Blogs

Government support for child care typically takes the form of a voucher. Income-eligible families can use the voucher generally where they want, and many millions do, but too many children get sub-standard care or none at all. Some states might be rethinking this demand-side approach, as a passage from this piece in the Urban Institute's new safety net series shows:

Pennsylvania, Iowa, and Maryland have used quality grants, bonuses, and awards to give providers incentive to move up a quality rating scale (National Child Care Information Center [NCCIC] 2006). This approach affords providers that lack the start-up funds to deliver high-quality services to get additional help covering quality-related costs (mostly pay qualified teachers) when parents cannot afford to pay higher rates.

Why not go the whole nine yards and have government only address the supply-side of the child care market instead of the voucher approach, which only hits the demand side? Governments could set up and administer child care centers, or, if they wanted less of a public presence, they could heavily subsidize them from the behind the scenes so that better-quality care becomes affordable to low-income folks.

Child care policy seems to be treated as an issue of insufficient individual income. Policy is built around the idea that people aren't making enough to pay for child care, so a voucher can pay for it. But it could also be thought of as a service that's too expensive and inaccessible. If the state lowers the cost of child care and provides more of it, then low-income families will have much greater access, and it'd even be more affordable for middle class folks.

Child care could be conceptualized the same way education is. Education is underprovided and overpriced in the market, so the state has to step in to make it affordable and accessible to everyone who wants it. And as many families do with public education, they can easily opt out by sending their kids to private day care.

Perhaps this has already been tried, and that's why everybody is so focused on vouchers as the way to increase access. But it seems to make too much sense to ignore it completely and not at least explain why it wouldn't work.

Social insurance “consists in protecting wage-earning families which have developed standards of living from losing them, and in helping wage-earning families without standards to gain them.”

--Social Insurance: A Program of Social Reform (1910), Henry Roger Seager

I've been digging Matt's series of posts on the safety net and John's last one on whether a frame like "expand the middle class" is really all that different from one along the lines of "reduce poverty." I'm hoping to do some longer posts over the next few weeks on these matters. As a starting point, I think it's important for us to put to rest the distinction between welfare and social insurance. Conventional wisdom has it that programs like Social Security, Medicare and Unemployment Insurance are categorically different than programs like TANF, food stamps, and Medicaid. A common way of expressing this difference is that the first set of programs are “social insurance” and the second set are “means-tested public assistance” or, more pejoratively, “welfare.”

This distinction is both artificial and ill-conceived. Means-tested programs like TANF and food stamps should be thought of as a necessary part of America’s system of social insurance rather than as “welfare” programs that exist outside of, and have little in common with, that system. Like Social Security and other social insurance programs, means-tested public assistance programs protect Americans against various risks that can reduce their economic security. This essential similarity of purpose is more important that some of the design differences that exist among programs serving an income-security purpose.

In True Security: Rethinking American Social Insurance, Michael Graetz and Jerry Mashaw define social insurance as a set of programs and institutions that “cover common risks to income security across the life cycle of individuals” (45). In this conception, social insurance is defined by its core purpose—moderating the risks of income loss or inadequacy—and not by its funding mechanism or other design features. The Graetz/Mashaw project is best understood, not as a sweeping reconceptualization of social insurance, but as an attempt to develop a conception of social insurance that is more conceptually coherent and useful, and perhaps even more historically grounded, than the current conventional conception of social insurance in the United States.

In their view, the argument that social insurance programs cannot be means-tested is an “ahistorical” one that reflects a political strategy to distinguish Social Security and other programs from unpopular “welfare” programs like AFDC.

As a matter of history, protection against current low income because of defined personal or family circumstances, irrespective of past contributions or earnings, has long been a cornerstone of American social insurance arrangements. The original Social Security Act was a compromise between those who thought social insurance should be structured primarily as a protection against low income and those who saw it primarily as a protection against loss of prior economic status and wanted social insurance closely tied to workforce attachment. (62)

While the strategy of distinguishing social insurance from “welfare” may have been politically beneficial at times, Graetz and Mashaw view it as a “serious mistake.”

This artificial and ahistorical division of the social welfare world between contributory and non-contributory schemes strands crucial poverty reduction programs in political backwaters. It creates confusion in both public discourse and public perception whenever progressive benefit and contribution formulas for social insurance are proposed and discussed. This political separation poses political dangers for ‘contributory’ schemes as well. It highlights ‘individual equity’ or bank-account considerations in social insurance arrangements—represented recently by the ubiquitous calculations of each individual’s ‘money’s worth’ from Social Security—while submerging the social adequacy commitment that should be the fundamental norm in the design and defense of social insurance.

This doesn’t mean that public assistance programs are solely social insurance, or even that all public assistance programs are social insurance. While Graetz and Mashaw believe social insurance is not limited to Social Security and Medicare, their conception of social insurance as a protection against income insecurity is “considerably narrower than all the public activities that might be said to support American family income.” As an example, they note that education programs are not social insurance, since they don’t provide insurance against “a current loss of economic well-being.” Instead, such programs are more appropriately viewed as an investment in future economic opportunity. (58)

This distinction isn’t completely clear-cut. Education obtained in one’s youth, after all, does enhance income security over the life cycle. But Graetz and Mashaw argue that such a narrowing of the definition is necessary for pragmatic reasons.

If the definition is too broad, ‘insurance’ becomes a useless metaphor.... Important ideas about good program design—identifiable risks, moral hazard, adverse selection, and so forth—lose their salience. If the criminal justice system qualifies as “social insurance” (protection against loss of income or assets through theft, embezzlement, and the like), the concept fails to define a distinctive area of public policy. (57)

Social insurance also is distinct from other types of insurance, including insurance provided in markets where there is considerable government involvement or regulation. The adjective “social” is important in making this distinction. Social insurance is different from other forms of insurance because it is a “social rather than an individual (or group) contract” and is made for “the purpose of collective provision, subsidy, or regulation.”

In part II, I'll discuss a specific case—why that quintessential "welfare" program, TANF, is best thought of in social-insurance terms.

I thought I'd wrap up my posts on the safety net with a couple of points.

• Safety net language is ambiguous. Work supports are sometimes synonyms for the safety net, sometimes subsets of the safety net, and sometimes entirely different from the safety net. I've succeeded in confusing myself many times just over this basic issue of what the difference between these categories is, and it seems there's no agreement on what the difference is.

• Similarly, the values that underlie the safety net can be ambiguous and hidden beneath the surface. A lot of this hangs on definitions, and it's generally a matter of what the most persuasive value statement is. If we're talking about risk pooling, the operative value should probably be security. If it's increasing earnings or assets, opportunity and shared prosperity are probably it. If it's child development, child and family well-being make sense.
• A great deal of safety net framing is excessively focused on individuals. The "make work pay" slogan and the "work-life dilemma" are cases in point, and I'd imagine they don't encourage systems-level thinking.
• Very little narrative shapes the discussion about the safety net. But there are some good examples. I thought John's paper had a great narrative on how North Carolina's economy has changed and why this requires new policy. And Jared Bernstein's work around risk-pooling that emphasizes how "we're all in this together" is appealing too.
• Finally, not much is known about what messages work and what don't. Does the "make work pay" slogan withstand an individualistic counterargument? Do people think building up assets is about opportunity or security? I can only speculate based on the general framing literature, because I haven't seen anything that's rigorously tested these frames out. Somebody needs to see what works!

Ok, I'm done.

Pinka Chatterji and Sara Markowitz find that longer maternity leaves—and fathers who take leave—has positive effects on mothers' health:

.... Using data from the Early Childhood Longitudinal Study Birth Cohort, we examine measures of depression, overall health status, and substance use. We use a standard OLS as well as an instrumental variables approach with county-level employment conditions and state-level maternity leave policies as identifying instruments. The results suggest that longer maternity leave from work, both paid and un-paid, is associated with declines in depressive symptoms, a reduction in the likelihood of severe depression, and an improvement in overall maternal health. We also find that having a spouse that did not take any paternal leave after childbirth is associated with higher levels of maternal depressive symptoms. We do not find, however, that length of paternal leave is associated with overall maternal health, and we find only mixed evidence that leave length after childbirth affects maternal alcohol use and smoking.

A new paper by UK economist Barbara Petrongolo examines how tight job search requirements effect the earnings of unemployment insurance recipients. The paper found that the new requirements resulted in people leaving the program earlier, but leavers who found a new job didn't have better earnings outcomes, and folks who left without jobs were more likely to disengage from the labor market altogether.

I'm no expert on the UK's unemployment insurance system, but the results of this study do seem to fit a pattern. Neoliberal safety net reformers tend to promise major impacts on earnings. While reforms succeed in moving more people into the workforce, they generally fail to significantly boost earnings, and neoliberals are left scratching their heads.

But these results shouldn't be that much of a mystery. Safety nets are not designed to address earnings. They serve the distinct purpose of pooling certain kinds of risk -that you'll lose your job, that you'll get sick, etc- and providing some security for situations when things fall apart. Low earnings have to be addressed by different policy.

Likewise, a boost in earnings isn't necessarily going to provide income security. A better job could always be detatched from a risk pool. It might not come with health insurance. Or it might not make you eligible for unemployment insurance. These problems are directly addressed by broadening access to risk pools.

As long as we're talking about poverty measurements, it seems reasonable to include income insecurity in addition to low earnings as distinct conditions of poverty. If you're making a decent living but can't get unemployment insurance, you're not safely in the middle class.

A few years back in the American Prospect, Linda Hirshman argued that the leveling off and decline of women's employment wasn't due to a bad economy, but rather the fault of what she labeled "choice feminism" which encouraged mothers to "opt out" of the workforce and care for children. She later wrote the charmingly titled book "Get to Work!"

Since then economist Heather Boushey has throughly debunked the opt out myth. In yesterday's NYT she pounded another nail in its coffin:

“When we saw women starting to drop out in the early part of this decade, we thought it was the motherhood movement, women staying home to raise their kids,” Heather Boushey, a senior economist at the Joint Economic Committee of Congress, which did the Congressional study, said in an interview. “We did not think it was the economy, but when we looked into it, we realized that it was.”

The full report is available on the JEC's website. Among the findings:

• Over the past three decades, only those families who have a working wife have seen real increases in family income.

• The 2001 recession hit the jobs that women held especially hard. Unlike in the recessions of the early 1980s and 1990s, during the 2001 recession, the percent of jobs lost by women often exceeded that of men in the industries hardest hit by the downturn.

• The lackluster recovery of the 2000s made it difficult for women to regain their jobs –women’s employment rates never returned to their pre-recession peak.

• If the prior recession’s trend holds, women will suffer equally to men in the 2008 recession. Because women are disproportionately represented in state and local government services, their job losses are likely to grow in the latter part of the recession as state and local governments are forced to implement cut-backs in spending in areas that women are disproportionately employed, such as education and health care.

Last week’s flurry of activity around revising the federal poverty measure has provided an opportunity to revisit the perennial progressive policy debate of “You Just Want to Talk about the Middle Class” vs. “You Just Want to Talk about the Poor.”

This is a debate that always has struck me as one based upon an overly strict distinction between the “middle class” and the “poor.” After all, to a large degree anti-poverty policies aim to connect people to the resources and opportunities traditionally available to middle-class individuals while also preventing middle-class individuals from falling into poverty due to uncontrollable risks. If the point of an anti-poverty agenda is to help people move towards and maintain a traditional middle-class standard of well-being, why not say so?

To me at least, it seems that policies aiming to address poverty and those that aim to expand the middle class overlap significantly and differ mostly in terms of emphasis. The main advantage of speaking in middle-class terms is that it is more aspirational and better fits with American values regarding upward mobility. Being able to cast progressive social policies in a more positive light free of the baggage that unfairly accompanies poverty seems, at least to me, a useful way of broadening the debate and better building a constituency for progressive policies.

Perhaps it is my temperament, but I would rather argue in positive rather than negative terms. Earlier this year, I had a chance to write a family basic budget study for North Carolina. Even though the focus of the study was on low-income families and many of the policy recommendations were taken directly from the anti-poverty playbook, it was not framed as a poverty report. Rather, the report focused on ideas of upward progress. The media and public reception was extremely positive, and I have had the opportunity to speak with many groups that historically have shown little interest in poverty. Granted the reception may have owed a good deal to the report’s timing, but the point is that the more forward-looking message helped in some way to broaden the conversation.

This doesn’t mean that I am unaware of the fact that policies purporting to help the “middle-class” may penalize low-income families or result in an upward redistribution of income. Yet is the problem that the policies are targeted to the “middle-class” or that they are targeted to the rich who are described as being middle-class? The definition of the American middle class is famously fuzzy with many affluent individuals self-identifying as members of the middle class. Perhaps instead of trying to draw a bright line between the poor and the middle class, progressives would be better served by more clearly marking the boundary between the middle-class and the affluent. The result might be the infusion of a more realistic perspective into policy debates.

This is great news:

Democrats and Republicans queasy about a federal rescue of mortgage giants Fannie Mae and Freddie Mac are coalescing around the idea of letting the government slap limits on the multimillion-dollar pay packages of their executives.

Key lawmakers - puzzling over how to explain to constituents why they voted to bail out the troubled government-sponsored firms - see new curbs on compensation for the top officers as a crucial measure to cut down on the cringe factor.

At a time when Fannie Mae's and Freddie Mac's troubles have investors worried and the government ready to jump in with untold sums of cash, the lavish pay of the two companies' executives is increasingly difficult to defend, they say.

For more on the case for imposing salary caps as bailout condition, see Dean Baker:

Economists have long debated the cause of growing wage inequality in the United States. While some have argued that inequality has been driven by institutions and policy, others have maintained that it was driven by the natural development of the market.

If the bailout proceeds [without conditions], the answer to this question will be as clear as day. The government is explicitly subsidising the pay of incompetent bank managers. It is the effective use of lobbyists that ensures the pay of the executives of Fannie and Freddie, not their skill and hard work. Of course, if anyone in Washington cared about inequality and fairness, or even believed in the market, the executives at Fannie and Freddie would not get away with it.

This month's Harvard Magazine has an excellent cover story on inequality. In this excerpt, Nancy Krieger asks the right question:

.... Research indicates that high inequality reverberates through societies on multiple levels, correlating with, if not causing, more crime, less happiness, poorer mental and physical health, less racial harmony, and less civic and political participation. Tax policy and social-welfare programs, then, take on importance far beyond determining how much income people hold onto. The level of inequality we allow represents our answer to “a very important question,” says Nancy Krieger, professor of society, human development, and health at HSPH: “What kind of society do we want to live in?”

The story also includes two evocative metaphors to describe inequality:

To describe the distribution of income inequality in the United States, Allison professor of economics Lawrence F. Katz likes to use the analogy of an apartment building. “Over the last 25 years,” he says, “the penthouse has gotten really, really nice. All sorts of new gadgets have been put in. The units just below the penthouse have also improved a lot. The units in the middle have stayed about the same. The basement apartment used to be OK, but now it’s gotten infested with cockroaches and it’s been flooding.”

The argument that none of this matters as long as the overall economy is growing—that a rising tide lifts all boats, as President John F. Kennedy famously said—is the subject of vigorous academic review, with mixed results, but it may not be the most important question. Picture a buoyant luxury cruise ship surrounded by dilapidated dinghies, full of holes and on the verge of sinking. The fact that the tide has lifted them does not mean they are doing well.

Both of these metaphors arguably need some more tweaking to accurately get at the nature of current-day inequality. With the apartment building, the problem isn't so much that the basement apartment has become less habitable in an absolute sense, it's that the tenant in that apartment has to work a lot harder to maintain it in the same condition. And she or he still doesn't have a parking spot in back, even though they've been on the waiting list forever, and the penthouse owners now have 3 Hummer-size spots in an underground garage with a valet.

Some conservatives argue that America's extreme income inequality is a praiseworthy thing because it goes hand in hand with greater economic mobility. In a new working paper, Lane Kenworthy and Co. find no such relationship:

Markus Gangl (University of Wisconsin), Joakim Palme (Institute for Futures Studies in Stockholm), and I have a paper that averages income over 18 years in Germany, Sweden, and the United States. Eighteen years isn’t a full work life, but it’s the best we can do with existing panel data sets. .... As the number of years over which income is averaged increases, the amount of measured inequality decreases. But it decreases at the same rate in each of the three countries. America’s position does not improve.

One of the challenges of framing the safety net is how to ground policy that directly benefits a minority of folks in univeralist terms and values. The safety net can't be special policy for "them," but in practice, it won't make an impact on most people. Taking a stab at solving this problem in the Boston Review, Bruce Western frames the growth of mass incarceration as an issue of citizenship. He argues that social inequality is a violation of the rights guaranteed by common humanity and community.

The British sociologist T.H. Marshall described citizenship as the “basic human equality associated with full membership in a community.” By this measure, thirty years of prison growth concentrated among the poorest in society has diminished American citizenship. But as the prison boom attains new heights, the conversation about criminal punishment may finally be shifting.

In the conclusion, he fleshes this idea out more.

Nearly a century ago, Eugene Debs, at his sentencing under the Sedition Act in 1918, offered a moving account of the moral significance of the prison. “Your Honor,” he said, “years ago I recognized my kinship with all living beings, and I made up my mind that I was not one bit better than the meanest on earth. I said then, and I say now, that while there is a lower class, I am in it, while there is a criminal element, I am of it, and while there is a soul in prison, I am not free.” Debs’s vision was radically egalitarian. Because we are joined by a common humanity, the imprisonment of one incarcerates us all.

Be it health care, education, or job opportunities, universal provision in any domain of public policy—and the bonds of citizenship on which that sense of universality is built—joins us to a common destiny, and might be the best chance for the redevelopment of urban schools and labor markets. If the duty of the citizen is to stay in school and go to work, then the political will to maintain good schools and promote employment is woven into the social fabric. This political logic implies that special projects targeting special populations will not do the job. If poor schools are to improve, it is more likely they will do so as a result of an effort to improve educational opportunity nationwide. If we are to promote jobs for unskilled men in the inner-city, the attempt will receive its greatest impetus from a national employment policy that aims to improve the working lives of all citizens.

He goes on to acknowledge that the day when our common citizenship and humanity is widely recognized seems far off. But every policy victory that ties our fates together will expand who's included in the mainstream community. By the same token, more special policy for special populations could make it harder to achieve larger scale change. Tactics that make sense in the short term can weaken the beliefs that favor major policy shifts.

I'm not so sure that language that explicitly addresses citizenship is the ticket- it's a bit abstract. But the basic idea seems sound. What do you think? Is this a good way to frame the safety net?

According to CQ:

.... Barack Obama .... has endorsed the idea of updating the federal measure of poverty, a proposal that is slowly gaining some traction after years of being confined to quiet talk among poverty experts.

New York mayor Michael Bloomberg called for a new poverty measure this week, and Democratic Rep. Jim McDermott of Washington held a hearing on his own proposal yesterday in the House Ways and Means Subcommittee on Income Security and Family Support, which he chairs.

But Obama’s support for the idea has the potential to advance the idea significantly, if he wins the election and pushes for it aggressively.

“Senator Obama knows that the federal poverty guidelines, which were developed decades ago, simply do not take into account the rising costs of child care, health care, transportation, and housing that make it difficult for many families to make ends meet in our globalizing economy,” campaign spokesman Nick Shapiro told me yesterday.

“Senator Obama believes that we should modernize the federal poverty guidelines to more accurately reflect the costs of living and the economic pressures on American families. Without an accurate measure of poverty and economic insecurity in America, we will not be able to fully tackle the effects of these problems on our children and families.”

The Urban Institute this week unveiled a series of papers on how to create a new safety net for low-income families. I was going to critique the paper that introduces the series, but I think I'd only be repeating myself.

Rather, I thought I'd address something I overlooked in my earlier posts- that the safety net is consistently defined as policy for "low-income families," i.e. "the other" and "them" or people who are very different from you and me. The Urban series is a shining example of this style of defining the issue, putting the merits of the policy aside.

In addition to avoiding the traps of individualism and race, we have to make the argument that the safety net is about "us." One way to do it would be to think differently about the values that compel us to create a safety net. The predominant thinking is that it's about "well-being," the humanitarian idea that there's a level of subsistence below which nobody should fall. This segregates anti-poverty policy. It puts the poor in the same league as the mentally ill, the physically disabled, the young, etc- people whose well-being is valued per se. It's for people who are "different," the exceptions to the rule, the subjects of charity.

I'd argue that a more universal value is security, and I'd define security as controlling the chance that the institutions we rely on will fail us- that the business we work for isn't offering any good jobs, that we'll get sick without insurance, that our families won't be there to cushion our fall. We could develop a narrative that assigns responsibility to these institutions, so that all of them, collectively, as one people, should feel obligated to step in.

This frame could also address the issue of being unclear about values. Safety net policy corrects some institutional failures and mitigates the consequences of others. A different set of policies is needed to make institutions perform at a higher level and create opportunities to join the middle class. This includes better education policy, more middle class-sustaining jobs, better economic management, etc.

What would it mean in terms of policy? Take jobs, for instance. We could eliminate many extremely bad jobs by raising the minimum wage, promoting unionization in low-wage sectors, and investing in the skills of the low-wage workforce. While this may not create jobs that support a middle-class lifestyle, it would help reduce the chance that people will be forced into poverty-wage jobs. At the same time, it may be nearly impossible to eliminate all bad jobs. For instance, even if a job is paying $9 an hour, you may only get to work 25 hours a week. Programs like the EITC help mitigate the consequences of the institutional failures that we can't eliminate.

So what role does work play in this framing? And what about the safety net as an opportunity "springboard?" I'll try to tackle this in my next post.

Via Arloc Sherman, in a new paper in the Journal of Public Economics, University of Chicago's Susan Mayer and Leonard Loopoo find a strong relationship between state-level investments in children and economic mobility:

....

.... a 10% increase in government spending raises low-income adolescents’ future earnings by 4%—reducing the influence of low parental income. However, for higher-income families an increase in government spending hardly raises adolescents’ future earnings.

Additionally, the authors examined what kinds of spending are most effective at increasing children’s future income and for whom it is most helpful. Funding for elementary and secondary schooling has the largest impact on children’s future income, but other kinds of spending matter as well. Government spending also had a much greater impact on the future income of children raised in low-income compared to high-income families. For example, among low-income children spending on public welfare, hospitals, Medicaid, health, higher education, and housing and community development all increased the future income of children raised in low-income families. No form of government spending, however, benefited children from the highest earning families. Because government spending increased the income of adults from low-income—but not high-income—families, it reduced the influence of family origin on adult economic success and effectively increased equality of opportunity. The results remain when the authors hold constant both family and state characteristics.

A new publication on poverty from the Century Foundation includes this statement:

Poverty levels have proved to be so difficult to reduce largely because poor people tend to be isolated in neighborhoods that predominantly consist of other poor people.

Economic isolation and segregation is certainly a problem, but it isn't actually the case that most people living below the official poverty line live in neighborhoods that predominately consist of people living below the poverty line. In fact, as this Urban Institute report shows, a majority of people with below-poverty incomes live in neighborhoods in which fewer than 20 percent of the residents have below-poverty incomes.