The U.S. Census Bureau has released its annual poverty report.
Conventional wisdom holds that the U.S. has a small social welfare
system and far more poverty compared with other affluent nations.
But
noted liberal scholars Irwin Garfinkel, Lee Rainwater, and Timothy
Smeeding challenge such simplistic ideas in their book “Wealth and
Welfare States: Is America a Laggard or Leader?”
Garfinkel and his colleagues examine social welfare spending and
poverty in rich nations. They define social welfare as having five
components: health care spending, education spending, cash retirement
benefits, other government cash transfers such as unemployment insurance
and the earned-income tax credit (EITC), and non-cash aid such as food
stamps and public housing.
The authors find that in the U.S., social welfare spending differs
from that in other affluent countries because it draws heavily on both
public and private resources. By contrast, in Europe, government
controls most of the resources and benefits. For example, in the U.S.,
government health care spending is targeted to elderly and low-income
persons; the American middle and working classes rely primarily on
employer-provided health insurance.
The U.S. government health care
system is, therefore, more redistributive than the systems of most other
developed nations.
Elderly middle-class Americans are also more likely to have private
pensions than are Europeans. Middle-class parents in the U.S. pay for
much of the cost of their children’s post-secondary education; in
Europe, the government pays. Overall, in Europe, the upper middle class
is heavily dependent on government benefits; in the U.S., it relies much
more on its own resources.
But even setting aside the private sector, the U.S. still has a very
large social welfare system. In fact, among affluent nations, the U.S.
has the third highest level of per capita government social welfare
spending. This is striking, given that government spending in the U.S.
is more tightly targeted to benefit the poor and elderly.
When private-sector contributions to retirement, health care, and
education are added to the count, social welfare spending in the U.S.
dwarfs that of other nations. In fact, social welfare spending per
capita in the U.S. rises to nearly twice the European average. As
Garfinkel, et al. conclude:
For those who believe the absolute size of the US welfare
state is small, the data presented … [in the book] are shocking and
constitute a wake up call. Once health and education benefits are
counted, real per capita social welfare in the United States is larger
than in almost all other countries!
Only one nation (Norway) spends more per person than the U.S. spends.
How much of this spending reaches the poor? The left often claims
that the U.S has a far higher poverty rate than other developed nations
have. These claims are based on a “relative poverty” standard, in which
being “poor” is defined as having an income below 50 percent of the
national median. Since the median income in the United States is
substantially higher than the median income in most European countries,
these comparisons establish a higher hurdle for escaping from “poverty”
in the U.S. than is found elsewhere.
Read more: US Spends Far More on Social Welfare Than Most European Nations
