Gordon Campbell debunks right wing welfare myths

by frog

Gordon Campbell has a great piece in this month’s Werewolf debunking some of the myths about welfare trotted out by the beneficiary bashers.

Here are a few of the highlights:

Anyone who wants to get off welfare can get a job

No, they can’t. In the last two months of 2010, the number of people receiving the dole rose by 4,536 to 67,084, and rose again in January to 68, 087. The number of people out of work stands at 158,000. … As one would expect, the dole numbers have risen steeply since the recession began. In the mid 2000s, dole numbers had shrunk to around 17,000 – one quarter of the current number, and solid proof that the problem is not a lack of motivation and/or of strong incentives.

It is a very odd situation. The same politicians who have been unable to manage an economy so that it employs people, are now blaming people for not finding jobs that do not exist.

People on welfare commit a lot of benefit fraud, at the expense of hard-working people

The evidence for the existence of widespread benefit fraud is paltry to non-existent – despite the fact that a special fraud intelligence unit was set up in the Social Welfare department in 2007 to detect it. Last year, the department checked 29 million records, and found the benefit fraud rate (as a proportion of the total benefits paid) was a miniscule 0.10 per cent. A declining number of prosecutions – from 937 in 2009 to 789 last year – resulted.

Moreover, other forms of unacceptable behaviour leave benefit fraud far behind in the dust without attracting the same negative stereotypes. The major foreign owned banks for instance finally agreed in late 2009 – and only after being pursued at great expense through the courts by the IRD – to cough up $2.2 billion of what they owed in unpaid taxes. Meaning : the settlement figure this case alone was about 140 times greater than the total amount lost in benefit fraud last year…

Putting a time limit on how long people can receive welfare is a good idea

No it isn’t – though it certainly sounds like a tough, no nonsense policy doesn’t it? …

What the GAO report indicates is that stringent welfare eligibility conditions deter people from seeking assistance during the recession – and have especially discouraged the most vulnerable people, who are suffering from disabilities. For example :

..”Other families may have found it difficult to apply for or continue to participate in the program, especially those with poor mental or physical health or other characteristics that make employment difficult... Research also suggests that, in response to lifetime limits on the amount of time a family can receive cash assistance, eligible families may hold off on applying for cash assistance and “bank” their time, a practice that could contribute to the decline in families’ use of cash assistance.

The pattern is undeniable. Tighter work conditions, low benefit payments and five year term limits not only combine to reduce the numbers of people eligible for assistance – they also deter the people who are eligible from seeking help. As the GAO report continues :

In total, about 420,000 fewer families were eligible for cash assistance in 2005 than were eligible in 1995, according to HHS data. However, most of the decline in the cash assistance caseload—about 87 percent—resulted from fewer eligible families participating in the program. In 1995, about 84 percent of eligible families participated, but over the decade, participation in cash assistance fell dramatically, to about 40 percent of eligible families in 2005.

Term limits deter people in need, and systematically cheat people of their entitlements. Why would we want to import such a scheme here when we already know the consequences in its country of origin?

People who go off on the dole go onto sickness and invalids benefits. We have to crack down on them, too.

On the international evidence, New Zealand does not have a problem in this respect. Late last year, the OECD released comparative figures which showed that one of the main reasons for the recent rise in people receiving disability benefit is that New Zealand has been from a very low base – mainly thanks to the pre-Rogernomics policies of full employment and prior methods of institutional care. True, in the wake of the initial carnage wreaked by Rogernomics in the 1980s, unemployment and disability benefits both rose sharply – and since then, unemployment has fallen but sickness and disability benefits keep on increasing.

Even so – and this is the relevant point – the numbers of working age people who receive sickness and disability benefits in New Zealand is still well below the OCED average. In 2008, this ratio was 3.8% in New Zealand, as compared to the 5.7% OECD average. Moreover, the share of people on disability benefits is among the lowest in the OECD for older workers aged 50-64, but fifth highest for young adults aged between 20-34.

Most of the people on welfare are unmarried mothers – many of them teenagers – who have extra children so that they can get more money

This is a hoary old myth that combines the resentment of beneficiaries in general, with prurient resentment of the sexy young having too much sex. In fact, the US and New Zealand evidence is that young people are having less sex, later than their parents’ generation.

In fact, only 3.1 % of those on the DPB are under 20 years of age – and that figure has barely flickered since 2005, when the figure was 2.9 %. Put another way, 97% of the people on the DPB are NOT the ‘very young women’ of Key’s lurid imagination. There are in fact, significantly more people on the DPB over 55 years of age (5.6%) than there are ‘very young women’ receiving this benefit.

The vast bulk of DPB recipients (nearly 75%) are what you would expect : they are aged between 25 and 54. Some 61% of them are caring for children six years or under – a figure that, again, has barely changed since 2005. Nearly half are caring for two or more dependent children.

Lots of people are on welfare for years and years, and then their children and grandchildren become welfare dependent.

This myth is based on stereotypes about the chronically shiftless and teemingly fertile poor. Lets stick with the DPB for a moment. Since the DPB involves the care of children who are dependent at least until they are 18, you’d think it would reflect lifetime dependency very strongly. Yet instead, over two thirds of DPB recipients (67.7%) are on the DPB for less than four years. More than a quarter of them (26%) are on it for less than a year, even during the recession. If this is a lifestyle choice, it is hardly a fashionable one.

Looking across all forms of benefits, 61.4 % of recipients are benefit dependent for four years or less. Only 14.3 % are on benefits for more than ten years – and since those figures include people with chronic physical and mental disabilities, the ratio of those staying on benefits because it is a “lifetime, lifestyle choice’ is lower again.

Making unemployment insurance compulsory would be a good idea.

It would certainly be a bonanza for insurance companies. It might also seem like a good idea to Finance Minister Bill English – who could not only shift much of the cost of welfare provision onto employers and beneficiaries, but could count the gigantic fund this scheme would quickly generate on the positive side of the nation’s accounts, and thus lower the cost of borrowing. That’s what has happened in Canada, where the federal government has been able to count the unemployment insurance scheme surplus on its books.

The Canadian experience with UI has been – surprise , surprise – that access hurdles rise, and payments don’t keep step with rising cost of living. In Massachusetts, the UI scheme has also exploded in rising costs to employers during the recession :

That’s the sticking point, politically speaking. UI amounts to a new tax on firms and their employees – and employers would make the loudest noises about it. The provision of welfare by private operators and insurance companies also opens up fresh avenues for fraud and abuse.

Campbell’s full article is well worth a read, especially for those who have grown up believing some of the welfare myths he debunks.

But what’s the bet the Paula Bennett’s Welfare Working Group, which is due to release its final report next week, will continue to rely on the same discredited myths to justify recommending another round of punitive beneficiary bashing?

And what of the motives of the people like Paula Bennett who deliberately perpetrate those myths, appealing to the worst aspects of human nature to try to gain public support for transferring wealth from the poor to the already wealthy?

frog says

Published in Economy, Work, & Welfare by frog on Wed, February 16th, 2011   

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