What is a Social Welfare System?

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Definition:

A social welfare system refers to a collection of government programs designed to help vulnerable people by providing money, healthcare, food, and other forms of assistance.

🤔 Understanding social welfare system

A social welfare system is the collection of government programs designed to help people in need. These programs generally aid vulnerable individuals and families who may have trouble taking care of themselves. In the United States, the federal government runs six major welfare programs that help millions of people pay for necessities, such as food and healthcare. Welfare programs are usually means tested, meaning recipients must prove they're financially needy. This is different from entitlements, which are provided to most if not all citizens, no matter their income. Some countries provide generous social welfare assistance, while others offer minimal help. Local and state governments may also run their own welfare programs.

Example

Suppose your friend Jane loses her job. Jane is a single mother with a four-year-old child. She applies for the Supplemental Nutrition Assistance Program (SNAP), which helps provide funds to buy groceries. Jane also begins an application for Medicaid — If approved, it will pay for healthcare for her and her child.

Jane also applies for unemployment benefits and receives roughly half of her monthly income from the state government.

While SNAP and Medicaid are welfare programs, unemployment insurance is not typically considered a welfare program, because wealthy people can still receive these benefits if they lose their jobs.

Takeaway

A social welfare system is like a rock climber's harness…

If you slip and fall, it will catch you before you hit rock bottom. Social welfare systems are frequently referred to as "safety nets," as they’re designed to help minimize the pain you’ll suffer if something bad happens (like a job loss).

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What is a social welfare system?

A social welfare system is a collection of government programs that are designed to help those who are struggling to provide for themselves. Social welfare programs help people pay for basic living necessities, such as food and shelter. Welfare programs are usually means tested — meaning the individual or family must prove that they’re financially needy. Many welfare programs, for example, set income thresholds. Once your income rises above a certain amount, benefits may be reduced or eliminated.

Countries design and implement their own welfare systems. Scandinavian countries, including Denmark, Finland, Sweden, and Norway, offer what are considered to be quite generous social welfare programs. These countries have implemented the so-called "Nordic model," which features high taxes and generous social benefits. The United States, on the other hand, is known for having a limited social welfare system. For example, the US doesn't provide universal access to healthcare. Many poor individuals and families struggle to access healthcare, and costs can be a significant burden.

In the U.S., individual states administer many welfare programs. For example, states have a major role in deciding who has access to Medicaid, which is healthcare provided to needy families and individuals. State and local governments also administer SNAP benefits, which provide funds to purchase food.

What are the major federal welfare programs in the United States?

Welfare programs vary significantly from country to country — and, in the United States, they even vary from state to state. However, there are six major federal government welfare programs that citizens across the U.S. can access if they meet certain criteria.

Temporary Assistance for Needy Families program

Often referred to by its initials, TANF, this program provides basic cash assistance to needy families with children. Some 2.5 million people were recipients of TANF grants in 2017, with 1.9 million being children. Average monthly benefits totaled $446 a month. Recipients are required to get a job within two years.

Medicaid/CHIP

Medicaid provided healthcare for approximately 75 million impoverished people in 2017. Nearly 10 million of those covered were disabled, while 30 million were children. More than 5 million senior citizens received Medicaid assistance, which covered costs not paid for by Medicare — an entitlement that provides healthcare for senior citizens.

An additional 6 million children received care through the Child's Health Insurance Program (CHIP). This program provides dental care, eye care, regular checkups, and some other types of care for impoverished children.

Supplemental Nutrition Assistance Program (SNAP)

SNAP (also known as food stamps) provided food vouchers to more than 40 million Americans in 2017. Many adults without children are required to hold jobs if they want to receive more than three months of food stamp assistance within a three-year period. This requirement may be waived in areas with high unemployment. Another program, Women, Infants, and Children (WIC), aids mothers and children up until the age of six. Meanwhile, the National School Lunch Program provides free and reduced lunches to millions of children each year.

Earned Income Tax Credit (EITC)

The EITC is a tax credit available to low- and moderate-income families. A family of four, for example, had to earn less than $51,492 in 2017 to qualify. Among other qualifications, you must earn some of this income from a job, business, or farm, and you need to file a tax return. In 2017, the EITC program paid out roughly $65 billion and lifted more than 9 million people out of poverty.

Housing Assistance

The United States offered some 1.2 million units of public housing in 2017. The Housing Choice Voucher Program, once known as Section 8, provided rental assistance to more than 2 million people. This program offers vouchers that people can use to rent approved properties from non-government property owners.

Supplemental Security Income

Supplemental Security Income (SSI) is a means-tested program managed by the Social Security Administration that provides benefits to people with disabilities that impede their ability to work. SSI benefits are also payable to some elderly people who are not disabled but do meet financial requirements. In 2018, more than 8 million people received payments, including more than 7 million blind and disabled people.

What is the difference between welfare and entitlements?

Entitlements are given to everyone, while welfare is for those in need. Medicare and Social Security are entitlements, not welfare. These programs are funded with the Federal Insurance Contributions Act (FICA) tax.

In the United States, just about every citizen who is 67 or older will receive Social Security. It doesn't matter if you're rich, poor, or somewhere in-between. The same is true for Medicare. Once you turn 65, you're qualified to receive Medicare benefits, no matter your wealth.

Some programs, like Supplemental Security Income, have additional requirements in addition to income. To qualify for disability payments, you must usually be disabled, and it must impact your ability to work.

In many countries, healthcare is an entitlement. People can access healthcare no matter their income. In the U.S., companies and individuals pay for healthcare. Paying for healthcare can be a burden for more impoverished families. Millions of people, however, are uninsured or underinsured. Some less fortunate people can access healthcare through social welfare programs, such as Medicaid and the Children's Health Insurance Program (CHIP).

How did welfare programs start in the United States?

Governments have been assisting needy people for centuries. In ancient Rome, for example, the government would dole out bread to the poor. Following the American Civil War, the U.S. government set up a pension system to care for disabled veterans and widowed families.

With the notable exception of wounded soldiers, however, welfare was primarily left to state and local governments until the 20th century.

When the Great Depression started in 1929, countless companies went out of business, and the national unemployment rate skyrocketed to nearly 25%. Many people lost their income and couldn't afford even basic living necessities. Franklin D. Roosevelt rolled out numerous large-scale social welfare programs as part of his New Deal policies. The federal government opened relief camps and launched large scale public works to employ people while building schools, dams, and the like.

In 1935, FDR signed the Social Security Act, launching the Old-Age, Survivors, and Disability Insurance (OASDI) program. Many people simply call the OASDI program Social Security. This program provided money to the elderly. While Social Security is an entitlement, rather than a welfare program, the program marked a turning point for the federal government. Up until the passing of the act, the federal government generally stayed out of people’s welfare altogether.

The Social Security Act also contained provisions for Unemployment Insurance (UI). In the U.S., unemployment programs are joint federal-state programs. The State of Wisconsin had established a statewide unemployment program in 1932. The Social Security Act helped other states set up programs.

FDR's New Deal changed the role of the Federal government. Following FDR and the Great Depression, the federal government took a more proactive part in looking after people's welfare. President Lyndon B. Johnson's "war on poverty" would establish many of the welfare programs we're now familiar with today.

What was the war on poverty?

In 1964, President Lyndon B. Johnson declared a "war on poverty" and moved to significantly expand America's social welfare system.

President Johnson's efforts focused on four pieces of legislation.

Economic Opportunity Act of 1964: Created the office of Economic Opportunity to direct the war on poverty. Established the Job Corps, which provides federal work-study opportunities and sponsors work programs.

Elementary and Secondary Education Act: Provided funding and support for schools with a large portion of impoverished students. ESEA was signed into law in 1965 and was reauthorized by the No Child Left Behind Act.

The Food Stamp Act of 1964: Established the food stamp program, which allowed people to buy food with stamps. This program has since been modernized and is now part of the Supplemental Nutrition Assistance Program (SNAP).

The Social Security Amendments of 1965: Expanded Social Security coverage to cover specific populations that didn't meet the age requirement. Disabled people who struggled to work could apply for benefits, for example. It also established Medicare healthcare coverage for the elderly and Medicaid coverage for some impoverished individuals and families.

These programs greatly expanded the federal government’s efforts to alleviate poverty.

How does a social welfare system work?

Social welfare systems are a form of wealth redistribution. The United States has a progressive tax system, which means that wealthier individuals typically pay higher taxes. In fact, the top 50%of taxpayers paid 97% of all individual income taxes. These taxes fund the government, including social welfare programs.

Social welfare systems assist vulnerable populations and the poor. So, social welfare systems take money from wealthier households to fund programs that help the poor.

What qualifies you to be on welfare?

Social welfare systems assist those in need. One of the distinguishing features of most social welfare programs is that they are means tested — meaning people must demonstrate a need for assistance.

Many social welfare programs require people to have an income below a certain threshold. For example, to qualify for SNAP benefits, a family of 4 must typically have a gross monthly income of $2,790 or less.

To qualify for Social Security disability insurance, you must be disabled, and your condition must impede your ability to find work or hold a job.

What are the advantages and disadvantages of social welfare systems?

Social welfare systems help vulnerable people access necessary resources. However, social welfare systems can be expensive to maintain. There is also some evidence that social welfare systems can trap people in poverty. Someone could avoid getting a job, for example, for fear of losing their benefits.

Social welfare systems can also be difficult for people to navigate. Filling out paperwork and providing evidence of income can be cumbersome. Furthermore, some people may be denied assistance even if they need it.

What is the importance of social welfare?

Social welfare helps people survive. Without social welfare, many poor and disadvantaged people would struggle to pay for basic living costs, such as food and shelter. Some people might die if they did not have access to social welfare programs.

One study published by researchers at Columbia University found that more than 100,000 people died in 2000 due to individual poverty. Without social welfare programs, deaths could increase.

There is evidence that some social welfare programs can reduce crime. Evidence suggests that increased social welfare spending during the Great Depression led to a reduction in property crime.

Social welfare programs may also help increase social mobility. Food assistance programs, for example, have shown positive effects on childhood development, increasing student cognition, and improving behavior. This can lead to better outcomes in school, which can lead to better career prospects later on.

Ultimately, social welfare programs provide an essential safety net and may also contribute to social harmony.

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