by Andre Coelho | Aug 30, 2018 | News
Gerdur Palmadottir (BIEN Iceland)
On the 23rd of August 2018, on the eve of the Basic Income Earth Network (BIEN) Conference in Tampere, Finland, yet another Nordic Day was completed, with the participation of speakers from all the European Nordic countries (Sweden, Denmark, Iceland, Norway and Finland).
After introductions and acknowledgements by Petti Koistinen, Chair of the Local Organizing Committee (of the Conference), a first module about basic income in Finland was opened. Finnish experts on basic income Pekka Elonheimo (who is also a Lutheran priest) and Jan Otto Anderson, both members of the BIEN affiliate in Finland, explain to the audience how the welfare system in Finland has been decaying in the last 25 to 30 years. That essentially meant loss of benefits, more state control in administrating those benefits, and increased complexity in managing the system. Pekka further introduced his thoughts on the relationship between the Lutheran thought and universal basic income, which for him are fully compatible. That same day he would be furthering that relationship in Tampere’s cathedral, on a dedicated Mass to subject, at 7 pm. Andersen, on his turn, informed the audience that basic income has been a discussion point in Finland since the 1980s, but that only relatively peripherical parties like the Greens and the Left Alliance have overtly endorsed basic income and presented specific mechanisms to introduce it in Finland. He also said that the more dominant political party Social Democrats, through its Youth branch, recently released a basic income proposal of its own, although connecting it with labour participation conditions.
From Denmark, Martin Michaelsen, head of the Denmark’s BIEN affiliate, agrees with his counterparts in Finland in that the Nordic welfare state is decaying, obviously including Denmark in such description. As for basic income, he admits the idea has not yet taken root in Denmark, where most relevant institutions of government, social and corporate society are not really attracted to the concept, not only out of ignorance, but also due to the strong hold of the welfare state and a deep-rooted work ethic (objecting the dispense of money with no strings attached). Even still, according to Michaelsen, implementing a basic income in Denmark would be relatively easy, precisely because the welfare state concept and apparatus are so well developed in the country.
Iceland has also sent a thinker and a leader to speak about the Icelandic situation about and around basic income. With close connections to the Iceland Pirate Party, which push for just redistribution of dividends from Iceland’s natural resources (according to their political platform), Gerdur Palmadottir delivered on this event a message on prosperity and passion. According to her, humans get a “kick” out of doing things, not necessarily the results from these (ex.: sales, profits, etc.), and also that people are using prosperity “in a suicidal way”. Emphasizing that democracy has been highjacked, in recent decades, by money power, Gerdur underlines that only politicians who understand societal evolution as stemming from honesty and empathy will eventually bring about a real democracy. Following this line of though, she thinks basic income should not be seen as a cost, but rather as an investment for the flourishing of new ideas and businesses.
Øyvind Steensen (BIEN Norway)
Øyvind Steensen, from BIEN Norway, also agrees with his Icelandic counterpart. According to him, prevention is always better than fixing the consequences, and so investing in people pays off. However, since power corrupts human beings – as proven by science and by hundreds of years of political experience – it is a good idea to redistribute power better than today, avoiding concentrating it into very few hands. So, giving a basic income to all people equates to trusting them enough and so allowing them to thrive in life, while distrusting them enough not to concentrate too much power in their hands.
Finishing the round of presentations from the Nordic countries, Lena Stark, representing the Swedish basic income party, warns that Swedish politics is devoid of visions at this moment in time. According to her, people have lost trust in each other, since there is no place for trust when most of them are just trying to survive. She also confirms, in line with her predecessors in the session, that the Swedish welfare state is falling apart, and that people are being reduced to numbers. This only adds to the general distrust and so, to break the “vicious cycle of distrust”, a generous basic income should be implemented.
Rutger Bregman. Picture credit to: Forbes.
Finally, and to close the day dedicated to basic income in the European Nordic countries context, Rutger Bregman talked about political frameworks, specifically relating to the basic income concept and how it has been developing in recent years. His talk came as an event linked to the translation into Finish of his now famous book “Utopia for realists”. According to him, mainstream news does not bring a factual perception about human nature, being usually far too negative. He thinks most people are agreeable and peaceful beings, mainly moved by stories appealing to emotions, rather than hard scientific facts. As an experienced speaker, he also explains that people listen, or are more open to certain types of language, and so the latter should be adapted to each audience, for maximum effect. Bregman added still that, in these times of unprecedent change, people tend to overestimate transformation in the short term (2/3 years) while underestimating what might happen in the long term (20/30 years). That is why he recommends that those concerned with such ideas as basic income or promoting them actively, be receptive to even the smallest of steps in that direction, instead of only be satisfied with large developments in society.
More information at:
BIEN Conference 2018 website
by Daniele Fabbri | Aug 29, 2018 | Research
Dr. Matthew Johnson. Picture credit to: Lancaster University
Dr. Matthew Johnson, in an article published on LabourList, examines the effects of universal basic income (UBI) on stress. He co-authors with Elliot Johnson a paper with the title “Stress, domination and basic income: considering a citizens’ entitlement response to a public health crisis“.
The paper is partially based on an international and interdisciplinary study, involving a team of more than thirty academics, titled “A Cross-cultural Working Group on Good Culture and Precariousness“, on how to identify and promote a culture capable of fostering the welfare of disadvantaged groups in societies in which accomplishment requires exposition to high degrees of socio-economic insecurity.
“We are facing a crisis of stress”, Johnson says, as researchers have shown that almost half of the cases of work related ill-health are due to stress, with a quarter of people in the United Kingdom affected by stress-related long-term health conditions, which weight heavily on medical expenses. If you have suffered illness due to stress then you may be able to get compensation from your workplace, you might want to contact a workmans comp attorney to see if you could take legal action.
While the mechanism connecting chronic stress to ill-health is still debated, there is a general consensus that stress contributes to a large breadth of conditions, he adds, and studies have shown that as the position in the workplace hierarchy decreases, physiological measures of stress increase, correlating with increased risk of cardiovascular diseases. These cardiovascular diseases could eventually lead to a cardiac event in the near future, so making sure that your workplace has been kitted out with equipment like the ZOLL AED Plus package will help to make sure that you are prepared for any situation that has arisen through workplace stress. You can read in the cited paper that: “The cause of stress in these circumstances is what the republican political philosopher, Philippe Pettit, has termed ‘domination’: being subject to arbitrary decisions of others made without reference to the interests of those affected by the decisions.”
Accusing neoliberal reforms involving promotion of flexibility as having exacerbated the problem, Johnson calls for an effort in promoting “freedom as non-domination”, in order to lessen the role of hierarchy in social relations which could be done through the implementation of UBI.
As John McDonnell of the Labour Party announced that the next Labour Party Manifesto may include a trial of UBI, the author stresses the need for it to also measure the physiological implications of stress, which would be an innovation in what concerns UBI trials. If you’re currently looking for a stress treatment, you could consider using CBD or related products such as redosing shrooms. These alternative medicines have been known to reduce work-related stress and anxiety in many patients. You could consider looking into companies like HerbMighty for detailed information about these products.
More information at:
Matthew Johnson, “Universal Basic Income can directly reduce work-related stress“, LabourList, August 20th 2018
by Michael Lewis | Aug 24, 2018 | Opinion
Michael A. Lewis
Silberman School of Social Work at Hunter College
One of the main criticisms of basic income is that if the government gave us money we did not have to sell our labor for, we would work less. Perhaps not all of us would reduce our labor supply but enough of us would render the policy unsustainable for example, if you are in a lawsuit you won’t be able to sustain your financial status since you would be struggling, therefore lawsuit loans would be able to help you and prevent you from drowning under financial stress. This is an important criticism and much of the basic income debate is centered around it. What I want to do in this post, however, is address another related criticism. I will call it the “something for nothing” (SFN) objection to basic income.
The SFN objection goes something like this. Even if giving people money they didn’t have to work for didn’t result in a significant decrease in labor supply, we still shouldn’t enact such a policy. The reason is that it’s simply wrong to give able-bodied people money without requiring something in return. I realize there’re those who’d object to the word “nothing” in the SFN objection. Many who received a basic income would work part-time, go to school, take care of others, or engage in a host of other activities we might not think should be characterized as nothing. Although I agree with this sentiment, for the sake of this post I’ll put it to one side. That’s because I want to address the SFN objection head on and believe the best way to do so is by conceding, for the sake of argument, that recipients of a basic income would do nothing.
The wrongness of giving people something for nothing is often couched in paternalistic terms. Here’s an example from economist Isabel V. Sawhill:
“Liberals have been less willing to openly acknowledge that a little paternalism in social policy may not be such a bad thing. In fact, progressives and libertarians alike are loath to admit that many of the poor and jobless are lacking more than just cash…. A humane and wealthy society should provide the disadvantaged with adequate services and support. But there is nothing wrong with making assistance conditional on individuals fulfilling some obligation whether it is work, training, getting treatment, or living in a supportive but supervised environment.”
But, as pointed out by economist Guy Standing in his book Basic Income: A Guide for the Open-Minded, many seem perfectly fine with people receiving something for nothing under other circumstances.
Take the cases of inheritance and gifts. Wealthy parents, grandparents, etc. are allowed, upon their deaths, to transfer vast sums of money or wealth to their heirs. And while alive, they’re able to make such transfers as gifts. Yet recipients of such bequests and gifts are under no obligation to work, receive training or treatment, or live in supportive environments. It’s rare to hear basic income opponents criticize this form of something for nothing. There’re several possible reasons for this absence.
Perhaps basic income critics opposed to such transfers among the wealthy do not say much about them because they are thought to be beyond the reach of public policy. That is, perhaps these critics believe it’s wrong for the kids, grandkids, etc. of the wealthy to receive something for nothing but feel such immorality must be tolerated because there isn’t much public policy can do to stop it. But this underestimates the reach of public policy, at least from a technical point of view.
Bequests and gifts are regulated by estate and gift taxes. So, technically, we could change tax laws to make it very difficult or impossible to transfer money or wealth to one’s descendants or heirs. Alternatively, we could allow such transfers to take place but require recipients of them to provide evidence that they’re working, or receiving job training, or in school, or have graduated from school, are receiving drug treatment if necessary, etc. To my knowledge, we currently do none of these things.
Another reason for lack of criticism of SFN transfers among the wealthy might be the view that we shouldn’t tell wealthy people what to do with their money and assets. If they want to leave a million dollars or a couple of homes to their kids, who are we to tell them not to? This raises a complicated economic and moral question: how much of the money and wealth we possess is ours? This may seem like a strange question to ask because the answer seems so obvious: all the money and wealth we possess is ours. But now consider the following autobiographical story.
I am currently a professor at a public university in New York City. I worked very hard to get where I am, having spent almost 25 years in school, culminating in a PhD. I’m not exactly wealthy but neither am I poor. I’m currently living, as many say, “comfortably,” as a result of making a “decent” salary. And I own (well co-own with a spouse) a home. Now here’s a question: what supports did I require to get to this point?
First, I was raised within a family. People don’t get to become professors, or anything else for that matter, without being socialized by a caring family of some kind, whether biological or not. Second, I spent 13 years in K-12 educational institutions. I, of course, did not teach myself but was taught to be a dedicated teacher. This continued throughout college and graduate school. Third, not only was I taught by teachers, but I took part in a number of group study sessions. This resulted in me learning a great deal from my classmates, as well as from teachers. Fourth, the things I learned were, in most cases, neither invented/discovered by my teachers nor my classmates. None of my teachers or classmates were Isaac Newton, Albert Einstein, Emile Durkeim, Adam Smith, Marie Curie, Shirley Ann Jackson, Rosalind Franklin, Ada Lovelace, etc. That is, a host of people no longer with us played an indirect role in helping me get to where I am today.
I could go on but suspect I’ve made my point: any income or wealth I currently possess is not an individual accomplishment. On the contrary, it is a collective one in which many others, dead and alive, played a role. And it’s very difficult to quantify how much of what I have now is due to what I did and how much a result of what others did. That is because what I have been able to do is so intertwined with what others helped make it possible for me to do. This doesn’t just apply to me; it applies to all of us, no matter how wealthy or successful.
To be clear, I am not saying people should have no say in how they allocate the money or wealth they possess. Perhaps they should have more say in deciding this than anyone else. That is, the point of my autobiography was not to support the assertion that the government can just confiscate people’s money/wealth for whatever purposes it sees fit. But it was intended to support the conclusion that government may have more of a claim on “our money” than many of us typically think. That is because government plays a big role in creating the legal/cultural environment which allows for the various collective accomplishments I spoke of earlier. It helps to define and enforce property rights, “nurtures” markets, and helps to curtail acts of violence and aggression, acts which could be quite destabilizing for any socioeconomic system. Thus, basic income opponents who worry about something for nothing transfers among the wealthy may have more room to maneuver than they think.
A third possible reason for reticence when it comes to criticizing SFN transfers among the wealthy may be their voluntary nature. When wealthy folks make transfers to heirs, this is something they’ve chosen to do. Current social welfare benefits (and this is likely to be true of any enacted basic income) are financed by taxes. If people do not pay taxes, they can be fined, jailed, or both. That is, social welfare SFN transfers are involuntarily financed. Perhaps this gives taxpayers the right to demand something in return from social welfare beneficiaries, a right they do not have when it comes heirs of the wealthy.
This is a fair point. But I think it implicitly takes us back to the question of whose money and assets wealthy people are transferring to their heirs. That is, implicit in the voluntary transfers argument is the notion that wealthy people can transfer any money or assets they want to their heirs because it’s their money and assets to do with what they please. But if what I said earlier about how achievements are collective, as well as individual, achievements facilitated in part by the government, perhaps the rest of us do have some say in what children of the privileged have to do in return for gifts and bequests from their rich friends and relatives.
There’s another point to raise about this voluntary transfers argument. The U.S. federal government currently has in place a number of tax expenditures. These are policies where the government allows people to reduce their taxable incomes or, in some cases, their actual tax bills. Those which allow people to reduce their taxable incomes are called deductions. Those which allow taxpayers to reduce their tax bills, that is, the amounts they owe in taxes, are called tax credits. I can make the point I want to make here by focusing on deductions, one in particular.
Under certain conditions, people who borrow money to buy a house can deduct the interest they pay on the loan used to finance that purchase. That is, when it comes to calculating their income which is subject to taxation, taxpayers in this situation can subtract the amounts they paid in interest before determining their taxable incomes. This could put them in a lower tax bracket and cost the government, that is, taxpayers lots of money in forgone revenue. The policy is arguably a kind of housing subsidy. Yet people do not have to work, take part in job training, prove they are staying off drugs, etc. to receive it. That is, this looks a lot like a “subsidy for nothing” policy. Why allow this one, as well as others like it, but not a basic income?
For the sake of discussion, let us put aside some of the things I have been saying in the past few paragraphs. That is, let’s assume any money or wealth people have is solely theirs to do whatever they please, and government has no claim whatsoever on these resources. Where does that leave us? Well it might leave us in the following situation.
The wealthy could continue transferring something for nothing to their kids because we would have no right to shape public policy to stop it. We could, by enacting a basic income, create a more equal playing field by allowing all of us the opportunity for a similar transfer. Yet if we could not tax people (wealthy or not) who did not want to be taxed, we might not be able to obtain enough revenue to enact a basic income. In fact, we might even be able to obtain enough revenue to enact the kind of conditional system Sawhill advocates. That is, if people had the right to decide what they wanted to do with their money/wealth and government had no claim on these resources, we might not be able to finance a social welfare system at all. That’s because folks might not want any of their money and wealth taken to finance such a system. So, the something for nothing objection to basic income, if taken seriously, could lead to the “free market Libertarian’s” first-best paradise. I wonder if something for nothing objectors to basic income have thought about this possibility.
Acknowledgements: I’d like to thank Michael D. Tanner and Eri Noguchi for their helpful comments on this piece. In contrast to what I said in the essay about accomplishments, I take full responsibility for any errors that remain.
by Kate McFarland | Aug 23, 2018 | News
Photo: Newberry Building in downtown Stockton, CC BY-NC-SA 2.0 Onasill ~ Bill Badzo
A new discussion paper, released on Monday, August 20 by Mayor Michael Tubbs and the Stockton Economic Empowerment Demonstration (SEED) team, reveals details of the design of the basic income pilot planned for launch next year.
Stockton Mayor Michael Tubbs
Following in the heels of Silicon Valley’s Y Combinator, the mid-California City of Stockton announced in October 2017 that the municipality was readying a privately financed basic income pilot.
The project arose out of collaboration between Mayor Michael Tubbs and the Economic Security Project (ESP), an initiative founded in California in the previous year to support work related to basic income and cash transfers in the US.
Called the Stockton Economic Empowerment Demonstration or “SEED”, the program will provide approximately 100 Stockton residents with unconditional cash payments of $500 per month for 18 months.
ESP supplied a $1 million foundational grant to launch SEED, which would be followed by major contributions from such donors as the Future Justice Fund, the Goldhirsh Foundation, tech entrepreneur Serkan Piantino, and Facebook co-founder Andrew McCollum.
To prepare a study of the effects of the cash payments, the project has recently enlisted the assistance of two scholars: Dr. Stacia West of the College of Social Work at University of Tennessee, who gained press in the basic income community last year for her study of Dolly Parton’s My People Fund (which provided no-strings-attached cash support to wildfire survivors), and Dr. Amy Castro Baker of Social Policy and Practice at the University of Pennsylvania.
A new discussion paper from SEED, published on August 20, 2018, lays out newly disclosed details about the process of selecting and enrolling participants. The design is one that has been informed by feedback received from Stockton residents, consulting researchers, and others since the project was unveiled.
Seeding SEED (Participant Selection)
As described in the discussion paper, participants in SEED’s basic income trial will be chosen from the population of legal adults (at least 18 years of age) who reside in any Stockton neighborhood in which the median household income is no more than $46,033, the median household income of the city as a whole. The latter provision is intended to allow the project “to be inclusive of residents across the city while ensuring that resources reach those who are in need”.
Although eligible participants must reside in a neighborhood in which the median income is at or below the city’s median, there are no limits on the individual or household income of participants. An adult resident earning above $46,033 is still be eligible to participate in SEED.
Invitations to participate in the basic income demonstration will be sent to 1000 households randomly selected from neighborhoods meeting the income condition. Approximately 100 recipients will then be chosen at random from those who reply to the invitation and give consent to participate. Those who are not selected will be eligible to join the control group. Members of the control group will share the same type of information with the researchers (e.g. information about their financial security, health, and well-being), and they receive compensation in cash for their participation in supplying data, but they will not receive the $500 monthly income.
The invitations are to be mailed by January 2019, with first payments anticipated in February.
Project Assessment
Lead researchers West and Castro Baker will publish a pre-analysis plan in October, which will present the study’s methodology in depth.
But SEED’s latest discussion paper does provide a few new details: the project will examine outcomes including “financial security, civic engagement, and health and wellness” through a combination of surveys, interviews, and focus groups, and the research team will compare outcomes among the cash recipients to those of a control group (which, as mentioned above, will be composed of others from the population of eligible participants).
Although SEED is now to include a controlled experiment, the project still calls itself a “demonstration” instead of an “experiment”, and this not due (merely) to the attractiveness of “SEED” as an acronym rather than “SEEE”; the generation of stories and anecdotes remains a core purpose of SEED.
As also described in the recent discussion paper, Mayor Tubbs and his team aspire to produce stories about how a modest guaranteed income impacts individual lives, as well as how a social experiment impacts a city.
The demonstration will track the individual experiences of a small group of participants who volunteer to speak publicly about the effects of the program on their lives. Artists will also assist in delivering the narrative. For example, the paper indicates that a public event featuring poetry and spoken word performances is to be held at the conclusion of the project.
In addition to telling the stories of individual recipients, the SEED team intends to set the project “in a larger framework for a broader vision for a new social contract”, presenting it “as part of the larger story of Stockton, a trailblazing city on the rise”.
Motivation
The Stockton project is motivated by the belief that an unconditional basic income is “one of the most effective tools” to reduce poverty and mitigate economic insecurity. SEED states, “We are motivated to test a guaranteed income in Stockton because we believe it is to combat poverty. Unconditional cash can supplement and enhance the current social safety net.”
Inspired by Dr. Martin Luther King Jr.’s endorsement of a guaranteed annual income, Mayor Tubbs developed an interest in basic income as part of a broader program to help his city recover from economic devastation. Hit badly by the economic collapse of 2008, Stockton was declared “America’s most miserable city” by Forbes in 2011 and filed for bankruptcy in 2012, becoming the largest US city to have done so at the time (although soon surpassed by Detroit).
Tubbs was elected to Stockton’s City Council in 2012, at the age of only 22, and in 2016 defeated incumbent Anthony Silva to be elected as mayor of the city of 300,000 — the youngest mayor in the city’s history and the first African American.
Since assuming office, Tubbs has pursued a range of initiatives to combat the effects of economic devastation. He led Stockton in creating a Housing Mitigation Fund to reduce financial risk for landlords who rent homes to the homeless, for example, and he secured a philanthropic grant to launch another privately funded initiative, Stockton Scholars, which provides scholarships to help Stockton high school students attend college or university. Mayor Tubbs also spearheaded a partnership with the city and Advance Peace, a controversial program that aims to reduce gun violence by providing cash assistance and other personal support to those most likely to commit violent crimes. In addition to heading SEED, he is currently constructing a re-skilling program to help close the skills gap between employers and Stockton job-seekers.
It is against this background that SEED declares it is “taking place within a larger collective impact model to build a world-class cradle-to-career pipeline of education, public safety, and opportunity”.
A “Basic Income” Trial?
Past articles in Basic Income News have stressed that many existing so-called “basic income” experiments are constrained in ways that call into question their resemblance to a universal and unconditional basic income. In many cases, for example, participants have been selected only from pools of individuals with low incomes (Ontario, Y Combinator), who are unemployed (Finland), or who are currently receiving other welfare or social assistance benefits (The Netherlands, Barcelona). In some cases, moreover, the cash payments are reduced with earned income (e.g. Ontario, The Netherlands).
The design of the Stockton pilot is notable in that there is no requirement that individual participants be low-income, unemployed, or receiving government assistance. As mentioned above, participants must reside in neighborhood with an average income at or below the city median; however, participants themselves needn’t have an income below this level (e.g., in principle, invitations to participate could be sent to affluent investors who has purchased homes in low-income Stockton neighborhoods with the hope of later turning a profit).
Additionally, the $500 payments will not be clawed back with additional earned income. That said, however, other benefits might. SEED is currently working with government benefits agencies to determine how the unconditional cash grants will impact recipients’ eligibility for means-tested benefits. Under current US policy, such a $500 per month of “reasonably anticipated income” would generally need to be reported as household income. However, Tubbs hopes to secure waivers for participants to prevent or mitigate potential loss of benefits during the trial. SEED states that it will provide potential recipients with detailed information about the effect of participation on public benefits, as well as providing opportunities to consult with benefits eligibility counselors prior to consenting to join the project.
More Information
Official Paper: “Our Vision for SEED: A Discussion Paper” (August 20, 2018).
Official Website: www.stocktondemonstration.org.
by Jelena Vitic | Aug 21, 2018 | News, Research
Picture credit to: Big Think.
On the 12th of July 2018, Trump’s Council of Economic Advisers (CEA) released the report “Expanding Work Requirements in Non-Cash Welfare Programs”, in response to an executive order made in April 2018 on reducing poverty in America.
The poverty rate of 3%, as measured in the CEA report, is at an all-time low. Although a favorable result, the authors point out that “many non-disabled working-age adults do not regularly work, particularly those living in low-income households. Such non-working adults who receive welfare benefits […] can become reliant on welfare programs.” In an attempt to increase self-sufficiency in recipients of benefits, they propose strengthening and increasing work requirements.
Ed Dolan reflects on the results outlined in the report in his article for the Niskanen center. He poses four questions that challenge the report’s main conclusions.
- Are the measures of poverty used in the report appropriate?
In the report poverty was measured through consumption starting in 1980, when the first reliable data is available. After adjusting for changes in purchasing power, the results show that the poverty rate has fallen compared to 1980. Although this approach has solid ground in research, Dolan argues that alternative measures produce different results (examples available here and here), mainly due to different definitions of poverty itself and using different years as the base for comparison.
- Who are the recipients?
The CEA distinguishes between two groups that currently receive welfare support: i. recipients unable to work, and ii. non-disabled recipients able to work. They report that non-disabled recipients have lower employment rates compared to the general population of working age. The authors explain this finding with the fact that recipients receive less benefits as their income raises which demotivates them to find work.
Dolan challenges this argument by saying that recipients cannot be easily grouped into non-disabled and disabled welfare beneficiaries. The Kaiser Family Foundation study found that some individuals that reported not working due to some form of disability do not meet the social security disability requirements for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) support, making them officially non-disabled. These individuals are unlikely to get employed despite policy adjustments, effective tax rates and work requirements.
- Are work requirements effective?
According to the CEA, there is sufficient evidence to support the claim that work requirements would be effective in reducing dependency on welfare benefits and increasing employment. Their argument is based on the welfare reform that took place in the 1990s.
Dolan disagrees with this conclusion, pointing out that the golden standard among experts for evaluating the 1990s reform is a series of eleven experiments known as the National Evaluation of Welfare-to-Work Strategies, conducted in the 1990s across the country with each lasting five years. In these experiments, participants were divided into two groups. The treatment group received benefits as a function of work requirements, while the control group continued to receive payments without conditions. The treatment group had modest gains in employment and there was a 1% decrease in total income on average. The results showed that the increase in wages was often smaller than the decrease in benefits. Finally, positive results were produced only where administrative support was provided (one-on-one interactions, training etc.). Dolan believes this provides little evidence that work requirements would help recipients move towards self-sufficiency. He also criticizes the CEA report for not emphasizing the crucial role of administrative support.
- What is the real agenda?
Dolan believes that work requirements are not likely to be effective at increasing employment and raising self-sufficiency: “Think of it this way. As currently configured, the message to in-kind welfare beneficiaries is, ‘We encourage you to work, but if you do work, we will take your benefits away.’ Adding work requirements changes the message so that it becomes, ‘If you work, we will take your benefits away, but we will also take them away if you don’t work.'” However, as a tool to lower welfare payments and reduce administrative costs work requirements could be effective, since more individuals would be excluded from the system, according to Dolan.
More information at:
“CEA Report: Expanding Work Requirements in Non-Cash Welfare Programs“, Council of Economic Advisers, July 12th 2018
Executive Office of the President, “Reducing Poverty in America by Promoting Opportunity and Economic Mobility“, Executive Order 13828, April 10th 2018
Ed Dolan, “Do we really want expanded work requirements in non-cash welfare programs?“, July 23rd 2018
MaryBeth Musumeci, Rachel Garfield, and Robin Rudowitz, “Medicaid and Work Requirements: New Guidance, State Waiver Details and Key Issues“, January 16th 2018
