Assessing welfare reform in the US and the UK

Anne Daguerre, Middlesex UniversityOn 20 March 2015, Middlesex University is hosting a one-day conference, ‘Assessing 20 years of welfare reform in the US and the UK‘. This event concludes a two-year ESRC research project ‘Welfare reform in the US and the UK: an interdisciplinary analysis’ led by Dr Anne Daguerre, Associate Professor of Work, Welfare and Employment at Middlesex University.

Welfare reform refers to programmes that require people to work in return for social assistance benefits. Non-compliance with work requirements carries the risk of loss of benefits, a temporary withdrawal of benefits or a reduction in benefits.

In the UK these are: social assistance for the unemployed (Job Seeker’s Allowance); people with disabilities (Employment and Support Allowance); and single parents, i.e. Income Support. These three benefits are being phased out to be replaced by a single means benefit, Universal Credit. In the US the main social assistance programme is Temporary Assistance for Needy Families (TANF), and is reserved to low-income families (in practice, single mothers).

The trend has been towards the erosion of rights to social assistance and an expansion of tax credits such as Earned Income Tax Credit in the US and Working Tax Credit in the UK to make “work pay”. Policymakers in both countries have used the rhetoric of work to restrict access to social assistance, perpetuating the myth that the underclass refuses to “get on their bikes” to find work.

Welfare recipients have been redirected towards entry level jobs. The problem is that even such entry level jobs have been much more difficult to get since the Great Recession. Low paid work with wages of less than $13.83 per hour has accounted for 58 per cent of employment gains since 2010 in the US. In the UK, low paid work – when the average wage is less than £7.95 – accounts for 8o per cent of employment gains since 2010. Working tax credits – which have been capped by coalition reforms in the UK since 2010 – can no longer compensate for structural imbalances in the labour market.

Disabled people protest outside St Marys House, Norwich - Roger Blackwell

Disabled people protest outside St Marys House, Norwich – Photo by Roger Blackwell (Creative Commons 2.0)

‘Churning’

The major problem is now ‘churning’, when people cycle back and forth between low paid work, tax credits and meagre social assistance benefits. The reality is that the fundamental link between work and pay has been broken.

In the US, TANF, hailed as a success in the first five years following welfare reform in 1996, has in fact extremely low work participation rates – about 30 per cent. It was precisely to address this problem that the Obama administration tried to experiment with more innovative employment measures in 2012. They were accused of “gutting” welfare reform in the run up to the presidential election. The administration has buried the measure. Congress has lost interest in TANF. But the rhetoric of work is now being transferred to other major social programmes such as the Supplemental Nutrition Assistance Program, which serves 46 million individuals (four million for TANF).

As today’s conference session around litigation strategies will make clear, policymakers in both countries have fought claimants and their counsel in the courts. Litigation represents the untold story of welfare reform. Public administrations have been held to account over issues of fairness and procedure. The Department for Work and Pensions has lost several court cases. Litigation over welfare reform is set to continue, producing a saga that has become increasingly remote from the daily realities of benefit sanctions.

The conference will conclude with a panel discussion on the politics of welfare reform in both countries. Despite all the “hype” surrounding evidence-based policy making, there is strong evidence that images and emotions have remained powerful drivers of reform and counter reform in the US and the UK.

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