How can we fix the stigma around welfare?

Welfare is deeply politicized and often stigmatized. Social support programs are strongly centered around beneficiaries working. Has it always been this way? Are we destined to be stuck with these political perspectives?

In today’s episode, UC Berkeley MPP student Sarah Edwards wraps up the three-part series around Universal Basic Income and the Social Safety Net. She examines a crossroads moment in our nation’s history when the  Social Safety Net conversation began to talk about the “deserving” vs “undeserving” poor.

She then speaks with the California Budget and Policy Center’s Sara Kimberlin to explore California’s new policies driving the future of our safety net—and how we might not be as far from a UBI as it seems.

Special thanks to James Hawkins (MPP '18) for research support on this episode.

Interested in more on the UBI, social safety nets, and the complicated history of welfare policy? We recommend you try out the following:

1. Listen to part 1 and 2 of this series—Part 1 features Goldman Professor Hilary Hoynes and Part 2 features Lori Ospina, the former director of the Stockton Economic Empowerment Demonstration (the first basic income demonstration in the United States).
2. Read Brian Steensland’s book, The Failed Welfare Revolution: America’s Struggle Over Guaranteed Income Policy, that dives into the historic attempts to guarantee Americans basic economic security.
3. Explore the California Budget and Policy Center’s reports on the impact of the CalEITC

Transcript

Playback1 We need to make sure that we bring people into the workforce. The poor are being marginalized and misaligned in many ways because a lot of the programs that we have are discouraging and disincentivizing work.

Playback2 In Chicago they found a woman who holds the record. She used 80 names, 30 addresses, 15 telephone numbers to collect food stamps, social security, veterans benefits for four nonexistent deceased veterans husbands, as well as welfare. Her tax-free cash income, alone, has been running one-hundred and fifty thousand dollars a year.

Playback3 We have no proof today but I would say to you under Obama's ideology it is absolutely true that he would be comfortable sending a lot of people checks for doing nothing.

Playback4 It's now common knowledge that our welfare system has itself become a poverty trap.

Playback5 I know people they work three jobs and they live next to somebody who doesn't work at all and the person who is not working at all is making more money and doing better than the person that's working his and her ass off. Welfare reform, I see it. 

Sarah Edwards Welfare. Why is it such a loaded term?

 In our previous two episodes on universal basic income, we talked about some of the flaws in our social safety net. We also touched on the stigma of receiving benefits. But why is that stigma there? Has always been this way? Does it have to be this way?

On today's podcast, we'll be discussing a moment in time where the nation is at a crossroads. Where the country has to consider what they think about income inequality and what they want to do about it to decide how they want to shape policies for the future and how they want to support the people living in poverty.

No we're actually not going to be talking about today—at least not to begin with. We'll be talking about the late 1960s. Did you know that what we thought about welfare and how we shaped it was very nearly entirely different? That moment in the 60s really changed things. Let's talk about the history and the future of welfare policy.

I'm Sarah Edwards and this is Talk Policy to Me. While the early 1960s brought victories against some pretty pressing social problems from civil rights to poverty, the late 1960s seemed to show an America that was kind of coming undone.

The Vietnam War was still raging, Martin Luther King Jr. was assassinated and major protests and riots in American cities came in the wake of that. In just a few months after MLK's death, Robert Kennedy was killed. But a new idea bringing hope was about to come onto the scene. The universal basic income. Who is this idea coming from?

Playback6 We're guaranteed income. Annual income,  a guaranteed minimum income for all people and for all families of our country.

Playback7 There is a guaranteed income minimum guarantee of a basic federal minimum would be provided, the same in every state. What I am proposing is that the federal government build the foundation under the income of every American family with dependent children that cannot care for itself.

Sarah Edwards While the concept of a guaranteed income, or a universal basic income, was the hot policy talk of the town both by progressives and by conservatives, there is one man that carried it farther than our nation had ever seen. Who was this man? Richard Milhous Nixon. That's right. Our thirty-seventh President nearly brought a forum of basic income into law. While we might know Nixon for other things.

Richard Nixon [playback] Therefore I shall resign the presidency effective at noon tomorrow.

Sarah Edwards He and his administration opened the door for a whole new approach to welfare and dramatically changed our welfare system in its wake.

Richard Nixon [playback] The choice we make in 1968 will determine not only the future of America, but the future of peace and freedom in the world for the last third of the 20th century. And the question that we answer tonight, can America meet this great challenge?

Sarah Edwards To paint the scene here, the welfare law of the land was called the Aid to Families with Dependent Children. It was seen as pretty flawed from most angles. Different states did not provide the same amount to their recipients, people actually lost their benefits at the same rate that they brought in income, and the nation was really grappling with who should be receiving benefits. Nixon's administration took this issue and took that idea, the guaranteed income, and ran with them. While the earliest iterations might have looked like what we think of as a UBI today, it quickly shifted. It's kept some of what we think of as the liberal ideals of the income floor, but it also incorporated more conservative elements, limiting benefits to those who are working or in a work training program. Basically, this revised version of a UBI implied that to be deserving of welfare, you had to work. And this work requirement, as a central feature of the social safety net, sticks with us to this day.

Nixon [Playback] Tonight I therefore propose that we abolish the present welfare system and that we adopt in its place a new family assistance system.

Sarah Edwards You might think that the way that the bill pulled from both liberal and conservative ideals would mean that it would get bipartisan support, but you would be wrong. The bill was too liberal for conservatives and too conservative for liberals. After a series of drawn out hearings, it ultimately failed. But while the bill didn't last, and neither did Nixon's term, the long term implications were really significant. The legacy of the bill was this idea of a deserving poor pitted against an undeserving poor. In 1996, a surprising person helped cement this concept into law. Bill Clinton, a centrist democrat, launched the Personal Responsibility and Work Opportunity Reconciliation Act. It's right there in the name: personal, responsibility and work.

So what exactly was in this bill? 

Bill Clinton [playback] Today we have an historic opportunity to make welfare what it was meant to be: a second chance, not a way of life. When I ran for president four years ago, I pledged to end welfare as we know it. I have worked very hard for four years to do just that. Today the congress will vote on legislation that gives us a chance to live up to that promise. To transform a broken system that traps too many people in a cycle of dependence, to one that emphasizes work and independence, to get people on welfare a chance to draw a paycheck not a welfare check.

Sarah Edwards Benefits were tied to stringent work requirements and lifetime limits were set. While this legislation and Nixon's had no mention of race, there's always a deeply racist undertone in the conversations around this. Social implications aside, what happened to poverty in the U.S. in the wake of this reform? Despite an initial perceived success of fewer people being on welfare and more people finding work, time has actually shown this had way more to do with a booming economy of the late 90s and this bill being some stroke of policy genius.

So to recap, in a matter of just a few decades, we went from merely passing a form of a universal basic income, to limiting benefits and instituting work requirements for recipients. The term "welfare" now carries a weighty and negative connotation.

What does that shift mean for how we view society and how has our changing economic landscape altered what we actually need from our welfare system.

[Start intermission] Follow along with UC Berkeley's Goldman School of Public Policy on social media. Find us at Goldman School on Twitter Facebook and Instagram. [End intermission].

Sarah Edwards Welcome back. We're talking today about the trajectory of our welfare system over the course of history.

We left off with our country at a crossroads. A moment that changed both the way that we provide benefits and the way that we think about providing benefits in general. Many argue that we're actually at another crossroads moment today. Levels of inequality are higher than they've been since before the Great Depression. Accounting for inflation, w ages have not grown over the past 40 years. The racial and gender wealth gaps have persisted. And the cost of living continues to increase. Many argue that our social safety nets are not doing enough to reduce inequality. And in what feels like an increasingly divisive political atmosphere, the fight over what to do about welfare seems completely removed from the actual issues on the table.

But there is one program that spans an interesting space in this welfare debate. The California Earned Income Tax Credit. In our first episode of the series, talking with Goldman Professor Hilary Hoynes, we talked a little bit about the Earned Income Tax Credit.

Hilary Hoynes If you start by looking at the social safety net, the two most important pillars of that social safety net are tax credits, the earned income tax credit in particular, and the second is food stamps. The Earned Income Tax Credit supplements your earnings if your earnings are below some level. And it's viewed as highly effective at reducing child poverty whilst encouraging work. So it's totally a social safety net built around work.

Sarah Edwards While the name sounds a little bit dry, it's essentially a program that gives a credit back to the poorest Californians.

We spoke with Sara Kimberlin, a senior policy analyst at the California Budget and Policy Center, about what's been happening around our state's EITC and why that matters in this broader conversation around welfare.

 [To Sara Kimberlin] First off, Why the EITC? Why not snap or healthcare or any other program, why is this important?

Sara Kimberlin I think it's just it's a really important tool that we have in this sort of policy tool box to address economic need and economic insecurity. And there are a lot of things about the way it's designed and the opportunities for how you can design it, but also make it possible to really make it effective in helping people who need that economic support. Also, there's a lot of research showing the positive effects of the federal EITC which the CEITC builds on that. It's one of the policies that has really strong bipartisan support, so that creates a lot of opportunities to do a lot of things with it that might be harder to do through other vehicles.

Sarah Edwards We talk about the federal EITC. What is different about the California EITC? Is it separate? Is it just filling gaps? How does that how does that pan out?

Sara Kimberlin So California's EITC is really unique among the state EITC. So there are a lot of states that have some kind of estate EITC. California's is different. Our state EITC, the Cali EITC is really focused on people with the lowest earnings. Aligibility for it ends for filers with kids at the point where someone is working a full time minimum wage job; and for filers without kids, the income limit right now is even lower than that. So the idea is that it gives larger credit. More meaningful credits, to folks who are at the very lowest end of the earning spectrum. One other thing that makes California's credit kind of unique, even compared to the federal credit, is that filers without kids are eligible for the credit from age 18 up. Which is different from the way the federal credit is and really most other state credits are structured where you have to be between ages of 25 and 64.

Sarah Edwards So California is kind of unique in extending it to young adults who are working and also to seniors who are still working past the traditional retirement age. Governor Newsome, as part of his big budget proposal in January, put forward some interesting changes to the county EITC.

Sara Kimberlin  Newsome proposed a very significant expansion of the Cal EITC. so his proposal would more than double the total amount of credits distributed. So you know, quite significant. Basically under the current structure of the EITC, the administration projects a total of about 400 million dollars in credits would be distributed, and his proposal would increase that total amount of credits to about one billion dollars. So that's a very significant expansion. In addition, it would extend it from an estimated two million tax filers and that would add another 400,000 tax filers who would become newly eligible for the credit. One thing that the proposal would do would be to increase the income limit so that anyone who's earning under thirty thousand dollars a year would become eligible for the credit. So that's a very significant increase for filers without kids. So that would mean just many more people are eligible. Thirty thousand dollars is basically the income you would earn if you're working full time year round at fifteen dollars an hour, which is the level of the minimum wage that California is moving towards in steps year over year. So in keeping with the history of the CalEITC, but also sort of jumping to the time when we're at a full fifteen dollars per hour minimum wage, ensuring that anyone who's working up to full time at that level would be eligible for the credit. So that's one piece of it. Another piece of the proposal, a second piece of three major pieces, is that it would increase the size of the credits for filers who are getting currently really small credits and those are the filers who are earning closer to minimum wage full-time jobs, basically.

And then the third piece of it which I think is kind of unique, really, would be adding an extra sort of flat five hundred dollars to the credit for any filers who have children under age six.

Sarah Edwards In some ways, the changes that Sarah is talking about feel pretty technical. But the base of it, is that we would be providing more money to people living in poverty. So that's fantastic. But will there be political pushback as this moves from Newsom's proposal into actual budgetary law?

Sara Kimberlin It's an interesting question. I think one thing to know is just the Kelly ITC has a lot of really strong support in the legislature and among many different advocacy groups in the state. So, I think there's a strong base of support overall for for this approach to to addressing a serious challenge that California faces.

Sarah Edwards That brings me some hope but also raises more questions. When we think about welfare, there's this deep level of stigmatization and political divisiveness around the issue. Remember this...?

Playback8 We must include more work in welfare.

Playback9 We can lift our citizens from welfare to work from dependence to independence.

Playback10 There is nothing better than a good job to help lift a family and to end the spread of a culture of dependency.

Sarah Edwards It does seem like the EATC is somehow outside of that. Why would that be? Why are the same people who oppose a Universal Basic Income okay with a program like the EITC?

Sara Kimberlin As tax credit, I think you could argue it being a tax credit makes it sort of less stigmatized than something that's more like a cash income support. Something where you get a check in the mail from a welfare department or social services department. Just because almost all Americans and certainly all working Americans have a shared experience of filing taxes, and many of them get a refund. When you get a refund, it's not like you are necessarily even aware of which pieces of the refund are attributable to which credits. So in a way that's something that would tend to make it less stigmatizing right? It's sort of more of a shared experience and especially an experience that's common to people who are working. And of course there's a strong association if you work in America, then that puts you like in the category of the "deserving poor" or the "worthy poor." So I think there's a lot of ways that having it linked to work and having it distributed through the tax system—which is not a special system for folks who have less resources, but instead a system that everyone interacts with. I think there's a lot of ways that that could be seen as a de-stigmatizing kind of approach to  implementing and achieving this kind of a policy objective.

Sarah Edwards How do you address that gap between that "deserving poor" and "undeserving poor?" It's all so centered on this idea of work. Absolutely the EITC does so much for people that are working, and I've seen the conversations around, could you expand the EITC to people who are providing care? I think that starts to kind of blur the edges a little bit. What are what are your thoughts around that?

Sara Kimberlin Yeah I think there are a lot of ways the conversation about expanding the definition of work to include things like caregiving that I think people in general don't have. It's not a big stretch for people to identify that as work that is important, that may not be financially compensated. So I think that's definitely one way that it starts to blur the difference. I also think that, I don't know, maybe this is an optimistic way of thinking about things, but there is maybe more recognition and growing recognition that the line between people who have little money and people have more money it's is not really defined by deservingness or not-deservingness. I think there are a lot of trends. Wages have really stagnated for most people, people at the median and people at the lower ends. I think that gives people a sort of increasing sense that working hard is not enough to get ahead. Your wages are not necessarily going to keep up with the cost of living. People have seen that. I think the great recession gave a lot of people a taste tough the ways the economic insecurity can touch people who had never experienced it before. I mean, there's also just the reality that many people spend at least some part of their lifetimes ending up in a place where they're really struggling to make ends meet. So, I think maybe all of those things together with also just the the rise in inequality and the rise in the concentration of wealth and income at the very top and maybe all these those things come together to sort of help people feel that there's a shared experience and shared responsibility to address the problems of economic insecurity and poverty.

Sarah Edwards So building on that, as some of the 2020 hopefuls are beginning to announce that they're running, there's been some pretty significant poverty alleviation programs being put forward. But they do kind of seem to be outside of the realm of traditional stigmatization. There's a lot more around middle income tax credits and things of that nature. But a lot of them are things that kind of look like an expanded EITC or something that kind of fits in this framework. How feasible do you think those are at that federal level?

Sarah Kimberlin A lot of the proposals that are out there now have large price tags, so there's that question. But in terms of significantly expanding support for lower income families, and doing it through the tax system through a tax credit of some kind, I think there's a lot of reasons why that makes a lot of sense and could potentially have a lot of political support. And again, this builds off an infrastructure that we already have. It's less stigmatizing and people understand how income taxes work, they understand if people are paying taxes that puts you in the category of people like you and me. If your goal is to find a way to address problems like the fact that wages are not increasing to keep pace with the cost of living for a lot of people, it's harder and harder to protect your middle class lifestyle or make sure your kids have the opportunities they need to succeed over the long term. These things that I think have a lot of sort of resonance with a lot of people, that are focusing on expanding tax credits for people with lower and middle incomes, I think there's a lot of ways that it makes sense. So it wouldn't surprise me if those were things that could move forward. I mean it's always in the context of negotiations and other priorities and where the revenues come from and all of that. But that's as general approach, it seems like it probably has a lot of promise.

Sarah Edwards I hope so. I always hoped we can find ways to normalize policies that correct for inequalities. And I hope that gives us the space to actually build systems that correct for some of these huge historic mistakes. And in that frame, if you are able to build something new to address these problems, what would it look like?

Sara Kimberlin One thing that I often will point to is that—I mean this is going to sound so obvious—cash is very effective in addressing poverty. And yet, we have a lot of policies that are designed to address poverty that try to work through other kinds of vehicles where you can have this resource but you have to spend it on food, you can have this resource but it has to be spent in this particular way. Addressing poverty through policies that put more cash resources in the pockets of families so they can spend it how they to it to cover the costs that they particularly need to cover. I think it's really effective. And that's one of the reasons why I think policies like the Earned Income Tax Credit are really powerful because it gives families dollars that they can spend the way they need to. And there's just so much research showing that when families' cash incomes increase, especially when kids are really young, that there are no long term payoffs for their kids and for society as a whole.

Sarah Edwards As I mentioned, I'm kind of looking at this moment under Nixon where our social safety system almost looked very different. And it's like, how much of the way that we choose to allocate benefits to people is based on like pretty historic judgments around who deserves what and who is in the best positions to make those decisions for people.

Sara Kimberlin It's also important to note that it plays out in unequal ways across different groups. There's definitely a racial equity aspect to that. We've done some analysis that if the the poverty rate for kids of color in California were the same as the poverty rate for white kids in California, there would be almost a million fewer poor children in this state. So I think that's another aspect that needs to be taken into account and thought about in terms of thinking how far we need to go and what kinds of things we need to do, to make sure there's really more equity of opportunity and equity of economic security that across all Californians and across all people who are struggling to make ends meet.

Sarah Edwards I feel like this brings us back to where we started with this entire conversation. This question of if there's a way to provide universal support to individuals across the board.

As I mentioned in our past couple episodes we've been talking about this idea of the universal basic income. I think when we unpack it a little bit there's actually some similarities between what people want out of a UBI and what people actually get out of an EITC. But somehow, I feel like it's not being talked about in that same way. Why is that?

Sara Kimberlin It's interesting because we've done some thinking about this at the at the California Budget Policy Center and if you wanted to do something like a UBI at the state level particularly, when you work through all of the implementation issues in the and the budget issues involved, you could very likely end up with something that looks a lot like a state EITC. So, I mean it would be hard to choose something that was truly universal at a state level that would still be within the realm of financial possibility. And so if you accept that it would make more sense to target your income guarantee to a smaller group, then every single Californian...for example, if you targeted it, it would probably make sense to target it more to people who are struggling, more to afford the basic cost of living. So then, you've limited it to folks with below some certain income threshold, most likely. From a policy design perspective, it makes sense to phase it out so that you aren't creating some kind of cliff where people would want to make sure that they didn't work too much so that they continue to qualify for it. So there's once you've added a phasing out at the upper income, and once you've targeted it, you've got something that's really in terms of how much money people get, looks pretty similar to an earned income tax credit. And then in terms of how you might distribute guaranteed income of some kind, doing something through the tax system, again we already have all this infrastructure in place, people already file their taxes, so there's a lot of reasons why that would make sense. I think all that brings it down to  what we're talking about is something that really is like an earned income tax credit. Whether you call it that or not, this might be pretty similar to a lot of the core concepts that are involved in an income guarantee or a basic income.

Sarah Edwards [Aside] So there we have it. Under Nixon, we almost had a version of a universal basic income. But instead, we ended up with a legacy of stigma around welfare and work. Today, while our current policies reflect that history, we're actually starting to see some things that are not dissimilar from a UBI. Policymakers have the opportunity to look at the flaws in the system and find a way to reduce those inequities as we move forward.

Thanks for listening. Talk policy to me is a production of UC Berkeley's Goldman School of Public Policy and the Berkeley Institute for the Future of Young Americans. For show notes, visit us at TalkPolicytoMe.org. Special thanks to James Hawkins for research support on this episode. Music heard on today's episode is my Pat Mesiti Miller and Blue Dot Sessions. Talk Policy To Me's executive producers are Bora Lee Reed and Sarah Swanbeck. Michael Quiroz is our engineer.

I'm Sarah Edwards. See you next time.