Welfare: Who is On It and How It Works

Of the dozens of ways that the government has found to take money from people who work and give it to people who do not work, the best known is Aid to Families With Dependent Children (AFDC). Although there are other programs that actually spend more tax money on poor people, AFDC is what is generally thought of as “welfare.” A significant minority of recipients are white. However, since whites are considerably less likely than any other racial group to be on AFDC, welfare acts as a net transfer of billions of dollars from whites to non-whites.

Americans are suspicious of government handouts to able-bodied adults, so AFDC payments are supposed to be for the benefit of the children of the indigent rather than for the indigent themselves. Eligibility is therefore restricted to poor families with children under the age of 18. There is a certain looseness about the definition, so virtually all AFDC “families” are single women with children. In 5.2 percent of all welfare cases, the other parent is dead or incapacitated, and 33 percent of the time the other parent is absent because of divorce or separation. Fifty-six percent of the time, however, the mother did not bother to get married at all. Thus, in more than half of all welfare cases, money goes to women who started “families” when they had illegitimate children.

Variations by State

Welfare varies considerably from state to state and, theoretically, a state is free not to have AFDC at all. Currently, all 50 states and the District of Columbia, along with Guam, Puerto Rico, and the Virgin Islands have AFDC but, curiously, American Samoa does not. The enticement to the states and territories to take part in AFDC is that the federal government pays half of the local administration costs and, depending on how poor the state is, anywhere from 50 to 80 percent of the benefit payments themselves.

The states set their own eligibility standards and benefit levels. The only restriction is that federal law prohibits payments to households with incomes that are more than 185 percent of the poverty standard set by the state. In some states, the standard is very simple. In West Virginia, for example, a family is eligible for AFDC if it “has insufficient income or other resources to provide subsistence compatible with decency and health.”

Many applicants, particularly unmarried mothers, have no income and no assets and glide effortlessly onto the rolls. However, for borderline cases, most states have complicated formulae for deciding eligibility and benefit levels. The formulae cover how valuable a car or burial plot (!) the applicant may own, whether the income of step-parents counts against eligibility, whether food stamps are counted as income, etc. Washington state even specifies that $33 a month can be set aside for guide-dog food.

The payment levels that result from these meditations have a vague relation to the local cost of living. The average monthly payment per family for the entire country is $388, but is as low as $119 in Alabama and $122 in Mississippi, and as high as $688 in Alaska, $624 in California, and $565 in Connecticut.

How many Americans are on the dole? In 1991, the average monthly AFDC case load was 4,628,000 families, or 13,712,000 individuals. That was 5.5 percent of the population and the average family size was 2.96. The period from 1988 to 1991 saw the biggest increase in recipients in the history of AFDC — the rolls grew by nearly two million.

Total spending on AFDC in 1991 was $20.3 billion in direct handouts and $2.5 billion in administration costs. Every year, about 90 million Americans pay federal income taxes, so this means that every six or seven taxpayers support a welfare recipient as well as themselves and their families.

If welfare payments were set by the federal government they would be linked to inflation, but most of the states have let the real value of welfare decline. In fact, the inflation-adjusted value of the average AFDC payment is only 57 percent of what it was in 1970. However, virtually all welfare recipients also get food stamps, and the federal government has tied their value to inflation. Thus, the average combined benefit of welfare and food stamps is still 73 percent of what it was in 1970.

Race of Recipients

Blacks are vastly overrepresented on the rolls. As the first chart on this page shows, 5.4 million — nearly 40 percent — of all recipients are black. The second chart compares actual numbers of recipients with numbers in the population to show the percentage of each racial group that lives on welfare. Only 2.9 percent of whites are on welfare whereas 18 percent of blacks are. This means that any given black is six times as likely as any given white to be on the dole. Although Asians have the lowest percentage on the dole after whites, they are still nearly twice as likely as whites to be recipients.

Given these disparities by race, it is no surprise to find that the states with the most non-whites generally have the most welfare. In the District of Columbia, which is 75 percent non-white, 9.3 percent of the population are on welfare. In 35 percent — black Mississippi, 6.8 percent are on welfare. In some notorious black ghettos, more people are on welfare than not. In Camden (NJ), two-thirds of the adults are on welfare and in East St. Louis (IL) 75 percent of the population gets AFDC.

In such overwhelmingly white states as New Hampshire, North Dakota, and Idaho, about two percent of the population is on welfare. Region and eligibility standards make a big difference, though. Although West Virginia is 96 percent white, 6.3 percent of its people are on the dole.

The welfare rolls look very different from state to state. In the District of Columbia, 98 percent of recipients are black (and 82 percent have never been married). In Hawaii, which is 62 percent Asian, 70 percent of recipients are Asian. In California, 33 percent of recipients are white, 23 percent are black, 29 percent are Hispanic, and 12 percent are Asian.

How long do people stay, as the British would say, “on the suck”? Thirty percent of recipients are on for less than two years and 50 percent for less than four years. However, at any given time, 65 percent of all recipients have been getting welfare for more than eight years.

These numbers sound contradictory, but they are not. Welfare is like a hospital in which most of the beds are filled with chronic cases. A large number of short-term patients can still be admitted one after another in the rest of the beds. In this way, at any given time, most patients are chronic, but of all the patients treated during the year, the majority may have been admitted for only a short time.

Just as blacks are more likely than whites to be on the rolls in the first place, they stay on longer. The average stay for a white is 5.95 years while for a black it is 8.14 years. Twenty percent of white recipients are on for 10 years or more, while 32 percent of blacks are on for that long.

Welfare combines with the tax system to give poor people perverse incentives. If a welfare recipient works, her AFDC payments and food stamp allotments are cut back. The effect in each state is different, but as a national average, a welfare mother keeps only 41 cents on the dollar from the first $5,000 she makes and only 52 cents on the dollar of the next $5,000. For her third $5,000, which would raise her annual earned income from $10,000 to $15,000, she pays income taxes as well, so is left with only 39 cents out of every dollar earned. This is the equivalent of a tax rate of 61 percent, and does not even take into consideration the loss of Medicaid, which can have a cash value greater than the value of AFDC payments.

Tax laws and welfare also combine to penalize welfare mothers who marry. In New York State, a woman on AFDC with two children has the equivalent of an after-tax income of $14,000 a year. If she marries a man who makes $20,000 a year, she loses her benefits, and the man’s tax deductions for having acquired three dependents are worth only about $1,400. Thus, after marriage, the couple has 42 percent less disposable income than they did together as single people.

Work and marriage are bulwarks against poverty. Welfare discourages both.

Childhood Poverty

Welfare, the different rates at which the races use it, and illegitimacy are all closely related to child poverty. Children of all races are more likely to be poor if they do not have fathers, and Hispanic children are more likely to be poor than black children. In female-headed households, 68.4 percent of Hispanic children are poor, while 64.7 percent of black children and 45.9 percent of white children are poor. In families in which a man is present, 26.7 percent of Hispanic children are poor, while 19.3 percent of black children and 9.5 percent of white children are poor.

Interestingly, a child’s chances of being poor are linked to how many brothers and sisters he has. The child poverty rate in one-child families is 12.4 percent, rises to 23.7 percent if there are three children, and reaches 50.6 percent if there are five or more.

The overall child poverty rate for the United States is 19.9 percent. This rate is rising as more and more children live with a single parent. From 1970 to 1990, the proportion of children living with just one parent doubled from one in eight to one in four. Having two parents through age ten is about the best insurance policy against poverty that a child can have. Eighty percent of such children can expect not to spend a single day in poverty. A child who spends his first ten years with only one parent has a better than 90 percent chance of being poor at least part of that time.

Marriage makes a huge difference even for the children of teen-aged mothers. About half of all unmarried adolescent mothers go on welfare for at least part of the year after the birth of their child, compared to only seven percent of those who were married when they gave birth. (It is worth noting that half of all teen-aged mothers manage not to go on welfare during the first year after their children are born. The racial breakdown for such mothers is not available.)

The family prospects for black and white children are vastly different. Although 80 percent of white children live with both parents only 38 percent of black children do. Fewer than six percent of black children can expect to live with both parents until age eighteen.

Soaring illegitimacy rates are closely linked to single parenthood and child poverty. In 1940, only 3.8 percent of all births were illegitimate, and this was before reliable contraception and legal abortion. Today 28 percent of American babies are illegitimate, and here too the races show great disparities. An astonishing 68 percent of black babies are illegitimate while the figures are 37 percent for Hispanics and 20 percent for whites. Heedless child-bearing is one of the defining characteristics of the underclass and it appears to be increasingly characteristic of blacks of all classes.

Illegitimacy is not merely a good indicator of a child’s chances of being poor or going on welfare. It is also one of the best signs of whether a child will die in the first year of life, drop out of school, be a criminal, have his own illegitimate children, or go on welfare.

Do bastardy and fatherlessness cause these things? To some degree they unquestionably do. A loving husband and wife together are vastly better equipped to rear children than is a single woman. On the other hand, people who have illegitimate children tend to be a shiftless lot who would give their children poor upbringings even if they were married.

At the same time, there can be little doubt that welfare, along with Food Stamps and Medicaid (see following story), have greatly eased the pain that used to discourage Americans from having babies they could not support. Removing the penalties for reckless procreation only makes it all the more likely or, as the British philosopher Herbert Spencer used to say, “the ultimate effect of shielding men from the effects of folly is to fill the world with fools.”

A Loosening of Laws and Morals

Although illegitimacy is now central to welfare, the original 1935 federal legislation that established the program did not offer benefits at all to unwed mothers. It specified that assistance was to be for “widowed, separated, or divorced mothers” in cases when “relatives, liable under the law for . . . support, are not able to provide adequate care . . .” Unmarried mothers were not thought to be fit beneficiaries and married mothers were eligible only after the resources of relatives had been exhausted.

ADC (Aid to Dependent Children), as it was then called, was the first federal welfare program, but some states had already established “mothers’ aid laws.” Like ADC, they did not countenance illegitimacy. A 1921 nation-wide survey of recipients of “mothers’ aid” found that of the 60,119 beneficiaries, 83.3 percent were widows, 6 percent had been deserted by their husbands, 8 percent had disabled husbands, 2.3 percent were divorced, and that only 0.09 percent (55 recipients out of 60,119) were unwed mothers. The 83.3 percent who were widows is a reproachful contrast to today’s figure of just 1.5 percent.

Eligibility requirements for welfare were loosened slowly during the 1940s and 1950s and quickly in the 1960s. When illegitimacy rates began to soar, fathers and husbands became irrelevant to AFDC. It is now fashionable to bemoan the breakup of the American family, but in many of today’s “families,” Uncle Sam is the man of the house. The more readily government steps in as father and husband, the rarer the real thing becomes.

The Big Payoff: Welfare is Just One Car in the Government Gravy Train

Costly though it is, AFDC is not America’s most expensive handout program for the poor. Medicaid is vastly more expensive and is growing much more rapidly. Costs have gone from $1.6 billion (in nominal dollars) in 1966 to $127 billion in 1992. In the last two years, Medicaid costs have risen more than 30 percent each year!

AFDC recipients are automatically eligible for Medicaid. Besides them, there are another 12 million Medicaid recipients — mostly old people — whose medical expenses are paid for by the taxpayer. This makes for a grand total of 25 million Medicaid recipients, or just over ten percent of the population. There are only 3.6 federal taxpayers for every Medicaid recipient.

Although more than half of the people who get Medicaid are on AFDC, they consume only about 27 percent of the $127 billion. This is because young poor people are less expensive to treat than old poor people. Even so, in 1992, welfare recipients cost the taxpayer $34.5 billion in Medicaid payments, or half again as much as the cost of the entire AFDC program. As it does with AFDC, the federal government pays half the administration cost of Medicaid, and depending on how poor a state is, from 50 percent to 80 percent of the cost of benefits.

The other big program for poor people is food stamps. Nine percent of the population, or 22.6 million people were getting them in 1991, at a total cost to the taxpayer of $21 billion. This program is paid for by the U.S. Department of Agriculture and is run by some of its 122,594 employees, though the states share administration costs.

Benefits are supposed to be based on what the Department calls its Thrifty Food Plan, which is what the bureaucrats think grateful, nutrition-conscious poor people will be using their stamps for. A family of three gets a maximum of $292 a month for Thrifty Food.

Stores are forbidden to accept food stamps as payment for alcohol, tobacco, or hot food for immediate consumption. Food stamps can, however, be spent on seeds and plants that are to be cultivated for food. In parts of Alaska, they can be used for things like fish hooks, knives, and fishing poles that are supposed to be used for catching food.

Eligibility requirements are set by the federal government, and they may not be the same as state requirements for welfare. However, eligibility standards for food stamps are looser — there are nearly 10 million more people on food stamps than on AFDC — and the vast majority of people on welfare also get food stamps.

Ever since our legislators started taking money away from people who have it, they have never rested from their task of thinking of new ways to give it to people who don’t. Some of their brain children are Pell grants, Federal Housing Assistance ($20.4 billion a year), WIC (Women, Infants and Children) food ($2.1 billion), Trade Adjustment Assistance ($136 million), Supplemental Security Income ($21 billion), Title XX Social Services Block Grants ($2.8 billion), Title IV Child Welfare Services ($3.5 billion), National School Lunch Program ($4 billion), National School Breakfast Program ($677 million), Job Training Partnership ($1.8 billion), Summer Youth Employment Program ($704 million), Job Corps (yes, it is still around, $862 million), Head Start ($2.2 billion), and Low-Income Home Energy Assistance ($1.5 billion).

None of these programs even pretends, as Social Security or Unemployment Compensation do, to have been funded by the beneficiaries themselves. Like welfare payments, they are outright handouts. If it ever occurred to you to wonder what occupies the small minds of the 123,959 employees of the U.S. Department of Health and Human Services, it is just one thing: spending your money. Other government schemes, like the Railroad Unemployment Compensation System, the Black Lung Disability Trust Fund, and the Vaccine Injury Compensation Trust Fund have the telltale stink of give-aways too, but it is hard to find out just what they involve.

All this means that an enormous amount of money must be yanked out of the pockets of those poor, long-suffering 90 million taxpayers so that it can be splashed out to people the government has decided are more deserving of it. Non-whites are disproportionately more deserving than whites. Only 33 percent of the children enrolled in Head Start, for example, are white.

However, when it comes to growing fat on government handouts, Puerto Ricans take top honors. Although only 2.9 percent of white people are on welfare, 23 percent of the population of Puerto Rico is on the dole. Although ten percent of Americans are on Medicaid (a racial breakdown is not available), 36 percent of Puerto Ricans are on it. Finally, though nine percent of the country gets food stamps, 42 percent of Puerto Ricans do. There are so many food stamps floating around the island that they are practically a second currency. Even prostitutes accept them.

White people are, indeed, a rum lot. Not only are they being displaced by non-whites, their freely-elected government hastens the process by raising their taxes so that yet more non-whites can have illegitimate children who will eat free school lunches and live on food stamps. The end may not yet be in sight, but it is not hard to imagine how it will look.