been criticized by those who question why a person who is able to work but is not doing is entitled to impose the burden of his sustenance on society.  Some critics ask why these individuals do not simply find a job and support themselves. These critics claim that the existence of welfare discourages recipients from looking for work, since recipients know they can live relatively comfortably without getting a job.

There are two problems with this analysis; the first of which is the presumption that welfare receiving individual could readily find a job if only he/she looked hard enough. This is simply not the case. In a capitalist society, there are never enough job opportunities available for every citizen who wants a job. Indeed, it is not even certain that it would be entirely desirable for such a situation to arise in a capitalist society. Such a level of job availability would effectively remove the  threat of unemployment as an effective tool for ensuring quality of labour. That is to say with such high employment rates, employers would have more to fear in firing a worker as there would be a very limited pool of alternative workers to hire. Employees would, in turn,  have less incentive to produce quality work because of the higher amount of alternative jobs available to them should they quit or be fired.

The second flaw of basic critical analysis lies in the assumption that welfare provides a comfortable standard of living. Most people living on welfare struggle to meet their needs despite living off the public purse. While it is true that some, who are satisfied with this meagre form of living, choose not attempt to seek anything beyond it, most welfare recipients have a fairly strong incentive to seek employment, as a way to improve their quality of life.

In addition to these two problems with the critique of welfare, it is important to consider the purely ethical case to be made in favour of welfare. Even if we were to assume that all welfare recipients live as such by choice, there is a strain of thought which would suggest that it is entirely unethical for us to leave any person with no means to support themselves.

This argument, although admirable, is of course ridiculous. If people are perfectly able to contribute to society, they do not deserve the option of simply living off social assistance. This seemingly cruel way of seeing things is true if for no other reason than that living off welfare is nota choice that could be practically taken by every able worker in society. It is simply not a practical option outside the realm of fantasy. For a society to function, its inhabitants must perform work. It is the individual’s right to choose not to perform any work, but if he chooses this path willingly, there is no justification for his continued support by the government. If private individuals feel differently and wish to fund a charity providing unconditional social services, that is their business, but it is not for them to decide that the public as a whole should fund this cause.

Sadly, as mentioned in previous paragraphs, we must recognize that our society is partially populated by people who are out of work for many reasons. They may be unable to find a job, too busy with childcare to work or perhaps physically or mentally disabled to the point that they are unable to work. These issues should be enough to prevent us from ending the welfare program in its entirety.

However, this is not to say that we should continue to dispense welfare payments via current methods. There is a way in which we could collect a contribution from welfare recipients – namely, through workfare.

Workfare is a system of welfare which requires recipients to work at a government appointed job for a given number of hours in order to qualify for payments. Ideally, these jobs would involve some sort of local community service, or any number of low-skilled positions the government may need to fill. Perhaps the government could work in conjunction with various local NGO’s to find placements. The goal of workfare is to ensure that welfare recipients who are able to work (though not necessarily able to find a job) do not get a free ride. They will be contributing to society if they wish to receive benefits.

Participants would not necessarily be making a huge contribution. Australia’s workfare program “Work for the Dole” (implemented in 1998) only requires welfare recipients who have been receiving payments for 6 months to participate in a government work program in order to qualify for continued payment. Additionally, participants are only required to work 25 hours per week. However, making a small contribution is better than making no contribution at all. In addition, the program can be used to help workers re-enter the workforce. Participants gain valuable work experience to add to their resumes and receive any training they need to fulfill their workfare requirements – training which may help them find a job beyond workfare.

Clearly, there would be exceptions as to who would need to engage in workfare – the severely disabled and single parents being amongst those deserving of such status. Those that fail to report for their workfare assignments or are negligent in their work to the point that they must be dismissed from their assignment would of course not receive any benefits. Ideally, a couple with children would be expected to have at least one parent reporting for workfare.

In that regard, it is important to address what would be done to ensure the well-being of the children of parents who are negligent in performing their workfare duties. Should such children be removed from their parents to become wards of the state? Ideally, yes they should be. This may sound harsh, but in observing the fundamental realities of the world, its truth should be clear. It would be wonderful if all parents could dedicate all of their time to parenting children, but it is simply not possible. When parents are perfectly able to take advantage of a government offer of work that – if accepted – would permit them to receive benefits they could use to provide for their children yet are negligent in pursuing this option, they would be negligent parents. To leave children with parents of such dubious quality would be foolish.

However, there are two problems with above approach to negligent workfare recipients with children. First, it is very likely a politically intangible idea. No matter how rational any approach may seem, an end result that separates children from their parents conceives immediate controversy. There is simply too much negative emotion aroused by the thought of a family being split apart.

The second problem is that children that are taken from their parents may face consequences severe enough to outweigh the benefits of reinforcing the obligation of the parents to participate in workfare. As crown wards, the children are likely to face many psychological problems. The problems they face as a result of the initial separation will be compounded by the significantly lower level of paternal attention they will receive as a crown ward (assuming their parents were fairly attentive). This could potentially lead the children down a path to poverty and even criminal activity, where, it might be said, they would be more of a burden on society than their parents would have been had they been granted welfare without having to work for it.

I have little faith in this second argument. I see few reasons to believe that children would be left any more damaged as crown wards than had they been raised by parents who did not even care enough about them to take a part-time job offered to them by the government without even so much as an application. In addition, it seems likely that such cases would be very small in number, with most parents’ natural paternal instincts leading them to participate lest they should do their children wrong.

Sadly, the political intangibility of removing children from their parents essentially makes the debate null and void. Society is simply not in a position where such an arrangement would be likely to gain support in the public sphere. The family remains the basic social unit of our society. With this in mind, the populace will understandably be hesitant in any situation where it is broken up, even if logical reasoning may lead one to conclude that such a breakup is the best solution to a problem. Here, since the form of abuse directed at the children by their parents would be very indirect in nature – being caused by apathy and negligence – members of society may be somewhat blinded to its true nature. This effect is furthered by the seeming ability to blame the government for the problem. The government, having reformed the welfare system to a new system of workfare that promoted the separation of parent and child, can be perversely perceived as the true source of the problem.

In light of the above stated problems, we shall put aside the problem of negligent, two-parent families for a moment. Assuming no other solution can be found, it seems likely that parents would receive payments regardless of their participation in a workfare program.

Next, having dealt with the question of how better to distribute welfare, it is important to focus on how welfare money is spent. It is a perpetual fear of non-recipients of welfare that recipients may be wasting the money they are given on alcohol, drugs and gambling, rather than on necessary goods such as food, clothing and shelter. In the United States, a partial system of food stamps has been adopted, whereby recipients are given part of their monthly welfare payment in the form of a credit that can only be used to purchase food. Today, each recipient carries a kind of special debit card, which can be used at various approved grocery stores to buy food. In Canada, we have no such system, though exactly why is unclear. It could be said that such a system is an undue infringement on the pride of the recipient, but that is an irrational and sentimental argument. Perhaps, it is thought that recipients deserve the freedom to spend their money on whatever they wish. This is, of course, ridiculous as well. They did not earn the money by any means, so why should they have that freedom? If anything it would be a good idea to extend the food stamp idea to cover other areas of expenditures as well, to the point where most, if not all, of a person’s monthly welfare payment, can only be spent on approved goods like food clothing and rent. The only potential problem with this approach might be the administrative costs required to maintain a list of approved goods and services and ensure that the card would work at these locations. However, if it can be done with food, it seems likely the structure can be easily extended to other services as well.

One part of our welfare system that is significantly harder to deal with than either of the problems above is the so-called “welfare trap”. The welfare trap refers to a phenomenon whereby welfare recipients are not encouraged to earn an income because when they do so, their benefits are reduced, they may have to pay taxes on the new income and will have to dedicate more of their time to working. This problem affects low-skilled workers in particular, since they may be unable to make very much more money with a job than they receive while on welfare. Workfare can help address this problem in two ways: by ensuring that people are working even while receiving welfare payments (thus reducing the relative extent of the new burden they would face by taking on a job), and by providing workers with the job training and experience that may ultimately help them find a higher paying job than they would have otherwise, thus increasing the appeal of finding a job.

Despite these improvements, the welfare trap will likely always be present to some extent. To fight it, it is also important to ensure that taxation of those with the lowest incomes in our society is very low, so that it will not discourage them from seeking a job. In addition, it is necessary to provide supplemental income to the lowest wage earners in society to ensure that they will not be deterred from getting a job by the immediate removal of benefits, and to account for the fact that some jobs will simply not pay enough to support an individual or a family. However, it will always be necessary to ensure people from this low-income group are working an equal or greater number of hours than they would be on workfare, otherwise, one might simply get a very low-paying job working only a few hours per week and still expect to receive supplemental income. To deal with this potential problem, a system of part-time workfare could be implemented which would require participation in order for individuals to receive supplemental income.

It is also of the utmost importance that these supplemental benefits for low-income earners are never removed in such a way that that they lose a dollar of benefits for every dollar earned above a certain level. This structure would not encourage them to find a better paying job, since they would not necessarily receive additional benefits from finding such a job. Instead, supplements must be slowly phased out as a person’s income increases. For example, if our minimum level of income is $10000 (that is to say, this is what a workfare recipient would be given), a man who secures a job paying $5000 should not have his supplemental income reduced to $5000, for he would then have no reason to seek out such a job. He should receive reduced benefits, but not to the extent that his income will have failed to rise.  The specific amount by which his benefits ought to be reduced is not something I will discuss (nor something I am qualified to determine) but, one would not expect he would need to receive much more than the $5000 benefit to be encouraged to seek out a job. He would also likely need to participate in a part-time workfare program to qualify for this benefit, since it is unlikely that his extremely low-paid job requires him to work anywhere near 25 hours per week.

On a side-note, alternative one way in which the welfare trap could be entirely eliminated is through a basic income system. In such a system every citizen would receive a welfare payment, regardless of income. This way, citizens would always have an incentive to get a job because they would always receive the full benefit of any additional income. In addition, the absence of government run means-testing to determine eligibility would eliminate any of the administrative costs required in the current welfare system. Unfortunately, such a system could not be incorporated with workfare unless the government were to undergo what would surely be an expensive process to determine whether individuals have a job or not, and furthermore, whether it is one in which the individual is working any significant number of hours. The benefits of workfare (namely, ensuring all members of society who are able to contribute do so) surely outweigh the reduced administrative costs and elimination of the welfare trap provided by a basic income system. Still, it is an interesting system to ponder and would likely be, at the very least, preferable to the current system. One wonders, however, whether such a system might also fall into the category of being politically untenable. Citizens may be understandably suspicious of a system that would take their money from them through taxation, only to hand it right back to them. This superficial simplification may blind citizens to the net benefits society would likely see as a result of reduced administrative costs and the elimination of the welfare trap.

This analysis of welfare policy it should have made it clear that current systems are lacking in their optimality. The ideal system of welfare would be a system of workfare, requiring individuals to contribute to society in order to receive benefits. In addition, recipients would be limited (to as great an extent as is practical) in their use of welfare funds to only those items which are approved for purchase such as food, clothing and rent. At the very least, they would be restricted from spending such funds on frivolous goods and services such as alcohol, drugs and gambling. Finally, taxation for low income earners would be kept very low and supplemental income would always be phased out as a recipient’s income rises but at a slower pace.

While no system of welfare could ever be with fault, this system would surely be far superior to current systems employed in Canada.

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