Take from the Poor, Give to the Rich

We have “reformed” our welfare system based on the assumption that everyone who wants to obtain a job that can lift themselves and their family out of poverty can obtain one. These are flawed assumptions. In 2007, when we had a moderately strong economy, more than one-in-four people with jobs did not earn enough to keep a family out of poverty.

The current economy is extremely weak. We have an unemployment rate of 9.7 percent. There are over 5 job seekers for every job opening. No matter how hard people try to find work, there simply are not enough jobs. As Timothy M. Smeeding has remarked, today “we have a work-based safety net without any work.”

But this reality has not stopped the engines of “welfare reform.” The New York Times reports that “Rhode Island has the nation’s third-highest unemployment rate, but the welfare rolls here continue to decline because of the time limits and stringent work requirements.” Nationally, “Since the start of the recession in December 2007, the number of Americans receiving benefits under the main federal-state welfare program, Temporary Assistance for Needy Families, or TANF, has increased less than 10 percent, even though unemployment has nearly doubled and the number of people receiving food stamps has grown more than 40 percent, to 39 million.”

The authors of Battered by the Storm report:

The percentage of poor children receiving temporary assistance under the main federal “welfare” program has fallen from 62 percent in 1995 to 22 percent in 2008. TANF benefits in 2008 averaged only 29 percent of the money needed to reach the official poverty line.

We should not be surprised to see further declines in aid to poor families.

Not everyone is suffering however. The Economic Policy Institute reports that the richest 400 families have seen their tax rate decline by 10 percentage points and their income has quadrupled since 1992. These families have a median income of $345 million. In a separate Economic Snapshot, the Institute states:

In 1979, the top 10% of families received 67.0% of all income generated by assets such as stocks, bonds and real estate. By 2006, that share had risen to 81.3%. By contrast, the share of capital income that went to the other 90% of families has fallen from 33.0% in 1979 to 18.7% in 2006. The portion of capital income going to the top 1% of families has gradually increased from 38.0% in 1979, so that by 2006 this small group received more than half – 57.7% -- of all capital income.

So, the poor are getting poorer, and the rich are getting richer.


--Algernon Austin, Ph.D.


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