POVERTY ANDPUBLIC POLICY WHAT SHOULD BE THE ROLE OF THE FEDERAL GOVERNMENT IN EXTENDING PUBLIC ASSISTANCE TO ALL AMERICANS LIVING IN POVERTY?

Hiuh School Dabate Series

AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH 1150 - 17th Street, N.W. • Washington, D.C. 20036 THE AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH, established in 1943, is a publicly supported, nonpartisan research and educational organization. Its purpose is to assist policy makers, scholars, businessmen, the press and the public by providing objective analysis of national and international issues. Views expressed in the institute's publications are those of the authors and do not necessarily reflect the views of the staff, officers or trustees of AEI. Institute publications take three major forms: 1. Legislative and Special Analyses-balanced analyses of current legislative proposals and special policy issues prepared with the help of specialists from the academic world and the fields of law and government. 2. Studies-in-depth studies of government programs and major national and international problems, written by independent scholars. 3. Rational Debates and Symposia-proceedings of debates, seminars, and conferences where eminent authorities with contrasting views discuss controversial issues.

ADVISORY BOARD Paul W. McCracken, Chairman Edmund Ezra Day University Professor of Business Administration University of Michigan R.H. Coase Paul G. Kauper Professor of Economics Henry M. Butzel Professor ofLaw University of Chicago University of Michigan Milton Friedman George Lenczowski Paul S. Russell Distinguished Service Professor of Political Science Professor of Economics University of California, Berkeley University of Chicago Robert A. Nisbet Gottfried Haberler Professor of Sociology and History Resident Scholar University of Arizona American Enterprise Institute tor James A. Robinson Public Policy Research President, Macalester College C. Lowell Harriss Joseph T. Sneed* Professor of Economics Dean,School ofLaw Columbia University Duke University

EXECUTIVE COMMITTEE Herman J. Schmidt, Chairman of the Board Richard J. Farrell William J. Baroody, President Dean Fite William G. McClintock, Treasurer SENIOR STAFF Thomas F. Johnson Sam S. Crutchfield Director of Research Director of Legal Studies Joseph G. Butts Dave M. O'Neill Director ofLegislative Analysis Director of Human Resources Studies Earl H. Voss Anne Brunsdale Assistant to the President Director of Publications for Special Programs Robert J. Pranger Gary Jones Director of Foreign Assistant to the President and Defense Policy Studies for Administration

• On leave for government service HIGH SCHOOL DEBATE SERIES July 16, 1973

(ISBN 0-8447-1821-1)

TABLE OF CONTENTS

PREFACE ... iii

INTRODUCTION 1

POVERTY IN AMERICA: FACTS AND CAUSES . 3

Defining and Measuring Poverty ...... 3 The Incidence of Poverty ...... 7 Causes of Poverty and Excessive Inequality . 12 EXISTING PUBLIC ASSISTANCE PROGRAMS 21

Introduction ...... 21 Social Insurance ...... 22 Public Assistance Programs--Overview • . 23 Public Assistance Programs in Detail . 25 Reforming Public Assistance: Basic Issues . 38

ELIMINATING POVERTY: EXISTING POLICIES AND PROGRAMS ...... 45

Minimum Wage and Antidiscrimination Laws . , 45 Education and Other Child Development Policies ...... • . • . . . 47 Federal Manpower Programs ...... • so Community Action Agencies and Community Action Programs ...... SS

A MINIMUM ANNUAL INCOME . 57 The Proposition 57 Why the Federal Government?. 57 What Do We Mean by "Guarantee?". 62

-i- Contents continued What Do We Mean by a Minimum Annual Income? 64 Each Family Unit. . 68 Concluding Comments ...... 69 PUBLIC EMPLOYMENT FOR THE EMPLOYABLE POOR 71 The Proposition ...... 71 Why the Federal Government? . . . 71 " ...Should Provide a Program for the Employment ... " ...... 73 " ...All Employable United States Citizens Living in Poverty ...". . . . . , . 75 " ...United States Citizens ...". . 76 "... Living in Poverty." ...... 76

A FEDERAL PROGRAM OF COMPREHENSIVE WELFARE . 79 Introduction...... 79 "... A Program of Comprehensive Welfare ... ". 79 Why the Federal Government? 88

NOTES TO TEXT. 91 BIBLIOGRAPHY ...... 101

-ii- PREFACE

This special analysis is concerned with the issues presented in the 1973- 74 high school debate question: "What Should the Role of the Federal Government Be in Extending Public Assistance to All Americans Living in Poverty?" It is published by the American Enterprise Institute in re­ sponse to many requests from high school debaters and coaches for back­ ground materials and references on the subject of the debate. The anal­ ysis was prepared by Professor John A. Lynch, director of debate, St. Anselm's College, Manchester, New Hampshire, and Dr. Dave M. O'Neill, director of human resources studies at the American Enterprise Institute. The authors have tried to assemble, organize, and present factual and authoritative material in such a way as to assist debaters seeking to delineate and explore the central issues raised by the national debate propositions. The format of the chapters is designed so that the analysis can serve both debaters and others interested in the area of poverty policy. The Introduction and Chapters 1 through 3 present a general survey of facts, issues, and research findings relating to poverty and existing policies toward poverty. Chapters 4 through 6 contain detailed analyses of each of the three debate propositions. This analysis is not intended to provide a complete manual nor an end to the debater's research but is designed rather to serve as a guide to the start of research and a stimu­ lus to its continuation. To this end, a bibliography lists references in addition to those directly quoted or cited in the footnotes.

The analysis should not be construed as reflecting any policy position on the part of the staff, officers, or trustees of the American Enterprise Institute.

-iii- INTRODUCTION

Although there have been periodic fluctuations in the other dir�ction, the long-tenn trend in public attitudes toward poverty and helping the poor has been in the direction of becoming more humanitarian and generous. One happy result of this trend is that with regard to the very extreme fonns of poverty--hunger, malnutrition, lack of shelter--there is really no longer any serious public debate about whether government should play a role. It seems to be generally agreed that government should assure that people in these situations be helped and as rapidly as possible.

However, the trend in attitudes has had another effect that is difficult to evaluate. The effect of this trend is that over time the public keeps revising upward what it considers to be the minimum income required to avoid a life of poverty. Thus, although general economic progress has by now almost eliminated the very low standards of life that were widespread in the nineteenth century, public concern over poverty has not diminished since that time. As the standard of living has increased for most people, they have updated their view of the minimum income required to avoid the deprivations of poverty. What this implies, from a very long-run point of view, is that concern over poverty is related closely to concern over excessive inequality in income. It is likely that as long as general economic progress continues and significant inequality persists each new generation will reopen the debate as to what should be considered the minimal acceptable standard of life and what the proper approach of pub­ lic policy should be toward the individuals whose incomes are below this level.

The current public debates over welfare reform and antipoverty policy are part of this recurrent process. Currently there are heated arguments over how much should be provided to certain categories of public assis­ tance recipients and over how eligibility and work requirements should be administered. There has been a hardening of public attitudes toward wel­ fare recipients in recent years that represents a deviation from the long-run trend. This hardening of attitudes is related to the strikingly rapid growth during the 1960s in one of the most controversial of the federally aided public assistance categories--Aid to Families with Depen­ dent Children (AFDC). This has resulted in widespread concern over the possible effect of existing welfare programs on family stability and has generated numerous proposals for comprehensive welfare reform.

In connection with policies designed to reduce the causes of poverty, there is growing public concern over the mounting evidence that many of the Great Society programs for this purpose have not achieved their ex­ pected objectives. Overcoming the effects that deprived environments

-1- have on the subsequent life chances of children has proven to be a formi­ dable task. Many people advocate having the government create public em­ ployment jobs that would guarantee an income above the poverty line. The current National High School Debate topic involves proposals 'that re­ late to both comprehensive welfare reform and to particular antipoverty proposals. Indeed, two of the debate resolutions--that relate to guaran­ teeing a minimum income to all families and to guaranteeing public employ­ ment for all employable poor--have been debated at length in the United States Congress. In the past four years a number of bills have been intro­ duced that sought to implement federal guaranteed minimum income standards for all families with children and to implement large-scale public service employment programs. However, despite extensive debate in Congress, in the newspapers, and in the popular intellectual journals, at the present writing neither a com­ prehensive welfare reform bill nor a large-scale public employment program bill have been enacted into law. What has been the cause of this inaction? Are the existing reform proposals sensible, given the nature of the prob­ lems involved? Are alternative policy approaches to the poverty problem (including just going along with the status quo) more desirable? It is hoped that the information contained in the following chapters will help the reader to come to his own conclusions on these important questions of social policy.

-2- POVERTY IN AMERICA: FACTS AND CAUSES

Defining and Measuring Poverty What level of income should be used to define poverty? Differences of 20 or 30 percent in the income level used for defining the "poverty line" can make for significant differences in both the size of the problem and in the cost of income maintenance programs for alleviating it. Given the importance of this issue, it is interesting to note that very little of the recent debate surrounding poverty and welfare policy has been devoted to it. Most commentators are impatient to get to other issues related to alleviating the suffering associated with low income status. There is a tendency to avoid appearing to argue against being generous to the poor-­ especially in the richest country in the world. This attitude, although understandable, has had the side effect of leaving a very important aspect of public policy largely in the hands of technical experts in the Depart­ ments of Labor and of Health, Education, and Welfare. Very few individuals, even among those in high-level policy-making positions, are aware of the details of just how the current poverty tests were determined.

Recently, however, many people appear less reluctant to question welfare costs. Various spot surveys have revealed that many low-income families collect substantial amounts of "income-in-kind" (for example, public hous­ ing, food stamps, et cetera) that is not, under current procedures, counted as income for purposes of measuring poverty.lf This has led many legis­ lators to begin to question whether our current definitions and methods of measuring poverty are appropriate. It is slowly becoming apparent that for purposes of devising antipoverty policies for "the poor," it may be necessary to be more precise in the definition and measurement of poverty.

Current Poverty Line Income. Table 1 shows the official poverty line in­ come levels used by the Bureau of the Census to determine the poverty, or nonpoverty, status of all families and unrelated individuals in the United States. The figures in the table have been adjusted for price level changes up to 1971. Each year the income cut-offs for the various sex, family size, rural-urban, and number of children categories are increased by the same percentage as the increase in the Consumer Price Index. Table 1 omits the number of children classification and thus does not show the complete ma­ trix of categories for which separate income cut-offs are used. Thus the figure of $4,139 for a four-person nonfarm family with a male head is an average of the poverty line incomes used for four-person families with two children under 18, four-person families with no children under 18, et cetera. In general, the Census Bureau procedure for determining poverty thresholds, which is based primarily on a nutritionally adequate diet,

-3- I � I Table 1 AVERAGE POVERTY-LINE INCOME LEVELS BY SIZE OF FAMILY, SEX OF HEAD, AND FARM-NONFARM RESIDENCE, 1971

Nonfarm Farm Size of Family Overall Nonfarm Male Female Farm Male Female average average head head average head head All unrelated individuals.... $2,033 $2 ,040 $2,136 $1,978 $1,727 $1,783 $1,669

Under 65 years...... 2,093 2,098 2,181 2,017 1,805 1,853 1, 715 65 years & over...... 1,931 1,940 1,959 1,934 1,652 1,666 1,643

All families...... 3,700 3, 724 3,764 3,428 3,235 3,242 3,079 2 persons...... 2,612 2,633 2,641 2,581 2,219 2,224 2,130 Head under 65 years...... 2,699 2, 716 2,731 2,635 2,317 2,322 2,195 65 years & over...... 2,424 2,448 2,450 2,437 2,082 2,081 2,089 3 persons ...... 3, 20 7 3,229 3,246 3,127 2,745 2,749 2,627

4 persons...... 4, 113 4,137 4, 139 4,116 3,527 3,528 3,513

5 persons .••...... 4,845 4, 880 4,884 4,837 4,159 4,159 4,148

6 persons...... 5, 441 5,489 5,492 5,460 4,688 4,689 4,656 1 7 or more persons ...... 6,678 6,751 6, 77 6,583 5,736 5,749 5,516

Source: U.S. Bureau of the Census, Current Population Reports, P-60, #86, "Characteristics of the Low Income Population, 1971" (Washington, D.C.: U.S. Government Printing Office, 1972), Table M, p. 18. leads to higher levels for males than for females and for adults than for children.

In 1971 the Census Bureau estimated that there were 5.3 million families (20.4 million individuals) and 5.1 million unrelated individuals who re­ ceived cash incomes that, according to the criteria in Table 1, did not provide a standard of living above poverty. The definition of cash income includes income from current income maintenance programs (including unem­ ployment insurance compensation) as well as income from employment and from ownership of various kinds of income earning assets. Thus the number of people reported not in poverty overstates the number who were currently earning incomes (either by work or by asset ownership) above the poverty level. In 1971 approximately 17 million nonpoor families received cash income from public assistance programs. Presumably the large majority of these families would have had incomes below the poverty line in the absence of public assistance programs. On the other side, there were 3.5 million families in poverty in 1971 who did not receive any public assistance cash income. This group was composed primarily of the working poor'?:..! and older people who collected social security benefits that simply did not add up to more than the various poverty income criteria in Table 1. The coexis­ tence of these two groups--nonworking people receiving public assistance and the working poor who do not receive it or receive very little--is a major source of concern underlying the current calls for welfare reform.

Some Issues of Definition and Measurement. How are the poverty level in­ comes in Table 1 determined? The procedure begins by determining what amounts and types of food constitute a "nutritionally adequate" diet. This is more than a diet that simply eliminates hunger. It is one that will also suffice to maintain good health. Since there are no precise objective standards as to what consti.tutes good health, or what the connections are between nutritive content of food and good health, the government relies on the opinions of a panel of experts. The key panel here is called the Food and Nutrition Board of the National Research Council. In 1941 this board presented its first formulation of daily nutrient intakes judged adequate for maintaining good nutrition in the population of the United States. Since then they have published revised standards every few years. Table 2 shows the types and amounts of food that provide the nutritive standards used in determining current poverty line income cut-offs. How are these specified amounts and types of food used to estimate minimum income standards? This is done by observing the food expenditure level of individuals and families of various sizes and compositions who actually achieve the nutritionally adequate diet, and then multiplying this figure by three.

The justification for using observed relations between food expenditures and achieved nutrition (rather than the minimum amount of money that could purchase a nutritionally adequate diet) is probably that allowance must be made for the fact that people are not completely well informed about

-5- Table 2 LOW-COST ADEQUATE FOOD STANDARo!i FOR GENERAL ASSISTANCE PROGRAMS (WEEKLY QUANTITIES)

Types of Food Man Woman Boy Girl Child (13-15) (13-15) (6)

Meat (lb.) 2-1/2 2 2 2 1 Eggs 6 6 6 6 5-1/2

Cereal, flour, bread (lb.) 4-3/4 3-1/2 5-1/4 4 2-3/8 Fats (lb.) 1-3/8 1 1-1/2 1-1/4 1 Sugar (lb.) 1-1/4 5/8 3/4 5/8 3/8

Vegetables (lb.) 7-1/4 7 7-3/4 7-1/2 5

Potatoes and legumes (lb.) 3-1/2 2-3/4 4-3/8 2-3/4 1-5/8

Milk (qt.) 3-1/2 3-1/2 7 7 5-1/2 lf The food standard is an adaptation of the Low-Cost Food Plan of the U.S. Department of Agriculture published in 1959. The standard in­ corporates the National Research Council's 1958 recommendations for nutrients.

Source: Rose D. Friedman, Poverty: Definition and Perspective (Washing­ ton, D.C.: American Enterprise Institute, 1965), Table 3, p. 7.

the nutritional characteristics of food. At any rate, it is not considered a very controversial aspect of the procedure among students of poverty policy. Much more controversial is the value judgment implicit in assuming that the adequate food expenditure figure must not exceed one-third of total income if the total income is to provide sufficient amounts of clothing, shelter, et cetera, in addition to food. As Rose Friedman forcefully points out, 3/ the actual income level at which families achieve a nutritionally adequate diet tends to be one at which food expenditures make up more than one-third of total income. Thus the procedure of multiplying by three assumes that low income families who do achieve an adequate diet do not have enough left over to purchase adequate amounts of other necessities. Dr. Friedman estimated 4/ that as of 1963

-6- the official poverty standard (which uses the multiplier of three increased the size of the official poverty population by approximately 100 percent over what it would have been if the income at which people actually do achieve nutritive adequacy was used as the poverty line. (In 1963 the official poverty data showed 9.3 million families living in poverty, while Dr. Friedman's calculations show about 4.8 million.)

Another important issue relates to the definitions currently used in the poverty line test. The test refers only to cash income. The only excep­ tion to this is in the case of farm families, where a crude adjustment is made for food grown at home. Thus the existing procedures for counting the poor do not take into account the tremendous growth in the number and size of income in-kind transfer programs (public housing, child care, food stamps, medicare, medicaid, et cetera). Many low income families are at present receiving total real incomes that exceed three times the poverty food expenditure level even though the amount of cash income they receive places them below the poverty line. Conversely, many low income individ­ uals and families whose total incomes are entirely in cash (not receiving any in-kind income from public assistance programs) are being placed above the poverty line under the present methods of measuring income status.

At present an interagency committee within the federal government is study­ ing how this deficiency in the poverty statistics can be remedied. Improved data are necessary in order to make meaningful calculations of what it would cost to raise all people above some poverty standard. For this purpose, one must have good data on the total incomes of low income individuals and families, not just their cash income.

A final issue, and one that in some sense is probably unresolvable, is the question of whether poverty should be a relative or absolute concept. A few years from now the poverty income standards in Table 1 would probably seem close to intolerable. Thus it appears that the concern over poverty blends imperceptably into concern over excessive inequality in general. As long as significant numbers of people lag too far behind the average standard of life there will be concern with poverty.

The Incidence of Poverty

Who are the poor? Where do they reside? How many are there and what is happening to the size of the problem over time? Tables 3 and 4 contain some of the basic facts relating to these questions. It will be noted that the incidence of poverty is greater among blacks than among whites, and very much greater among female-headed families than among male-headed fami­ lies. It is also greater among the elderly and among the young. There are two reasons for the pattern by age--some individuals rise out of pov­ erty upon growing into adulthood only to fall back into it again upon reaching old age; and families living in poverty have more children than

-7- I 00 I

Table 3 INCIDENCE OF POVERTY IN 1971 BY FAMILY STATUS AND SEX AND RACE OF HEAD (in thousands)

Family Status and Sex White Negro of Head Total Below low-income level Total Below low-income level Number Percent Number Percent ------All persons - -

(1) In families 165,184 13,566 8.2 20,900 6,530 31.2 Head 47,641 3,751 7.9 5,157 1,484 28.8 Related children 58,119 6,341 10.9 9,414 3,836 40. 7 Other family members 59,423 3,474 5.8 6,328 1,210 19.1 (2) Unrelated individuals 14,214 4,214 29.6 1,884 866 46.0 TOTAL, (1) and (2) 179,398 17,780 9.9 22,784 7,396 32.5 - - Persons in male-headed families, plus male unrelated individuals --

(1) In families 151,682 9,468 6.2 14,502 2,943 20.3 Head 43,152 2,560 5.9 3,516 605 17.2 Related children 52,624 3,889 7.4 5,915 1,507 25.5 Other family members 55,906 3,019 5.4 5,071 831 16.4 (2) Unrelated individuals 5,425 1,167 21.5 888 324 36.5 TOTAL, (1) and (2) 157,107 10 ,635 6.8 15,390 3,267 21.2

- Persons in female-headed families, plus female unrelated individuals - ( 1) In families 13,502 4,099 30.4 6,398 3,587 56.1 Head 4 ,489 1,191 26.5 1,642 879 53.5 Related children 5,495 2,452 44.6 3,499 2,329 66.6 Other family members 3,517 455 12.9 1,257 379 30.1 (2) Unrelated individuals 8,789 3,047 34.7 997 542 54.4

TOTAL, (1) and (2) 22,291 7,145 32.1 7 ,394 4,129 55.8 Source: "Low Income Population, 1971," Table 7, p. 54. Table 4 PERSONS IN POVERTY (BELOW TI-IE LOW-INCOME LEVEL) BY FAMILY STATUS AND SEX OF HEAD, 1959- 1971 (in thousands)

Family Status and Sex of Head 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 ------All persons ------

In families 20,405 20,330 19, 175 20,695 22, 771 23,809 28,358 30,912 31,498 33,623 34,509 34,925 34,562 Head 5,303 5,260 5,008 5,047 5,667 5,784 6, 721 7,160 7,554 8,077 8,391 8,243 8,320 Related children 10,344 10,235 9,501 10,739 11,427 12,146 14,388 15,736 15,691 16,630 16,577 17,288 17,208 Other family members 4,757 4,835 4,667 4,909 5,677 5,879 7,249 8,016 8,253 8 ,916 9,541 9,394 9,034 Unrelated individuals 5,154 5,090 4,972 4,694 4,998 4,701 4,827 5,143 4,938 5,002 � 4,926 4,928

TOTAL 25,559 25,420 24,147 25,389 27,769 28,510 33,185 36,055 36,436 38,625 39,628 39, 851 39,490

------Persons in male-headed families,plus male unrelated individuals __------

In families 12,608 12,828 12,296 13,705 15,873 16,948 20,834 23,615 23,852 25,842 27,257 27,678 27,548 Head 3,203 3,309 3,181 3,292 3,893 4,063 4,805 5,338 5 ,582 6,043 6,437 6,288 6,404 Related children 5 ,494 5,546 5,253 6, 330 7,181 7,884 9,826 11,314 11,137 12,124' 12,533 13,193 13,063 Other family members 3,910 3,973 3,862 4,083 4,799 5,001 6,203 6,963 7,133 7 ,675 8,287 8, 197 8,081 Unrelated individuals 1,543 1,438 1,439 1,320 1,305 1,312 1,293 1,469 1,487 1,552 1,573 1,510 1,552

TOTAL 14,151 14,266 13,735 15,025 17,178 18,260 22,127 25,084 25,339 27,394 28,830 29,188 29,100

------Persons in female-headed families , plus female unrelated individuals - - -

In families 7,797 7,503 6,879 6,990 6, 898 6,861 7,524 7, 297 7,646 7,781 7,252 7,247 7,014 Head 2,100 1,951 1,827 1,755 1, 774 1, 721 1,916 1,822 1,972 2,034 1,954 1,955 1,916 Related children 4,850 4,689 4,247 4,409 4,246 4,262 4,562 4,422 4 ,554 4,506 4,044 4,095 4,145 Other family members 847 862 805 826 878 878 1,046 1,053 1,120 1,241 1,254 1,197 953 Unrelated individuals 3,611 3,652 3,532 3,374 3,693 3,389 3,534 3,674 3,451 3,450 3,546 3,416 3,376

TOTAL 11,409 11, 154 10,412 10, 364 10 ,591 10, 250 11,058 10 ,971 11,097 11,231 10, 798 10,663 10,390

Source: "Low Income Population , 1971," Table 1, p. 29.

I \0 I nonpoverty families. There is also a well-known geographic profile of poverty incidence--greater in the South than in the North; greater in rural than in urban areas; and within urban areas much more concentrated in large central cities than in the suburbs. These basic demographic and geographic facts of poverty contain some interesting hints about possible causes and possible cures for poverty. The most illuminating facts about poverty, however, are in connection with the dramatic trends in incidence over time (Table 4) .

Perhaps the single most important fact about poverty is that during the decade of the 1960s it declined dramatically--from approximately 40 million persons in 1959 to 25.5 million persons in 1971, from 22 percent of the population in 1959 to 12 percent in 1971. It is perhaps one of the major ironies of our time that despite this trend a host of federal programs were being inaugurated to reduce the causes of poverty--manpower programs, regional development programs, compensatory education, et cetera. That many of these programs failed to accomplish their goals is now generally accepted, and there is much useful debate now going on about how to re­ direct these efforts so that they will be more effective in the 1970s. However, it should be noted that poverty (at least in an absolute sense) has been reduced while many of the "War on Poverty" programs were failing.

What was the cause of this trend? The data in Table 5 on trends in male­ headed poor families by work experience of the head strongly suggest that general economic growth was the major causal factor at work. Technological changes and capital accumulation, the basic forces underlying economic growth, by raising the productivity of even the lowest skill and ability workers enabled millions of individuals to rise above the poverty line during the 1960s. Note that within the poverty population the group that experienced by far the greatest decline between 1959 and 1971 was the work­ ing poor, especially those who worked full-year full-time. If this steep trend line for the working poor group continues on for another 10 years, it would appear that the phenomenon of working poverty, at least among male-headed families, will disappear.

Another important development is the ominous sharp uptrend that has occurred in the relative importance of female-headed families in the poverty popula­ tion. In 1959 poor persons in female-headed families were about 20 percent of all persons in poverty, but by 1971 this percentage had risen to 38 percent. Some of this rise is due to the fact that as economic growth gradually eliminates low wages as a major cause of poverty, the other tra­ ditional causes--disability, old age, family disorganization, et cetera-­ come to dominate the picture. Although this can explain some of the growth in the relative importance of poverty associated with family disorganization, it must be stressed that it is not the entire story. Female-headed families have grown as a percentage of all (poor and nonpoor) families since World War II (from about 8 percent to 11 percent). Moreover, the incidence of poverty among female-headed families, although it did decline, fell by a

-10- Table 5 MALE HEADS OF POOR FAMILIES BY WORK EXPERIENCE, SELECTED YEARS, 1959-1971 (in thousands) Work Experience 1971 1970 1969 1968 1967 1963 1959

TOTAL 3,203 3,309 3, 179 3,292 3,893 5,582 6,404 Worked 2,013 2,042 1,933 2,108 2,475 4,000 4, 798 50 to 52 weeks 1,080 1,075 1,063 1,286 1,466 2,266 2,740 Full timeY 943 924 921 1,142 1,333 2,036 2,409 1 to 49 weeks 934 967 870 822 1,009 1,734 2,058 Reason for working part year: Unemployed 448 409 289 278 342 982 1,109 Other 485 558 581 544 667 752 949 Did not work 1,118 1,211 1,188 1,124 1,347 1,440 1,444 Reason for not working: Ill or disabled 532 620 553 481 548 626 690 Going to school 32 28 32 15 34 18 5 Unable to find work so 36 11 22 17 60 67 Other 504 527 593 606 748 736 682

Head in Armed Forces 72 56 58 60 71 142 162 a/ Included in "50 to 52 weeks."

Source: "Low Income Population, 1971," Table 4, p. 44. much smaller percentage than it did for male-headed families--from 49.4 percent to 38.7 percent for female-headed families and from 18.2 percent to 7.5 percent for male-headed families. Finally, the relative importance of the various causes of family disorganization (death of head, desertion, divorce, illegitimacy, et cetera) has shifted dramatically over these years.

The significant trend in family disorganization that has occurred despite great growth in economic opportunities and the standard of living is a major social puzzle and is now under study by social scientists from many different disciplines. As suggested below, a major factor contributing to this trend may have been the perverse incentives in one of the most contro­ versial of the current public assistance programs--Aid to Families with Dependent Children (AFDC).

Causes of Poverty and Excessive Inequality

Although general economic growth can be relied on to eliminate poverty eventually when it is defined by some absolute standard, there is still the long-run problem of having large numbers of people whose level of living lags significantly behind the current average. In 1959 the poverty threshold income for a family of four (see Table 1) amounted to approxi­ mately 54 percent of what was then the average income of all families in the United States. By 1971 the same poverty threshold income (adjusted for increases in the consumer price index) had fallen to 40 percent of the current overall average family income. And although the percent of all families with incomes below the absolute standards shown in Table 1 de­ clined dramatically between 1959 and 1971, the percent with incomes below 54 percent of the overall average family income probably did not decline at all. Thus to understand the poverty problem from its relative as well as its absolute point of view, one must study the factors that cause these extremes of relative inequality to persist.

How important are factors that keep individuals and families from any kind of participation in the labor market at all? How important are the various factors--unemployment, dead-end jobs, low wages, et cetera--that operate after the individual enters the labor market? What is known about an in­ dividual's having access to high quality educational and home life experi­ ences in relation to its influence on his future performance in the labor market? Finally, how important is discrimination in holding down the earnings of certain groups? Poverty, Unemployment and the Labor Market.SI Table 6 gives the distribu­ tion of poor family heads and poor unrelated individuals by work experience in 1971. Note that fully half of all poor heads and unrelated individuals are in poverty for reasons that are not only totally unrelated to unemploy­ ment but are also only remotely connected to the labor market in any way-­ old age, disability, disease, and family disorganization. For the other

-12- Table 6 WORK EXPERIENCE OF FAMILY HEADS AND UNRELATED INDIVIDUALS BELOW THE LOW-INCOME LEVEL, 1971 (in thousands)

Work Experience Familr Heads Unrelated Individuals Number Percent Number Percent

TOTAL 5,231 100.0 5,151 100.0

Worked 2,809 54.0 1,622 31.5 Full time, full year 1,084 20.7 292 5.6 year (u)� 12.5 Part 655 } 1,330� 25.4 Part year (other) 1,070 20.4

Did not work 2,422 46.0 3,530 68.5 Unemployment 118 2.2 83 2.3 Other reasons 2,304 43.8 3,447 66.2 a/ Those who gave unemployment as the reason for not working a full year.

� No data are published showing reason for the part-year experience of unrelated part-year workers.

Source: "Low Income Population, 1971," Table 26, p. 97. half, those who worked either full-year/full-time or part-year, the in­ ability to obtain anything but low paying jobs, rather than unemployment, is the major cause of their poverty. Although the annual incidence of unemployment among the working poor is about twice that among the working nonpoor, the fact that work is possible only for about half the poor means that unemployment is only a very minor cause of poverty in the present U.S. economy.

This lack of significant connection between unemployment and modern day poverty will strike some readers as so unbelievable that it may be worth­ while to demonstrate it from another point of view--by looking at the dis­ tribution of the unemployed by various characteristics.

Table 7 shows various characteristics of 4.4 million people who reported themselves unemployed during the survey week in February 1973. The data on duration of unemployment suggest that the average length of a period of unemployment is probably about 11 weeks. This is not likely to throw one into a life of poverty. In most states unemployment insurance benefits go on for six months at least. The data on reasons for becoming unemployed are also enlightening. People who voluntarily leave jobs and workers just

-13- entering or reentering the labor force make up fully 61 percent of the unemployed.

Clearly, it would only be among the subgroup who have both lost their jobs involuntarily and who have remained unemployed for a very long time that one would find individuals who are living in poverty on account of unem­ ployment. In February 1973, unemployed adult males who were both job­ losers and unemployed for 27 weeks or more came to about 125,000.

Thus to the extent that poverty is related at all to unemployment problems, the problem is such that a very modest-sized public employment program could handle it. The program would only have to create about 100,000 job slots at the very maximum.§/

Table 7 SELECTED CHARACTERISTICS OF UNEMPLOYED WORKERS, FEBRUARY 3, 1973 (SEASONALLY ADJUSTED)� (in thousands)

Characteristic Number Percent

Duration of Unemployment

Less than 5 weeks 2,324 51.8 5 to 14 weeks 1,265 28.2 15 to 26 weeks 530 11.8 27 weeks and over 365 8.1

TOTAL UNEMPLOYED 4,484 100.0

Reasons for Unemployment

Lost last job 1,724 38.7 Left last job 671 15.1 Reentered labor force 1,377 30.9 Never worked before 684 15.4

TOTAL UNEMPLOYED 4,442 100.0

Because of independent seasonal adjustments of the component series the figures for total unemployed in this table only approximate the actual number of unemployed in February 1973.

Source: U.S. Department of Labor, Employment and Earnings, Vol. 19, No. 4, October 1972, Tables A-12 and A-14.

-14- Skill Acquisition and Low Wages. Clearly, if all the working poor could get paid high enough wages, then a large part of the poverty problem would quickly vanish. In order to formulate wise public policies on this issue, however, it is imperative not to jump to conclusions about the underlying causes of low-wage jobs. There is now widespread agreement among econo­ mists that simply passing laws to enforce payment of higher wage rates (minimum wage laws) will not help the great majority of the working poor.?J Broadly speaking, wage rates are governed by worker productivity. Policies that seek to alter wage rates of low-wage workers without doing something about their productivity are likely in the end to result in harming more of those workers than it helps. The fundamental role of skill levels in influencing earning capacity is illustrated by the data in Tables 8 and 9. The enormous differences in educational attainment between the poor and the nonpoor are striking. The differences in occupational distribution are also substantial and show an obvious poverty/low-skill correlation. Of course, these data should

Table 8 EDUCATIONAL ATTAINMENT OF HEAD--FAMILIES WITH A MALE HEAD 25 YEARS OLD AND OVER, BY POVERTY STATUS, 1971 (in thousands) � Cumulative� Cumulative Years of Schooling Nonpoor Percent Percent Completed Heads Distribution Poor Heads Distribution

Elementary: Less than 8 years 4,331 100 .o 1,062 100.0 8 years 4,701 89 .4 543 62.8 High School: 1-3 years 6,612 77.9 476 43.8 4 years 13,617 61.8 492 27.1 College: 1-3 years 4,912 28.5 159 9.9 4 years 6,659 16.5 118 4.3 TOTAL 40,832 2, 850 � Shows the percent of heads with the indicated amount or more of schooling completed. Source: "Low Income Population, 1971," Table 32, p. 110.

-15- not be interpreted to mean that, by simply seeing to it that all the chil­ dren o� the poo7 ?btain more education, low wage rates as a cause of pov­ erty will be el1m1nated. Some of the higher earnings of more educated people are almost certainly due to their greater endowment of innate ca­ pacities, family connections, et cetera. However, systematic studies by economists in which these nonschool factors are controlled for have shown that additional schooling does increase earnings.8/ The importance of this finding is the fact that it demonstrates that earning capacity in indivi­ duals can in fact be produced--it is not completely determined by the genes or by luck, Just what are the paths to skill acquisition that will guide a disadvan­ taged youngster to a satisfactory earning level in his working years? For some, the ·best career ladder will be one involving only high school education combined with much training on the job. For others, it will be some kind of vocational technical institute after high school, and so on. The important message for public policy here is that programs that seek to eliminate the underlying causes of low-wage poverty should concentrate on getting to young people and motivating them to seek out some meaningful career ladder. This process, once begun, usually results in a standard of life that is not only above the poverty line, but one that contains a considerable number of amenities as well. The data in Table 9 on the occupational distribution of the working poor and nonpoor suggest some other factors that might be amenable to change by public policy. The working poor are over represented in agriculture and this suggests that policies and programs aimed at helping migrant workers and others move into the mainstream of urban life can be very cost-effective in reducing poverty. Discrimination. Productivity will be the major determinant of wage rates only if individuals and groups are treated fairly. If there is widespread discrimination against minority groups, this can result in lowering the amount these groups can earn in the marketplace. Discrimination can re­ sult in minorities being crowded into certain low paying occupations. It can also result in unequal pay for equal work and so on.9/ There is sub­ stantial agreement among social scientists that discrimination against blacks prior to World War II had important effects on their relative econo­ mic status. Since World War II, however, discrimination against blacks has steadily diminished and there has been a steady (although not specta­ cular) rise in their economic status relative to whites. The ratio of median income of all black families to that of all white families rose from approximately .SO in the late 1950s to about .64 in the early 1970s. Is discrimination still a factor in keeping down the income of blacks? At present, researchers answer that it is difficult to tell. Because of the lagged effects of past discrimination, black workers currently in the labor force have a lower quality of schooling and less of it than their

-16- Table 9 OCCUPATION OF LONGEST JOB HELD--FAMILIES WITH A MALE HEAD BY POVERTY STATUS IN 1971 (in thousands) Occupational Nonpoor Poor Category Number Percent Number Percent Professional, technical, and kindred workers 5,630 14.6 76 3.8

Salaried managers (nonfarm business) 4,720 12.2 44 2.2

Clerical and sales workers 4,936 12.8 130 6.5

Craftsmen and kindred workers 8,957 23.2 370 18.3

Operatives and kindred workers 7,076 18.3 359 17.8

Service workers 2,495 6.4 169 8.4

Self-employed (nonfarm business) 1,081 2.8 111 5.5

Laborers (except farm) 2,063 5.3 266 13. 2

Farmers and farm managers 1,199 3.1 301 14.9

Farm laborers and foremen 356 1.0 188 9.3

TOTAL 38,513 100 .o 2,014 100 .0

Source: "Low Income Population, 1971," Table 25, p. 95.

white counterparts. The data in Table 10 illustrate the situation. The income differences between blacks and whites of the same age and education level are due partially to differences in the quality of schooling and partially to current labor market discrimination. How much is due to each factor? A study by one of the authors estimated that as of 1960 each fac­ tor accounted for about one-half the differential.IO/ The amount due to either factor, however, is probably somewhat less at the present time. The data shown in Table 11 indicate that, as between blacks and whites of the same age and educational level, relative earning differentials have narrowed significantly between 1960 and 1970. These data show that the combined effect of discrimination in the labor market and quality of schooling differentials on the relative earnings of blacks fell during the turbulent 1960s. How much of the trend was due to declines in labor

-17- Table 10 MEAN INCOME IN 1971 OF MALE PERSONS 25 YEARS OLD AND OVER BY YEARS OF SCHOOL COMPLETED AND RACE

School Completed White Negro

Elementary: 0-8 years $ 4,984 $ 3,912 8 years 6,378 4,877

High school: 1-3 years 8,277 5,909 4 years 9, 772 6,748

College: 1-3 years 11, 248 7,483 4 years 15,355 10, 684

Source: U.S. Bureau of the Census, Current Population Reports, P-60, No. 85, "Money Income in 1971 ·of Families and Persons in the United States" (Washington, D.C.: U.S. Government Printing Office, 1972), Table 49, p. 115.

Table 11 MEAN EARNINGS OF MALES 25-34 YEARS OLD BY RACE AND YEARS OF SCHOOL COMPLETED, 1960 AND 1970

Years of School 1960 1970 Completed Negro White Ratio Negro White Ratio Elementary: 0-8 years $2,497 $3,947 .632 $4,448 $6,296 .706

High school: 1-3 years 3,240 4,998 .648 5,329 7,538 .707 4 years 3, 717 5,480 .678 6,326 8,466 . 747

College: 1-3 years 4,072 5,964 .683 7,050 9,082 . 776 4 years or more 4,760 7,146 .666 8,673 10,952 . 792

Sources: 1970 figures from U.S. Bureau of the Census, Census of Popula­ tion: 1970 Subject Reports, Final Report PC (2) -88, "Earnings by Occupa­ tion and Education" (Washington, D.C.: U.S. Government Printing Office, 1973), Tables 1 and 2; 1960 figures from the 1960 Subject Reports, Table 1.

-18- market discrimination? How much was due to narrowing differentials in quality of schooling? More detailed research is required in order to distinguish the relative importance of these two hypotheses in explaining the trends during the 1960s.

-19- EXISTING PUBLIC ASSISTANCE PROGRAMS

Introduction

It is important to distinguish between "public assistance" programs, under which general tax revenues are used to provide various forms of income support to various needy groups, and "social security," which is financed by contributions (payroll taxes). Although both sets of programs were authorized by the Social Security Act and are concerned with income sup­ port to alleviate poverty, they have generated policy issues of a very different character and intensity. The Social Security Act, as it stands today, covers twelve major programs. These may be grouped into three categories:

Social Insurance

Old-age, survivors, and disability insurance Unemployment insurance Heal th insurance for the aged and disabled ("medicare")

Public Assistance

Old-age assistance Medical assistance ("medicare") Aid to the blind Aid to families with dependent children Aid to the permanently and totally disabled

Children's Services

Maternal and child-health services Services for crippled children Child welfare services Combating mental retardation

The Social Security Act is a federal law, but the federal government alone operates only two of the programs: (1) old-age, survivors, and disability insurance, and (2) health insurance for the aged and disabled. The other ten programs are operated by the states, with the federal government co­ operating and contributing to the cost.

-21- Social Insurance

The old-age, survivors, and disability insurance program (OASDI), popularly known as social security, was created during the Great Depression of the 1930s. While one of the purposes of OASDI was to minimize poverty among the aged, it is not generally regarded as a welfare program because it is financed by contributions (employee-employer taxes) and the benefits are not confined to the poor. However, some of the benefits provided by OASDI are in the nature of welfare. For example, special minimum benefits are provided for persons with at least twenty years of coverage at low earning levels regardless of how little s'uch persons may have contributed.

There are significant differences between the social security program and private retirement systems based on traditional insurance concepts. Re­ tirement benefits under social security are determined by Congress, and amounts received by a particular beneficiary do not necessarily reflect the actuarial value of taxes paid in by that beneficiary. Experts esti­ mate that at present most social security beneficiaries are receiving more than the actuarial value of their contributions.11/ Such benefits can be paid because the government, unlike a private system, need not accumulate an employee's contributions in a reserve fund to pay him bene­ fits when he retires. Social security taxes paid by younger workers cur­ rently employed can be used to pay benefits to older persons who have--i:e­ tired. Thus the program has been described as "a compact between genera­ tions," under which one generation, in effect, finances the retirement of its predecessor.�

Social security payroll deductions rise proportionately (up to maximum taxable earnings) but benefits do not (Table 12). Moreover, from time to time, when Congress has ordered percentage increases in benefits along with increased payroll deductions to pay for them, those already retired received the increases automatically. Thus benefit increases for the re­ tired were granted at the expense of members of the working population whose payroll taxes were increased. Beginning in 1975 social security benefits and payroll taxes will increase automatically in January of each year whenever there has been a significant increase (3 percent or more during specified periods) in the cost of living. The automatic cost-of­ living "escalator" was enacted by Congress in 1972.

The old-age, survivors, and disability insurance program is by far the largest single income-support program. At present (1973) approximately 28 million individuals are receiving cash benefits and medical care ser­ vices that total about $55 billion annually. Of the 10.7 million families who received benefits in 1971, 1.6 million were below the poverty line and 9.1 million were above it. Recent increases in cash benefit levels across the board and the automatic benefit escalator assure that in the 1970s more and more working individuals will be kept out of poverty during their old age. The benefit figures in Table 12 (not including in-kind medicare

-22- Table 12 RATIOS OF OLD AGE AND SURVIVORS INSURANCE BENEFITS TO SELECTED AVERAGE MONTI-ILY EARNINGS, 1971 BENEFIT SCHEDULE

Single Retired Worker Cou;ele Average Monthly Implied Ratio of Ratio of Earnings of Insured Average benefit benefit Worker During Annual Monthly to prior Monthly to prior Working Years�I Salary benefit earnings benefit earnings $250 $3,000 $145.60 0.58 $218.40 0.87 417 5,000 198.80 0.48 298.20 o. 72 0.43 377.70 0.65 58\; 7,000 251.80 750- 9,000 296.00 0.39 444.00 0.59

Average monthly earnings, upon which the OAS! benefit is based, are the average of post-1950 monthly taxable earnings after up to five years of lowest (or zero) earnings have been omitted: (total earnings after 1950 minus 5 years of lowest earnings) divided by (total months after 1950 minus up to 60 months). In 1971, no one could have had average monthly earnings of $750 be­ cause the ceiling on wages subject to social security tax was below the $9,000 covered annual salary implied by the $750 monthly wage during all prior years. The highest average monthly earnings possible with the ceilings on wages subject to social security tax after 1950 was $472.

Source: Taken from Charles L. Schultze et al., Setting National Priorities, The 1973 Budget (Washington, D.C.: Brookings Institution, 1972), Table 6-3, p. 181.

benefits) appear to provide income above the poverty line. Thus it may be argued that for those covered by social security the OASDI program has eliminated the specter of poverty--at least in its more severe form.

The OASDI program, of course, does not cover the elderly and disabled who do not qualify for benefits and it does not cover those who become needy before they are eligible to retire. Hence the Social Security Act includes a system of public assistance and we now turn to that subject.

Public Assistance Programs--Overview

Federal government participation in welfare activities began with the Great Depression of the 1930s. Ironically, the overriding purpose of the

-23- Congress at that time was not to establish a federal commitment to help support local welfare programs, but rather to establish a national system of social insurance. But it soon became evident to the members of the 74th Congress that it would take several decades until most members of society had built up enough employment credits for adequate retirement, survivors, and disability benefits. Hence provision was made for a system of federal matching support to help the states fund programs of local pub­ lic assistance. Only people who fell into certain categories as to the cause of their need--old age, disability, blindness, and the death, dis­ ability, or absence of the family's breadwinner--were to be aided by the federal monies.13/ The need for each of these cash assistance categories was expected to lessen as time passed and more and more of the population was covered by the social security system. As detailed below, this has in fact occurred insofar as the old-age public assistance program is concerned. However, for the program of Aid for Dependent Children, popularly known as AFDC, this expectation has not been fulfilled. Indeed, this particular federal­ state public assistance program has grown at an ever-accelerating pace since the end of World War II and has become one of the major factors underlying the recent crisis in welfare. The federal-state cash assistance programs that were initiated in the 1930s are often referred to as "categorical" programs. In other words, they are intended to cover only certain kinds of situations involving economic deprivation--not economic deprivation in general. Thus a family with two small children in which the father is present but is bringing home a very low income from an unskilled job may well have a legitimate need for some income support to maintain an adequate standard of life. However, such a family would not fall into any of the current federal cash assistance program categories--that is, the husband is not blind or disabled, the children are not considered officially "dependent" because the father is present and is working, et cetera.14/ Thus the view of federal legislators in the depressed 1930s was essentially that the federal gov­ ernment should help state and local governments with their traditional functions of providing for people who are in need through no fault of their own--widows, orphans, the severely disabled, the hungry, et cetera. The idea of the federal government (or any level of government for that matter) using its general revenue-raising power to alleviate the distress of low-income status in general, regardless of the cause, did not enter the public policy arena until the post-World War II period. Since World War II, a number of federally supported noncategorical programs have developed along with the traditional categorical programs. Under these newer assistance programs, low-income status alone is usually enough to qualify for benefits. Interestingly, these noncategorical assistance programs have all involved income-in-kind rather than cash transfers-­ public housing, child care, medical care, and food stamps. Efforts to

-24- convince Congress that it should institute a general noncategorical as­ sistance program involving cash transfers have not been successful.15/

Thus the current system of federally aided public assistance programs has created two fairly distinct subgroups of recipients. One group, consisting largely of dependent children and their mothers, receives both cash and income-in-kind when satisfying certain categorical criteria in addition to financial need, and another group, consisting largely of intact poor families with low-skilled working heads, receives only income-in-kind benefits. The coexistence of these two groups is another factor under­ lying the current concern about reforming welfare. Numerous examples of inequities between working poor families and AFDC families have come to light and this has generated pressures to expand cash assistance to the working poor via some form of noncategorical family assistance plan.

Public Assistance Programs in Detail

Adult Programs of Cash Assistance. Table 13 shows trends in the number of recipients and in aggregate benefit outlays under the three federally supported adult welfare programs. These three are relatively noncontro­ versial. The dependent children program (AFDC) is at present generating most of the concern over a "crisis in welfare."

The decline of the old-age welfare program is evident in Table 13. This, of course, reflects the widening coverage of the federal social insurance system. Fewer and fewer people are reaching old age with inadequate social security credits. The very sharp and accelerating increase in the number of recipients under the disability program is a puzzle; especially in light of the fact that since 1956 the social security system has provided for disability as well as old age and death, and it is unlikely that there has been any large increase in the overall incidence of disability in the country. About all that can be said of this development at present is that it represents some combination of changes in eligibility requirements (both at the statutory and administrative levels) and increased awareness of eligibility on the part of disabled individuals in the population. The disability program does not represent a very large percentage of overall welfare costs and so its recent growth has not generated any public debate. However, if the rates of growth shown in Table 13 should continue for a few more years, this program could become a cause for concern.

Amendments to the Social Security Act in 1971 replaced the previous federal­ state assistance program for the aged, blind, and disabled with a new con­ solidated program under which the federal government established a uniform minimum benefit level. Previously each state was free to choose its own benefit levels and had to comply only with certain administrative and eli­ gibility rules in order to receive federal matching grants. The new uni­ form minimum benefit levels (monthly benefits of $130 for a single person

-25- and $195 for a couple in 1972) will be funded completely by federal revenues. States can supplement the monthly minimum grants, if they wish, with federal matching support.

Table 13 NUMBER OF PERSONS RECEIVING PUBLIC ASSISTANCE BECAUSE OF AGE, BLINDNESS, OR DISABILITY, AND TOTAL MONEY PAYMENTS, SELECTED YEARS, 1950-70

Old-age Aid to Aid to the Year Assistance the Blind Disabled Total

Number receiving payments in December . . . . . (thousands)

1950 2,786 98 69 2,953 1955 2,538 104 241 2,883 1960 2,305 107 369 2,781 1965 2,087 85 557 2, 729 1970 2,082 81 935 3 ,098 Cash benefit payments, calendar year ...... (in millions)

1950 $1,454 $53 $ 8 $1,515 1955 1,488 68 135 1,691 1960 1,626 86 236 1,948 1965 1,594 77 417 2,088 1970 1,861 98 985 2,944

Source: Taken from Schultze et al., Setting National Priorities, Table 6-5, p. 188.

Dependent Children. Table 14 and 15 show the growth over time in the most controversial of all the categorical cash assistance welfare programs--AFDC. During the 1950s, after fairly rapid growth between 1940 and 1950, the pro­ gram grew only about as fast as the population as a whole. But during the 1960s, a decade characterized by dramatic declines in the incidence of pov­ erty in general, the AFDC program grew by leaps and bounds. In 1960 AFDC families were about 1.7 percent of all families, while in 1971 they had grown to 4.7 percent. This incredible paradox of growth in the incidence of child dependency coexisting with a decline in the incidence of poverty

-26- Table 14 NUMBER OF AFDC RECIPIENTS AND TOTAL PAYMENTS UNDER AFDC, SELECTED YEARS, 1940-1970 Total Annual Number Payments (in thousands) (in millions) Year ( 1) (2)

1940 856 N.A. 1950 2,233 $ 547 1960 3,073 994 1965 4, 396 1,644 1970 9,660 4,852

Source: Column (1) taken from Levitan and Marwick, "The Mounting Welfare Problem," Current History, November 1971, Table 1, p. 262. Column (2) taken from Schultze et al., Setting National Priorities, Table 6-6, p. 188.

Table 15 NUMBER OF AFDC FAMILIES AND TOTAL FAMILIES SELECTED YEARS, 1950-1971 (in thousands) AFDC Families AFDC Total as Percent of Year Families Families Total Families 1950 651 39,929 1.6 1955 602 42,889 1.4 1960 803 45,456 1. 7 1961 822 46,341 1. 7 1965 1,054 48, 297 2.2 1967 1,213 49,834 2.4 1969 1,591 51,237 3.1 1970 2,553 51,948 4.9 1971 2,523 53,296 4.7

Source: Data on AFDC families are from two sources. For 1961, 1967, 1969, and 1971 they are from the National Cross Tabulations that are derived from the AFDC Survey Studies. The formal citation for the 1971 survey study is: Findings of the 1971 AFDC Study: National Cross Tabulations, Number (SRS) 73-03759. For 1950, 1955, 1960, 1965, and 1970 they are from the Social Security Bulletin, vol. 34 (1971), pp. 54-55. Data on all families are from: U.S. Bureau of Census, Current Po ulation Re orts Series, no. 85 (Washington, D.C.: U.S. Government Printing Office, 1972 , p. 60. -27- in general is probably a major cause of the current public concern over welfare. The fundamental purpose of the AFDC program has always been to provide for children who are caught unexpectedly in very deprived circumstances becaus� of the loss of support by the father--the family's breadwinner.16/ It does not appear that there has been any change in public support for�his funda­ mental objective. What is causing public concern is that the underlying causes of nonsupport by the father have changed drastically since the pro­ gram began in the 1930s. At that time fully 75 percent of the children covered by the program had fathers who were either dead or severely inca­ pacitated. This percentage has declined steadily. By 1961 it had fallen to 32 percent and then continued to fall throughout the 1960s (see Table 16). Thus in 1971 86 percent of all.. AFDC families had fathers who were still alive but were officially "absent." It has been this sharp change in the character of the circumstances causing child dependency rather than any diminution in the public's concern over caring for dependent children per se that has resulted in a hardening of public attitudes toward the pro­ gram. When a woman "goes on welfare" because her husband suddenly dies (and she is not sufficiently covered by social security), it is generally assumed that her situation is not due to any fault of her own or of her husband. However, when the reason is separation, divorce, illegitimacy, desertion, et cetera, it becomes much easier for the public to assume that the parents themselves are partially responsible for the situation.

Table 16 AFDC FAMILIES: PERCENT DISTRIBUTION BY STATUS OF FATHER, SELECTED YEARS, 1961-1971

1961 1967 1969 1971

Total families (thousands) 822 1,213 1,591 2,523 Status of father (percent) Dead 7.3 5.3 5.4 4.3 Incapacitated or unempldyed 24.7 19. 7 18.4 9.6 Absent 68.0 75.0 76.2 86 .1

Source: Various AFDC surveys, see Table 15.

-28- Public demands for reform of AFDC were manifested in a series of legislative amendments that have broadened the approach to the problem. Until 1956 the major function of administrators was to make sure that the families receiv­ ing cash assistance under the program were abiding by the regulations for eligibility. Rehabilitation of the clients, although always a hoped-for by-product of social worker visits, was never considered a formal program function. Indeed, as long as the major cause of dependency was death or physical incapacity of the breadwinner, attempts to change life styles and attitudes of recipients were considered illogical as well as presumptuous. Starting in 1956, significant appropriations were authorized for categories of social services to be provided by the administrators of the AFDC program. These included child care services for the younger dependent children, counseling and various kinds of rehabilitative therapy for the mothers, et cetera. The idea at first seems to have been that the factors causing the absence of the father could be reversed by providing these types of ser­ vices--broken families could be patched up. With the role of AFDC contin­ uing to expand into the early 1960s, the slogan "rehabilitation" rather than "relief" took an even firmer hold in the Congress. But the objective of the services shifted from patching up broken families to that of making AFDC mothers self-supporting.

A 1967 amendment to Title V of the Social Security Act established the Work Incentive Program (WIN) as an integral part of the AFDC program. The overall WIN program has two components--a monetary work incentive exempting one-third of earnings from the welfare payments deduction, and a training program. Previous to the WIN amendments, any earnings of AFDC mothers were subject to an implicit 100 percent tax--a mother would lose $1 in wel­ fare payments for every $1 she earned. Under the WIN "income disregard" provisions, she loses nothing in welfare payments until she has earned at least $30 per month and then she loses only 66 cents in welfare payments for every $1 earned beyond $30 per month. Subsequently, large amounts of work-related child care services also came to be provided under the WIN program. At the present time, expenditures for the various services pro­ vided under the WIN program (training, child care, counseling, et cetera) come to about �1 billion annually. This amounts to about 12 percent of the total amounts received by AFDC families in the form of cash assistance.

The major objective of passing the WIN amendments appears to have been to enable welfare mothers to become self-supporting. However, as explained in more detail below, one part of the WIN package, the income disregard provisions--although they do provide strong incentives for AFDC mothers to work--actually make it harder for them to earn enough to remove them­ selves from the AFDC caseload altogether. For example, if the maximum benefit payment (for a mother and her three dependent children) is $3,300, then with the income disregard provisions the mother has to earn about $5,000 before her welfare benefit payments would fall to zero. Perhaps more important, however, is the fact that the income disregard provisions also create a strong pecuniary incentive for female family heads who had

-29- been self-supporting at incomes just above the AFDC maximum benefit level to somehow qualify themselves for the program and then return to work. For example, if a woman with three dependent children had been supporting herself with $4,000 before the income disregard provisions, then for the same work effort she may increase her total income if she can manage (and desires) to qualify herself for the AFDC program. Thus, although the in­ come disregard provisions of WIN are probably a powerful tool for increas­ ing the work efforts among AFDC women, it could also be working to increase the size of the AFDC caseload.

When the AFDC rolls continued to grow at an alarming rate after the WIN program was instituted, Congress again reacted to the continuing welfare crisis. But now the reaction became much more complicated. It contained more elements than just a hardening attitude toward those on the welfare rolls--although that element is still present. Two additional elements became mixed into the very recent discussions of welfare reform. One was the recognition that the categorical nature of the AFDC program--the re­ quirement that the father be absent in order to qualify for any assistance-­ might itself be inducing a lot of the increased family disorganization that was swelling the welfare rolls. The other factor was growing concern over inequity between the treatment of the working poor (intact families with a male head earning a very low·income) and the treatment of welfare mothers. Both these factors resulted in various legislative proposals to extend cash assistance of some kind to the working poor. None of these proposals suc­ ceeded in passing Congress in 1972. The only recent welfare reform mea­ sure that did emerge reflected a still further stiffening of attitudes to­ ward persons alreaay on welfare. The 1971 Talmadge amendment to the Social Security Act requires that each state must register a certain minimum per­ centage of certain categories of its adult AFDC recipients at the Employ­ ment Service as job-ready. Various penalties are provided for states that fail to comply. The hope here appears to be that by putting pressure on AFDC mothers to apply at the Employment Service more of them will end up working.

Recent attempts to legislate uniform minimum federal benefit standards for AFDC recipients, as in the case of social security and certain other pro­ grams, failed. The existing federal-state arrangements for financing AFDC benefit payments and other program costs are essentially a matching grant arrangement. The federal government agrees to share the cost of whatever benefit levels the individual states decide to establish.

The percentage share of benefit payments borne by the federal government tends to fall as the states' benefit level rises, and there is also a pro­ vision for a slightly higher federal percentage in low-income states. This is sometimes described as a "foundation plan" approach on the part of the federal government. The federal government is trying to ensure an adequate minimum standard rather than an equal standard. Richer states are free to establish higher benefit levels than poorer states--and they do. Table 17

-30- shows what the maximum and the average benefit levels were for an AFDC family of four in a set of selected states in 1971. It is important to note here that the amount of variation (in percentage terms) in benefit levels appears significantly greater than the corresponding variation in, say, state per capita incomes. Thus there appears to be variation in atti­ tudes toward welfare standards as well as in the ability to pay for bene­ fits across the country.

This lack of a federal minimum standard is another source of controversy concerning the AFDC program. Many people feel strongly that the federal government should establish minimum benefit standards for the program fol­ lowing precedents in other areas--social security and the adult cash as­ sistance categories. Actually, the problem here is not one of having any minimum standard at all, since the percentage that the federal government now contributes to the initial amounts of benefit payment are so high (about 83 percent) as to make them effective m1n1mums. The real issue is how high the minimum standard should be set. The extremely low benefit levels in some states obviously suggest that in some areas there are strong feelings in one direction on this issue. The following excerpt, taken from a study by a researcher who is somewhat sympathetic to having adequate mini­ mal national standards, is a good summary statement of the situation and the issue:

The states are still free to decide, by whatever means they choose, what constitutes need, to determine that portion of need, as they define it, will be met, and to decide, within the broad guidelines of the federal legislation and certain recent Supreme Court decisions, who is eligible to receive assistance. Thus, in 1967, for example, the cost standard for a family of four varied from a high of $255 per month in Alaska, to a low of $147 in North Carolina, but the maxi­ mum amount actually paid varied even more--from $280 per month in New Jersey to a low of $40 per month in Mississippi. Only 21 states paid 100 percent of need, while for the re­ mainder of the states, the percent of unmet need varied from 80 percent to three percent.

With respect to eligibility, some states put no limitation on the value of an applicant's home, while others limit it to less than $3,000; some allow applicants less than $500 worth of other·personal property and others more than $1,000; cohabitation with a man, other than a lawful spouse, is ground for automatic ineligibility in some states, no child of 16 or more is eligible to receive aid, while in others he may receive aid up to the age of 21 if he is attending school. These variations are not matters of trivial consequence; they bear on questions of both physical and mental health, life chances, human dignity and, some would maintain, even life itself.17/

-31- Table 17 AID TO FAMILIES WITI-1 DEPENDENT CHILDREN, MAXIMUM AND AVERAGE ANNUAL PAYMENTS, SELECTED STATES, 1971� Annual Maximum Average Payment Payment for a for a Four-person Four-person Family Family State (1) (2)

California $2,652 $2,508 Colorado 2,820 2,510 Florida 1,608 1,162 Georgia 1,596 1,375 Illinois 3,408 2,803 Indiana 1,800 1,733 Iowa 2,916 2,537 Massachusetts 4,188 3,226 Michigan 3,516 2,981 Mississippi 720 670 Missouri 1,560 1,469 New Jersey 4,164 3,000 New York 4,032 3,730 North Carolina 1,896 1,514 Pennsylvania 3,756 2,993 Texas 2,148 1,409 Vermont 3,924 2,983 Washington 3,636 2,868 a/ More up-to-date figures can be obtained at any time by contacting the Social and Rehabilitation Service (SRS) of the Department of Health, Education, and Welfare. Source: Taken from Henry J. Aaron, Why is Welfare So Hard To Reform? (Washington, D.C.: The Brookings Institution, 1973), Table 2-1, p. 8.

Income-in-Kind Programs. The three major types of income-in-kind benefits provided under the various federally assisted programs are housing, medical care, and food.18/ The medical care program is called Medicaid. Under Medicaid, the federal government agrees with each state to share in the cost of providing certain kinds of medical care to both public assistance recipients and to low-income families with incomes that do not exceed four­ thirds of the state's maximum AFDC benefit. The individual states retain

-32- discretion, however, as to whether they will provide benefits to both pub­ lic assistance recipients and low-income families or only to public assis­ tance recipients. At present about half the states have opted to restrict medicaid benefits to those individuals who otherwise qualify for a cash public assistance program.

There are three varieties of programs under which housing is subsidized and provided to the poor. The oldest is the public housing program under which the federal government makes construction loans and operating sub­ sidies to local governments so they can operate and lease low-rent public housing units. The two more recent programs involve payment of part of the cost of rent in private apartment houses and payment of part of the cost of acquiring a private home.

The major federal program for providing food for the needy is the Food Stamp Program.19/ Under this program, needy families receive food stamps with varying values which they can use to buy food in private food outlets.

In the federal budget for fiscal year 1972, outlays were $3.8 billion for medicaid, $1.5 billion for the various housing programs, and about $2 bil­ lion for the Food Stamp Program.

The housing and food programs are similar in that they are administered in all states as pure noncategorical assistance programs--that is, low-income status is the only requisite for becoming eligible to receive benefits. Thus housing and food assistance are currently being received by families who also receive cash public assistance and by intact working poor families who do not qualify for the categorical cash assistance programs. For exam­ ple, about 4 million of the 10.6 million low-income people who were using food stamps in March 1971 were not receiving any form of cash public as­ sistance. Also, it is well known that a very large share of the recipients under the various housing programs are low-income but not in the cash pub­ lic assistance categories. On the other hand, the medical care program, at least in those states that have so chosen, remains an essentially cate­ gorical program--most of the families obtaining benefits must, in addition to meeting the low-income criteria, satisfy the categorical criteria of one of the cash public assistance programs.

The housing and food programs are also similar with regard to the issue of work incentives. Under both of these programs, the amount of benefits for which a family or individual is eligible declines gradually as the indivi­ dual's or family's level of cash income rises to the maximum eligibility level. On the one hand, benefits are reduced somewhat as earned cash in­ come rises, but not dollar for dollar, so that some incentive exists for the individual to go on earning additional cash income up to the maximum eligibility level. On the other hand, benefits do not remain at the same level as cash income rises to the maximum eligibility level and then be

-33- suddenly cut off as income moves above this level. In this type of situa­ tion, sometimes described as a "notch" situation, a family can have its total income actually reduced if it should earn some small amount of cash income in excess of the income used to define eligibility. The result is an extreme work disincentive for a small range of earned income levels. Individuals who are earning incomes 10 to 15 percent above the eligibility level have a significant incentive to actually reduce their income level.

Medicaid benefits are administered in many states so as to put low-income families in a notch situation. In states with programs for low-income, non-AFDC families, eligibility is determined on the basis of their net income (gross income less medical expenses) falling below some specified level. The amount of expenses then covered are approximately the same whether or not net income is just below that cut-off level or way below that level. Thus, a family whose earned income less medical expenses had been just below the qualifying level could have its total income reduced by a small rise in earned income (assuming no corresponding increase in medical expenses). This would occur whenever the increment in earned cash income was less than the medical expenses incurred.

Tables 18 and 19 provide information about the amounts of benefits provided under the food stamp and medicaid programs, as well as an illustration of

Table 18 FACE VALUE OF FOOD STAMPS AND FEDERAL ANNUAL INCOME LIMITS, BY FAMILY SIZE, 1972

Maximum Annual Face Value of Income in Order Maximum Annual Food Stamps To Qualify for Income for Pro§ am Family Size Per Year Free Stamps E ligibi 1i ty-7

1 $ 432 $240 $2,136 2 768 240 2, 796 3 1,104 360 3,684 4 1,344 360 4,476 5 1,584 360 5,280 6 1,824 360 6,084 7 2,06 360 6,876 \, I 8 2,30� 360 7,680£

Households in which all members receive public assistance retain eli­ gibility regardless of income. For each person in excess of eight, $192 is added. For each person in excess of eight, $636 is added. Source: Aaron, Why Is Welfare So Hard To Reform? Table 2-3, p. 17.

-34- Table 19 INCOME LIMITS FOR MEDICAID BENEFITS FOR THE MEDICALLY INDIGENT AND AVERAGE MEDICAID PAYMENT PER AFDC FAMILY OF FOUR, SELECTED STATES, 1971

Maximum Income for Initial Eligibility for Average Medical Medicaid Benefits, Vendor Payment Four-person per AFDC Medically Indigent Four-pers7n Family Family� State (1) (2)

California $3,600 $876 Colorado (b) 344 Florida (b) 309 Georgia (b) 374 Illinois 3,600 908 Indiana (b) 547 Iowa (b) 692 Massachusetts 4,176 738 Michigan 3,540 700 Mississippi (b) 89 Missouri (b) 335 New Jersey (b) 491 New York 5,000 970 North Carolina 2,800 503 Pennsylvania 4,000 610 Texas (b) 640 Vermont 3,828 668 Washington 4,260 524 � Average of fiscal years 1970 and 1971. � State does not have a program in operation for the medically needy.

Source: Aaron, Why Is Welfare So Hard To Reform? Table 2-2, p. 15.

how significant the different kinds of work-incentive provisions can be. For example, consider a low-income family of five under the federal food stamp program. The information in Table 18 shows that if this family's income should fall below $360 (as of 1972) it would have been eligible to receive free food stamps with a face value (value in the food store for purchasing food) of $1,584. However, once the family's income was anywhere in between $360 and $5,280, and though it would still be eligible for food

-35- stamps, it would no longer receive them free. The amounts charged for stamps (always some amount less than their face value) increase gradually with increments in income, becoming very close to 100 percent of face value at an income just below $5,280. The net effect of the gradually increased charge is to subject increments in earned income to an "implicit" tax rate of 30 percent. Suppose, however, that the food stamp charge had been set so as to subject increments in earning to a 100 percent implicit tax. Then the family would have had very little incentive at all to increase its earnings in the range from zero to about $2,000. If the members of the family did not work at all, they would receive $1,584 in food stamps. If they worked and earned $2,000, they would improve their total income posi­ tion by only $416 ($2,000 minus $1,584).20/ At the other extreme, suppose the food stamp program were administered"""so that there was never any charge for stamps until income rose above the maximum eligibility level. Then a family would have a strong incentive to earn income, but only up to a level just below the maximum eligibility line ($5,280 in our example). More importantly, individuals who had been earning between $5,281 and $6,863 could actually increase their total income by reducing their work effort so that they would earn just less than $5,280.

Total Public Assistance Available to Various Groups. The total amount and kind of public assistance that a low-income family can obtain varies greatly depending on its state of residence, amount of earned income, and whether or not it qualifies for one of the categorical programs.

In some states there are nonfederal general assistance programs that pro­ vide cash assistance to families with a working male head. In other states such families are not eligible for any cash assistance. Moreover, in all states AFDC families qualify for both cash and in-kind assistance while intact families usually qualify only for in-kind assistance. The following examples illustrate the extreme diversity that exists:

Georgia provides no cash assistance programs for intact families, while Michigan does. In Michigan, an intact family of four (two children) re­ ceives $3,660 in cash if it has no earned income or unemployment insurance benefits. Any earned income (including unemployment insurance benefits) leads to reduced benefits but not dollar for dollar--the implicit tax rate on earnings is the same as that of the WIN program described above. Thus a family of four with a working head who earns $3,200 will receive $2,115 in cash public assistance if it happens to live in Detroit, but none if it happens to live in Atlanta. Within states that do not provide any cash assistance to intact families the contrast between AFDC families and other families can be striking. In Georgia, for example, an AFDC family consisting of a mother and three dependent children is eligible to receive a maximum of $3,606 in all forms of public assistance--both cash and in-kind. On the other hand, an intact family of four in Georgia (husband, wife, and two children) with no earned

-36- income during the year is eligible for only $1,474 in in-kind public assis­ tance--$474 worth of free food stamps and school lunches and $1,000 in the form of an implicit rent subsidy if the family lives in a public housing unit. If the father qualifies, he will be eligible for some cash assis­ tance in the form of unemployment insurance benefits but only for about 39 weeks at most. After unemployment insurance is exhausted private charity would appear to be the only source of cash assistance. Finally, in all states the amount of assistance received in the form of cash significantly understates the amount received by most families in total public assistance income. Table 20 shows the amounts of cash and total public assistance benefits available to an AFDC family in four se­ lected cities in 1971. The AFDC family (a mother and three dependent chil­ dren) is assumed to have no earnings at all. The noncash benefits involve food stamps, medicaid, public housing, and free school lunches. Thus the amount of understatement in using cash assistance to measure total assis­ tance varies from 50 percent to 100 percent depending on the state of resi­ dence of the recipient.

Table 20 AMOUNTS OF CASH AND TOTAL BENEFITS THEORETICALLY AVAILABLE TO AN AFDC FAMILY� OF FOUR, SELECTED CITIES, 1971

Available Benefits Ratio of City Cash In-kind Total Total to Cash Atlanta, Ga. $1,788 $1,818 $3,606 2.02 Chicago, Ill. 3,314 2,261 5,575 1.68 Detroit, Mich. 3,660 1,954 5,614 1.63 New York, N.Y. 3,756 2,156 5,912 1.57 � See text for description of family unit. Source: James R. Storey, "Public Income Transfer Programs: The Incidence of Multiple Benefits and the Issues Raised by Their Receipt," Paper #1, Studies in Public Welfare, a study proposed by the Subcommittee on Fiscal Policy of the Joint Economic Committee, Congress of the United States (Washington, D.C.: U.S. Government Printing Office, 1972).

-37- Reforming Public Assistance: Basic Issues

Since 1969 various comprehensive welfare reform proposals have been intro­ duced in Congress. First, there was President Nixon's initial omnibus re­ form bill presented to Congress in 1969. This was called the Family Assis­ tance Plan (FAP). Then came modified versions of FAP presented to Congress by the administration in 1970 and 1971. The administration's FAP proposal as revised was made a part of a bill (H.R. 1) entitled "The Social Security Amendments of 1971." This bill (H.R. 1) passed the House on June 22, 1971. But the Senate did not accept the FAP proposal. Thus H.R. 1, as finally passed and signed by the President, increased social security and medicare and medicaid benefits but did not reform family welfare programs. For pur­ poses of this analysis, the FAP proposal in the form in which it passed the House of Representatives will be referred to as H.R. 1.

H.R. 1, as passed by the House, was the major comprehensive reform bill around which much of the public debate on welfare reform has centered over the last three years. At the present writing, however, a comprehensive reform bill has yet to be passed by Congress. About the only legislative proposal for family welfare reform that has managed to make its way into law is the above-described Talmadge amendment under which more stringent requirements for seeking work on the part of adult AFDC recipients were written into the existing AFDC program. In short, the Federal public as­ sistance system is about the same system now as it was in 1969 when the great debates on welfare reform began.

It should be noted, however, that H.R. 1, as enacted, did provide that effective January 1, 1974, existing federal-state programs for aid to the aged, blind, and disabled shall be replaced with a program fully financed and administered by the federal government. In what follows, the under­ lying factors inhibiting comprehensive reform are explored. Then a criti­ cal assessment of the specific approach to reforming the AFDC program embodied in the WIN program is presented. Some suggestions for new ap­ proaches to AFDC are also made.

Comprehensive Reform--the Basic Conflicts.21/ What basic factors are in­ hibiting comprehensive welfare reform? Are there strong differences over what the essential features of the reformed system should be? Many students of the problem seem to agree that an "ideal" reform system should have the following three features: (1) it should eliminate the "absent father" categorical basis for cash assistance and thus reduce the perverse pecuniary incentive encouraging family disorganization; (2) it should provide adequately for families who end up in really distressed circumstances (for example, families that for one reason or another end up with zero or practically zero earned income), and (3) it should provide sufficient incentives so that those heads of low-income families who are working and earning modest incomes will go on doing so (that is, it should not subject earnings to a very high implicit tax by sharply reducing benefits as a family's earned

-38- income rises). Th.us the basic problem of comprehensive reform can be dis­ cussed in terms of these three features. First, the only way to have a system that exhibits all three of these features simultaneously is to be willing to spend a lot more tax revenues than are currently being spent on public assistance. Alternatively, to institute reform that has only features (1) and (2), although it might be less costly in the short run, would run a high risk of inducing a massive and highly visible reduction in work effort among intact families of the working poor.

In 1972 the Congress did not accept either of these options. Congress was neither willing to authorize the increased expenditures required for total comprehensive reform, nor was it willlng to opt for less costly partial reform that would run the risk of producing significant reductions in work effort among the working poor. A brief examination of some of the details of the provisions of H.R. 1 may help explain this situation.

H.R. 1 would have provided a basic federal minimum cash payment to all families with dependent children (regardless of the presence or absence of the husband) 22/ and permitted the states to supplement that minimum benefit. The basic maximum cash benefit for a family of four with no earned income would be $2,400. H.R. 1 also proposed the extension of medical benefits, uniform across all states, to intact poor families. Public housing benefits were not deductible from the benefits proposed by H.R. 1. Th.us intact poor families could continue to receive these in­ kind benefits in addition to the cash assistance proposed by H.R. 1. How­ ever food stamps were explicitly excluded by H.R. 1, and low-income fami­ lies with dependent children would not have been ab le to collect benefits under the food stamp program. On balance, H.R. 1 would have guaranteed that the total benefits (cash and income in-kind in the form of medical care and housing) available to a family of four with no other earned in­ come, living anywhere in the United States, would not have been less than about $4,400. In many states (especially in the North), which would have supplemented the H.R. 1 minimum benefit, the maximum benefits available to a family of four with no other earnings would have probably been close to $5,500.

Accordingly, the prov1s1ons of H.R. 1 seem to satisfy the first two of the three criteria mentioned above: elimination of the absent father categori­ cal feature and adequate provision for families in very distressed (zero or very low-income) situations. What about the third criterion--provision of work incentives? On the surface, H.R. l's provision for work incentives did not appear to differ much from those of the current _WIN program--cash benefits wculd have been cut by 66 cents fur every dollar of earned income in excess of $60 per month. However, critics of the bill pointed out that less visible provisions relating to work expenses and taxes in computing benefit deductions and to partial payment of medical expenses with increased earnings would have had the effect of making the effective implicit tax rate on earned income work out to be about 100 percent. In other words,

-39- in a state that provided $5,500 in total benefits, a family in which the head did not work at all would have received about the same total income as a family in which the head worked and earned as much as $5,500. In 1971 there were about 10 million families with incomes in the range zero to $5,500. Thus proponents of a realistic work incentive provision found the bill unacceptable. Chart 1 illustrates the situation. The solid line traces out the actual relationship that would have existed between a family's total disposable income and its gross earned income under H.R. 1. The dashed line shows how this relation would have looked if H.R. 1 had been written so as to make the effective implicit tax on after tax earnings equal to 66 percent rather than 100 percent. Note that with the increased work incentive two things happen: (1) families with �arned incomes below or very near the maximum benefit level now have no incentive to reduce their work effort and (2) families with earnings in a considerable range above the maximum benefit level will now receive some benefits under the program. In 1971 there wer.e some 22 million families in the income range zero to $9,000. Accordingly, the Congress was unwilling to commit the public to a system that might require a huge increase in tax revenues to support. What can be done about the situation? One approach that has been suggested is to establish a two-tier system of benefits at the zero earned income level--a low one for families with an employable head and a more generous one for families with a nonemployable head. Employable family heads would then be confronted with a strong work incentive in the form of an effective implicit tax of only 40 or 50 percent. Since the low implicit tax would start from a much lower maximum benefit level, this would hold down the cost of the program. The fundamental difficulty with this approach is in connection with establishing a fair administrative system for determining who is and is not employable. Another approach that has been suggested for holding down the cost of com­ prehensive reform is to transform our patchwork in-kind cash system into a cash-only system. It would be a completely noncategorical system (that is, any unit, unrelated individuals, childless couples, et cetera, would qualify) and would be administered by the Internal Revenue Service. This approach is sometimes referred to as a "negative income tax" approach and has long been identified with Professor Milton Friedman, the well-known economist. The argument here is that there would be enormous savings in terms of administrative costs that would serve to offset some of the in­ creased benefit payment costs. The main argument against the negative in­ come tax approach is that it would allow poor families to have much more discretion over how they spend their incomes. Many people oppose this type of program on the ground that certain types of assistance should be provided in kind (food, medical care, housing) so as to assure that the money will not be spent on other, less important items.

-40- Chart 1

DISPOSABLE TOTAL INCOME FOR A FAMILY OF FOUR UNDER H.R. 1 AND UNDER A HYPOTHETICAL EFFECTIVE IMPLICIT TAX RATE OF 66 PERCENT

Disposable income

Maximum benefit level Hy�othetical: Assumes an implicit tax of 66% 1 I $5,500 I I I I I I Actpal H.R. 1 I prorisions � I I I I I I I I I I I

0 $5,500 $9,000 Earnings

a/ Adapted from Aaron, Why Is Welfare So Hard to Reform? Figure 4.4, p. 40.

-41- The AFDC Program and WIN: Prevention Versus Cure. As noted above, the main objective of instituting the WIN program appears to have been to en­ able welfare mothers to become self-supporting or at least to reduce the overall costs of the AFDC program by having their earnings substituted for some welfare payments. It was also indicated that the income disregard provisions of WIN, in addition to increasing the work incentives of women already on AFDC, had potential for increasing the size of the AFDC case­ load. This is because non-AFDC women who had been earning above the maxi­ mum AFDC benefit level could, with the income disregard provision, increase their total disposable income for the same work effort �if they were able (and willing) to first qualify for the AFDC program.

WIN was instituted more than five years ago. What can be said about its actual effects? One detailed empirical study concluded that, in addition to increasing the average amount of work effort among AFDC women, the amendments had increased both overall AFDC costs and caseloads.23/ How­ ever, this s�udy was limited to one state (Michigan) so it cannot be taken as hard evidence of the effects of WIN nationwide. Table 21 presents less precise but much more comprehensive data that can also shed some light on the issue of WIN impact. Recall that WIN was begun in 1967. The data in Table 21 show that the percentage of AFDC women who were employed was about

Table 21 TRENDS IN THE EMPLOYMENT STATUS OF AFDC MOTHERS,� SELECTED YEARS, 1961-1971

1961 1967 1969 1971

Total mothers 743,200 1,109,000 1,463,000 2,345,700 Status of mother (percent)

Mother not employed 84.3 85.5 85.3 85.1 Mother employed 15.6 14.5 14.7 14.9 Full-time 5.5 7.0 8.3 8.9 Part-time 10 .1 7.5 6.4 6.0

� Limited to AFDC mothers who were living at home. Source: Various AFDC surveys, see Table 15.

-42- the same in 1971 as it had been in 1961. Thus although the introduction of WIN may have had some effect on the average amount of work effort among AFDC mothers (there was a small increase in the proportion of working mothers who worked full time), it was not enough to make much of a dent in either overall welfare cost or caseloads.

Short of comprehensive welfare reform what can be done to improve the sit­ uation with regard to dependent children? The approach taken until now has been curative rather than preventive. It appears that the young girls who enter programs like WIN do so only after they are in the debilitating life situation that is associated with family disorganization. A more promising tack might be to view the problem as being primarily that of preventing these young girls from getting on the AFDC rolls. Perhaps some programs can be devised to make a young girl feel that she will be better off if she foregoes the welfare life style and opts. instead for the stan­ dard middle-class life style. What precisely is the nature of a program that will produce this result? This is one of the major challenges for social research in the 1970s.

-43- ELIMINATING POVERTY: EXISTING POLICIES AND PROGRAMS

Poverty is not a simple, one-dimensional phenomenon. There are various and diverse causes of poverty--deprived childhood environment, being stranded in a depressed area or industry, poor health or physical dis­ ability, excessive family size, family disorganization, mental breakdown, et cetera. Moreover, although the major concern is over "economic" poverty (that is, having low income),the major causes are only partially related to economic opportunities. For example, unemployment, which was a major cause of economic poverty in the 1930s, is only a relatively minor cause today.

Accordingly, the policies and programs of the government for eliminating the causes of low income are very diverse in nature. At least four dis­ tinct types of policy approaches can be distinguished. First, there are the laws aimed at eliminating unfair treatment and exploitation in the labor market--minimum wage laws and antidiscrimination laws and policies. Second, there are the policies and programs aimed at improving the early educational and other experiences of children from deprived family environ­ ments. Third, there are the many programs, all aimed in one way or another at improving the access of distressed groups to jobs and job-related ser­ vices, that go under the rubric of "manpower programs." Finally, there is the special set of antipoverty programs that were promulgated under the Economic Opportunity Act of 1964 and that were designed to involve the adult poor in helping themselves.

Minimum Wage and Antidiscrimination Laws

The Fair Labor Standards Act. Minimum wage laws have been enacted by all levels of government--federal, state and local. However, the federal law (known as the Fair Labor Standards Act) is by far the most important in determining the effects of policy in this area. In many states (especially in the South) the level of the federal minimum tends to be significantly above that contained in local statutes. Also, in most states the main thrust of the local laws are to supplement the federal law by providing coverage for certain industries that are exempted from the federal law. Thus a discussion of the workings of the federal law will suffice to cover the major issues. The original Fair Labor Standards Act of 1938 fixed the minimum wage at 25 cents an hour and overtime pay for hours worked in excess of 40 hours a week at one-and-a-half times the employee's regular rate. Repeated

-45- amendments have raised the m1n1mum wage and extended the definition of covered workers. The amendments of 1961 initiated a graduated increase, with the minimum wage rising in two steps from $1.00 to $1.25, effective in September 1963. The 1961 amendments also extended coverage to a large number of employees in trade and services, with the minimum for newly covered workers set initially at $1.00 and rising in two steps to $1.25 in September 1965. The last amendments were enacted in 1966. These amend­ ments raised the minimum to $1.40 an hour effective in February 1967 and to $1.60 an hour effective in February 1968. They extended coverage to over nine million additional workers. The minimum for newly covered em­ ployees was set initially at $1.00, rising annually by 15-cent steps to the general minimum in February 1971, except for hired farm workers, whose minimum was to rise only to $1.30. During the past two years, a series of proposed amendments have been introduced, debated, and reported out of committee. But none has been enacted into law.

As of September 1972, about 75 percent of all employees were in jobs covered by the Fair Labor Standards Act. (About 10 percent of employment is ac­ counted for by self-employment and unpaid family workers.) Noncovered workers are primarily employed in very small trade and service establish­ ments, private households, smaller farms, and governments. With the ex­ ception of government workers, a large proportion of employees currently exempt receive wage rates below $1.60 an hour. Moreover, they are dis­ proportionately made up of teenagers, women, and nonwhites. At the present writing a number of bills to raise the level and extend the coverage of the federal law are being debated in Congress.

Most economists now agree that minimum wage laws are not a realistic policy approach to the poverty problem, according to critics of the pending bills. Both economic theory and empirical research by economists 24/ strongly suggest that past increases and extensions of Fair Labor Standards Act provisions have imposed significant hardships on many low-wage workers, especially teenagers. Essentially, the argument is that increases in the wage rates of low-wage workers that are in excess of increases in their productivity will lead firms to cut down on the employment of some of these workers. The low-wage workers who are displaced will then suffer both in terms of having to accept lower wages in the uncovered sector where they ultimately find reemployment and by experiencing significant transitional unemployment in the interim.

Moreover, it is stressed that these low-wage workers who are displaced tend to be the least able and the most disadvantaged. Thus, the argument con­ tinues, most economists envision a situation in which a few of the most able among the low-wage group benefit but primarily at the expense of those at the very lowest rung of the ability ladder in the labor market. This is likely to result in an overall increase in poverty rather than a re­ duction in it.

-46- Equal Employment Opportunity Laws. As in the case of minimum wage laws, equal employment opportunity statutes are in effect in both state and federal governments. Since the federal laws and regulations are more comprehensive they dominate the picture. 1bere are two major federal ef­ forts in this area. One is contained in the equal employment opportunity provisions of the Civil Rights Act of 1964. 1bis act established the Equal Employment Opportunities Commission (EEOC) to enforce its fair em­ ployment provisions. 1be other federal program is administered by the Office of Federal Contract Compliance (OFCC). 1bis involves ensuring that all private companies who receive contracts to perform work for the federal government do not discriminate in their employment policies. In addition to these efforts that relate primarily to the private sector, there are a number of special federal policies and programs aimed at speci­ fically ensuring the absence of discrimination in the employment practices of the federal government itself. For example, the military services, which until the end of World War II had practiced various forms of dis­ crimination, are now regulated by special presidential orders designed to eliminate discrimination by the services.

Unlike the case of minimum wages, however, it appears that fair employment laws are considered by most economists to have benefited the minority groups they were intended to help. For example, a careful empirical study of the effects of state fair employment practice laws concluded that they had raised the relative earnings of black males.25/ Thus substantial authority can be cited for the view that fair employment laws are a worthwhile policy tool and that they do, in practice, achieve their intended result. However, sharp disputes have developed over what constitutes proper enforcement procedures and over developing proper stan­ dards for detecting the existence of discrimination. Should the EEOC be given the power to issue cease-and-desist orders without, as it now does, having to go to court and prove to a judge that a firm has been discrimi­ nating? After a recent debate, Congress decided not to give the EEOC this greater enforcement power. Is a firm that utilizes paper-and-pencil job selection tests on which minority groups score lower guilty of a discrimi­ natory employment practice? The Supreme Court has recently ruled that un­ less the firm can demonstrate that such a job-selection test has a very high degree of correlation with measures of actual on-the-job performance it must cease using them.26/

Education and Other Child Development Policies

Traditionally, state and local governments have had the major burden of providing children from deprived family backgrounds with at least an ade­ quate elementary and secondary school education. Until the mid-1960s the only mechanism for ensuring that children from poor families would receive an adequate amount and quality of schooling were the various state "founda­ tion plans." Under these plans, the state provided supplementary funds to

-47- local school districts whose residents could not raise sufficient funds via local property taxes. Beginning in the mid-1960s, however, the federal government instituted a number of programs under which compensatory funds are provided to local school districts around the country depending on the economic status of their students. The major federal program of this type is known as the "Title I program" because it was created by Title I of the Elementary and Secondary Education Act (ESEA).

Table 22 shows data on trends in sources of public school support. As will be seen from the table, direct federal support to elementary and secondary education, although it grew rapidly during the 1960s, still accounts for only a small part of the overall picture. However, the important aspect of federal support is that it is supposed to be compensatory in nature-­ that is, it is supposed to be concentrated, both among and within states, on children from low-income families. If the information in Table 22 could be broken down by the income level of families, it should show that low­ income families received a much higher percentage of funds from state and federal sources than middle- and high-income families.

In addition to federal programs that provide compensatory funds to local elementary and secondary schools, there are a number of federal programs that seek to enrich the preschool experiences of disadvantaged children. The "Head Start" program, is by far the largest and most well known of them. Head Start is composed of local centers around the country, run either by the local public school system or by local Community Action Agencies, that provide developmental and recreational activities for disadvantaged pre­ school children. At present there are a number of comprehensive child

Table 22 SOURCES OF PUBLIC SCHOOL SUPPORT, 1950 AND 1972

1949-50 1971-72 Percent Percentage of Su;e:eort (millions of dollars) Increase 1949-50 1971-72

Federal $ 156 $ 3,306 +2,019% 3% 7%

State 2,166 19,063 780 40 41

Local 3, 115 24,276 679 57 52 Total $5,437 $46,645 758%

Source: Financing the Schools, Special Analysis, High School Debate Series (Washington, D.C.: American Enterprise Institute, 1972), Table 3, p. 11.

-48- development bills before Congress, which would serve to greatly expand the existing Head Start program both by increasing the amount of services re­ ceived by disadvantaged children and by extending services to many non­ disadvantaged preschoolers.

What factors underly this sudden growth in concern over the adequacy of resources devoted to early child development and schooling? Have the existing federal programs produced the effects that were expected?

Key Research and Policy Developments. The importance of ensuring that every child receive at least some basic schooling has, of course, long been recognized. Simply being able to read and write has obvious economic value in a modern-day economy, and being able to read and write well can confer even greater economic produGtivity on an individual. Moreover, for many decades it seems to have been taken for granted that an individual's motivations and aspirations can be affected by the quality of his early childhood and school experiences. These motivation and aspiration effects can then have a significant influence on a youngster's future chances in life.

However, a number of dramatic events in both the areas of research and public policy have occurred since the mid-1950s and these have served to greatly increase the intensity of public concern in this area. Perhaps the single most important event was the 1954 Supreme Court decision that outlawed de jure segregation in public schools and discussed in dramatic terms the long-run effects of inferior schooling experiences. This de­ cision was followed not only by a process for desegregating schools but also by an outpouring of studies and surveys inquiring into the adequacy of school resources provided to various groups of children in the United States. The now famous "Coleman Report," 27 I published in 1966, documented the existence of significant inequalities'""'fn amounts of school resources among groups of children according to their race and the socioeconomic status of their families. In addition, the Coleman survey documented the existence of striking inequalities in cognitive skill development (as measured by scores of standardized achievement tests) between children from different racial and socioeconomic backgrounds.

Following the appearance of the Coleman Report, numerous studies were made to try to determine the precise causal roles of the various school resource factors (teacher ability, school facilities, class size, et cetera) and family background factors (for example, parents' education) in determining the differences in cognitive skill development between children from dif­ ferent social classes. The general conclusion of all these studies was that probably both types of factors are important but that it was not pos­ sible to separate out precisely the contribution of each. Have the Federal Programs Been Effective? Two well known and very contro­ versial studies, by Arthur Jensen and Christopher Jencks, 28/ concluded

-49- 0

that, on the whole, the federal compensatory programs, both the in-school and preschool kinds, have not achieved their objectives. Both these studies are well documented and thoughtful. They carefully survey the many empiri­ cal evaluation studies of Title I and Head Start that have been commissioned over the years. The authors have indicated that they attempted at all times to bias their research in. the direction of finding a favorable program ef­ fect and that they have no vested interests or ideological biases in the direction of not helping disadvantaged children.

However, critics of both of these studies (and many of the interpretations of thenu say that they suffer from one crucial methodological drawback which tends to greatly reduce their usefulness for guiding antipoverty policy. The drawback is that they have only focused on one very indirect measure of program effectiveness--scores that young children make on IQ and stan­ dardized achievement tests. The argument is that while the existing com­ pensatory programs may not have changed the ability to perform on these tests, this does not necessarily imply that they have not had an effect on some other important aspects of ability and motivation. Thus attendance at a Head Start center might subsequently lead a child to stay in school longer and improve his subsequent economic status, even though at the time of testing it has not raised reading ability very much.

Another important federal policy development in this area has to do with encouraging experimentation with different ways of organizing the delivery of educational services. Many students of the school situation feel strongly that the effectiveness of educational dollars could be greatly improved by instituting some form of "voucher scheme." This type of arrangement would allow government to continue to finance the schooling of children from poor families while at the same time leaving both parents and educational entre­ preneurs free to choose the kind of curriculum, discipline policy, et cetera, that they desire.29/ At present, the federal government is underwriting two voucher experiments, one in Alum Rock, California, and the other in New Hampshire.30/

Federal Manpower Programs 31/ The purpose of federal manpower programs is to help various distressed groups by improving their access to jobs and job-related services.

The groups served at present range from very disadvantaged youth (Job Corps, Neighborhood Youth Corps) through AFDC mothers and the physically disabled (Work Incentive Program and Vocational Rehabilitation), all the way to groups of fairly well-educated adult workers who, although temporarily un­ employed at the time of entry into the program, are not disadvantaged in a permanent sense. The types of programs now include, in addition to for­ mal skill training in classrooms, skill training on-the-job, direct pro­ vision of jobs ("job creation" programs), fairly elaborate and computerized

-50- Table 23 ESTIMATED OUTLAYS ON FEDERAL MANPOWER PROGRAMS BY TYPE OF PROGRAM, FOR FISCAL YEARS 1973 AND 1974 (millions of dollars) Program Category 1973 1974 Special Manpower Revenue Sharing (SMRS) $943

Training programs:

MOTA Institutional� $393 b/ JOBS program 92 96 Other OJT programs£/ 171 b/ Job Corps 177 111 Veterans OJT programs and other 260 287

Job creation programs:

Public Employment Program 1,088 574 Neighborhood Youth Corps (all programs) 407 b/ Operation Mainstream 82 b/ Other specified job creation_/d 61 b/ Other not specified 119 128

Work Incentive Program:

Training 320 381 Job creation 70 102 Child care (employment related only) 517 582

Vocational rehabilitation 756 824

Labor-market services 578 588

Program direction, research, and support 205 192

Total $5,296 $4, 808 a/ Includes institutional training under the Concentrated Employment Program (CEP). b/ Funded from $943 million shown above for SMRS. c/ JOBS optional, public service careers, CEP. d/ CEP and public service careers. Source: Taken from a forthcoming American Enterprise Institute study, Public Claims on U.S. Output: Federal Budget Options in the Last Half of the Seventies.

-51- employment exchange services and, finally, provision of a variety· of so­ called supportive services such as child care, counseling for health and emotional problems, et cetera. Table 23 shows estimated outlays for the various programs in fiscal years 1973 and 1974.

Thus, it can be seen that federal "manpower programs" constitute a very diverse mixture of activit�es. Perhaps because of this characteristic, until very recently they have not been subject to any serious evaluation. In view of the charitable nature of the programs (helping disadvantaged youth, welfare mothers, the disabled, the unemployed) it seems to have been assumed that worthwhile objectives are being achieved. But what pre­ cisely are the rationales and objectives of the various federal manpower programs? And what is the evidence that the programs are actually achiev­ ing their objectives? Finally, what long-range changes in the role of manpower programs are suggested by the evidence?

Training Programs. The major objective of manpower training programs is to raise the long-run earning capacity of participants. The underlying rationale for having the government provide this service is that the groups being served do not have access to the knowledge or financing required to do it themselves--that is, there are significant imperfections in the human capital market. In thinking about the validity of this rationale, it is important to distinguish sharply between the various groups being served by the training programs. In the case of mature adult males, especially those with formal education of high school or more, perhaps the imperfec­ tions argument does not have nearly the plausibility that it does in the case of disadvantaged youth. Ways to obtain the job skills that might be useful to adult workers are at present widely available in the private sector of the economy.

Have federal manpower training programs actually worked in practice to raise long-run earning capacity? There is very voluminous and, except for the Job Corps program, mostly discouraging evaluative literature on most of the training programs, especially for the venerable Manpower Development and Training Act (MDTA) institutional program.32/ Critics of MDTA assert that they are hard put to find any solid evidence that the institutional training carried out under the MDTA has had any significant effect on the post-program earnings capacity of its participants.

One possible exception is in connection with the Job Corps. The sparse empirical evidence available indicates that the Job Corps has had benefi­ cial effects on the earning capacity of disadvantaged youths who have gone through the program. Although the magnitude of this effect may be diffi­ cult to assess with existing data, it does appear to be greater than that provided by any of the other manpower programs serving disadvantaged youth.

Job Creation Programs. Among existing federal job creation programs it is important to distinguish the Neighborhood Youth Corps (NYC) program from

-52- the others. The NYC program is aimed exclusively at disadvantaged school­ age youth and its objectives are primarily prevention of drop-outs and juvenile crime and other antisocial behavior. The NYC summer program pro­ vides about 500,000 summer jobs for mainly inner-city disadvantaged teen­ agers. Its primary objective is to reach unemployed youngsters who might otherwise get into trouble during the summer. The other·part of the NYC program is primarily aimed at preventing drop-outs. Its role is to pro­ vide youths with jobs that easily dovetail with school attendance so that they do not have to drop out of school in order to help with family support.

The other job-creation programs are aimed at adults, with the objective of reducing unemployment primarily among the long-term unemployed poor. The Public Employment Program (PEP) has the additional objective of providing for local public services that would have gone underfunded at the local level. The small Operation Mainstream program is targeted specifically at creating rather low-skill public jobs for older long-term unemployed workers. The rationale for these programs appears to be based on two assumptions. One is that long-term involuntary unemployment is a significant cause of poverty. The other is that these types of hard-to-employ workers can be helped more efficiently with this approach than they can with alternative policy approaches to reducing unemployment--monetary and fiscal policy, migration assistance, et cetera.

Have job creation programs worked to achieve their objectives? The most extensively evaluated program in this group has been the NYC. Most of the careful studies 33/ are discouraging with regard to achieving the objective of preventing drop-outs. Usually NYC enrollees end up with the same drop­ out rates as a similar comparison group of nonenrollees. However, the NYC program does get high marks in terms of achieving the objective of placing its target group in jobs.

It may appear at first blush a simple matter for a public job creation pro­ gram to result in the placement of a specified target group in the jobs actually created. Although this has turned out to be the case for NYC (and also for the very small Operation Mainstream program), it appears not to have been the case for the PEP.

What appears to have happened in practice is that local governments utilize part of the PEP funds to ease their own tax burdens. In other words, critics of PEP argue that some unknown (but possibly very large) percentage of the 150,000 persons employed under the program were used to fill posts that would have been funded out of local borrowing or taxes in the absence of federal funds. Also, some studies point out that the characteristics of persons actually employed are not those of the disadvantaged working poor population. For example, fully 78 percent were high school graduates or higher, including many old, retired military officers who were employed under a veteran preference clause that was intended to apply to Vietnam veterans only.34/

-53- Some Possible Reforms. It is relatively easy to criticize existing man­ power programs. But it may be more difficult to be positive and suggest better approaches to the social problems that manpower programs have wrestled with. In the last chapter some possible ways of reforming the manpower ap­ proach to the AFDC problem were suggested. It was suggested essentially that the manpower approach is not useful for the social problem at hand and that the programs for two other groups, disadvantaged youth and the adult poor, may have a role, but in a greatly revised form.

Consider first disadvantaged youth. Debaters who wish to suggest changes may argue as follows: Manpower training programs like the Job Corps and the on-the-job training programs can play a useful role in helping this group avoid a life of dead-end jobs and low income. But to do so existing federal programs should be integrated with existing state and local poli­ cies and programs relating to disadvantaged youth--rehabilitation of juve­ nile offenders, drop-out prevention, career counseling, et cetera. In fact, it may be suggested that a wise strategy would be to drop the term "man­ power" al together and call the overall program area dealing with disadvan­ taged youth "Career Development Assistance." It can be argued that the starting point should be the early years of high school (and the juvenile courts) and that the program should make available to the disadvantaged youngster a veritable avalanche of options and treatments--Job Corps, on­ the-job training, two-year college, four-year college, migration assistance, marriage counseling, psychotherapy, et cetera.

Consider next the adult poor. There are many who argue for using the job­ creation type of manpower approach for this group. Bills have been intro­ duced in Congress that would greatly expand the existing small-scale pro­ gram in order to fight poverty. Although the evidence indicates that un­ employment is no longer a significant cause of poverty, one might still argue that the older working poor, if not actually unemployed, are under­ employed and that the government should provide job�that pay a higher wage.35/ On the other hand, the argument made against this approach is that there are much less costly ways of augmenting the income of the working poor. By less costly is meant that for each dollar of additional income actually received by poor people, the taxpayer has less to pay. Proponents of a negative income tax argue that it would have obvious ad­ ministrative advantages over public job-creation programs for augmenting the incomes of the working poor. In addition, the point is made that many of the "created" jobs would turn out in practice to be "make-work" jobs with very little socially useful output involved. In transferring a poor worker from his private sector job, would society be exchanging his posi­ tive (albeit small) social product in the private sector for his negligible or zero product in the public sector? This would constitute a real (al­ though not highly visible) cost of the job-creation approach. Finally,

-54- there is the problem of the morale and productivity of regular public­ sector workers. Assuming that they obtained their jobs on the basis of merit, how will they react to the preferential treatment that would be accorded the less qualified poor workers who are brought on board?

Perhaps a realistic role for public employment programs in relation to poverty is in the form of a small-scale program aimed at reaching those few whose poverty status is actually caused by long-term involuntary un­ employment (see pp. 14-16 and Note 6). However, in order to ensure that even a small-scale program reaches the long-term unemployed poor in prac­ tice, it may be argued that major changes in the administrative methods used to implement public job-creation programs will be required.

One suggested administrative innovation is to stop using simple measures of unemployment incidence as a basis for geographical allocation of funds and individual eligibility. Under the PEP allocation rule, the amount a state gets is directly related to the number of unemployed individuals in the state regardless of their distribution, either by the reasons for be­ coming unemployed or by duration of unemployment. Although this simple allocation might have been sufficient in the 1930s when unemployment and poverty were largely overlapping, it may lead to inequitable allocations by area in the current period. Many relatively prosperous high-growth areas of the country (for example, California) have had above-average un­ employment rates for the past fifteen years. This phenomenon is not neces­ sarily evidence of poverty. Indeed, it results from the migration of large numbers of nonpoor people seeking to better their economic opportunities. In-migrants always experience above-average unemployment after they arrive in a new area. Thus critics of the present system argue that, in order to ensure that funds will actua1ly be targeted on the structurally unemployed poor, the legislative rules for area allocation and eligibility should utilize information on duration of unemployment, age, wage in last job, reason for becoming unemployed, et cetera.

It has been suggested also that a well-targeted job-creation program would create job slots realistically in line with the abilities of very low-pro­ ductivity older workers. If legislation mandates that fairly high-quality jobs be created (along with moderately high salaries), of course this will greatly reduce the probability of the poor actually being hired for them. Also, it might create serious inequities between the working poor in the private sector and those structurally unemployed poor who end up in the public jobs. In this regard it might be advisable to study the success of the very small ($30 million) Operation Mainstream program in placing aged unemployed individuals in low-skill public jobs.

Community Action Agencies and Community Action Programs

In 1964 the Economic Opportunity Act (EOA) was enacted. The collection of antipoverty programs that were initiated under this legislation became

-SS- known collectively as the "War on Poverty." Many of the programs discussed above, Job Corps, Head Start, et cetera, were initiated by the Office of Economic Opportunity (OEO) and were subsequently transferred to cabinet offices--Department of Labor (Job Corps), Department of Health,Education and Welfare (Head Start), et cetera. However, the aspect of EOA that made it unique (and extremely controversial) was not so much its education, training, health, or regional development programs. Rather, it was the creation of a completely new way of administering these federal programs at the local level through the Community Action Agency (CAA). The CAA membership had to be composed, to some extent, of the poor people living in the community being served by the various programs. The other unique feature of the CAA concept was that it was not to be controlled in any way by elected officials of state and local governments.

As initially conceived, CAAs were to receive federal funds in a very dis­ cretionary way--with the broad mandate to develop a concerted "attack" on poverty in local communities. The particular details of the "attack" were to be left to the local CAA administrators to determine. They were to develop their own Community Action Programs (CAP). However, shortly after OEO went into operation, it was decided to develop "national emphasis" programs (for example, Head Start, Job Corps). For these programs, the local CAAs were to have no discretion as to the amounts spent on them, although they did, in some cases, have administrative authority to decide which type of local operating organization would run the program (for example, Head Start centers).

As time passed, more and more of the national emphasis programs were them­ selves taken completely out of the control of the OEO program administrators in Washington. The amounts appropriated by Congress for OEO to finance the local Community Action Programs around the country have also plummeted drastically in the last few years. At the present time, the Nixon adminis­ tration is proposing to abolish OEO.

This experiment with a radically new form of administering federal social programs at the local level has generated extreme controversy over the years. However, public debates have been dominated by highly partisan groups--local elected officials versus the individuals who have committed themselves to administering CAAs. Thus the question remains: Is the CAP/ CAA approach to the local delivery of federal antipoverty programs more efficient than the more traditional approaches?

-56- A MINIMUM ANNUAL INCOME

The Proposition

The first debate proposition to be discussed is "that the federal govern­ ment should guarantee a minimum annual income for each family unit." In our analysis of this resolution we will define the relevant terms and dis­ cuss the case for and against a guaranteed minimum annual income. This chapter relates to the four principal terms in the resolution: "federal government," "guarantee," "minimum annual income," and "family unit."

Why the Federal Government?

Among the issues presented by this debate topic is whether the states and localities rather than the federal government should undertake a given type of program. Thus, the affirmative team must be prepared to explain why federal action is preferable to state or local solutions. If the affirmative concedes that state and local governments are primarily re­ sponsible for providing a minimum annual income, then the affirmative should be prepared to argue that state and local efforts are inherently inadequate. Of course, the debate will involve many areas such as job training and other antipoverty programs for which the federal government has already assumed responsibility. It is important to note that the de­ bate proposition asserts that the federal government should become the sole guarantor of a minimum annual income. Therefore, the resolution as­ serts a presumption that the federal government has a responsibility in this general area. Nonetheless, at the plan level, when the affirmative advocates a guaranteed minimum annual income to all family units, it must take into account that as yet such a guarantee is not a federal function.

Prior to the New Deal, the whole area of spcial welfare was thought to be exclusively a state and local responsibility. Local and state relief agencies in the United States were apparently unable to cope with the prob­ lems created by the depression in the 1930s. During the New Deal era, the nation witnessed a massive and unparalleled effort by the federal govern­ ment in the area of welfare, an area previously reserved to the states. Federal aid for public assistance originated in 1935 in the form of federal matching grants-in-aid based on state and local expenditures for such as­ sistance. Authority for these public assistance grants was included in the Social Security Act of 1935. But federal action in this area did not eliminate the responsibility of lesser governmental units. The program was keyed to state and local cooperation and participation. Thus starting in the 1930s the federal government has tended more and more toward the assumption of at least partial responsibility for public assistance pro­ grams. However, all of these joint federal and state programs attempt to

-57- aid categories of the poor, which may or may not help those whose circum­ stances or health permit them to obtain gainful employment.36/ Thus it is not clear that existing programs provide a guaranteed income for "all" citizens. For instance, although the Family Assistance Plan proposed by the Nixon administration would have provided benefits to more than double the number of individuals now receiving welfare, 37/ it may be said that the federal government has not assumed a general and undivided responsi­ bility for providing a minimal standard of living for the poor. Present programs, most of which are conducted with the states, are directed toward specific groups and needs; consequently, it may be argued that they do not encompass the whole poverty problem.

The poor who do not meet the criteria for any of the categorical programs receive assistance, if any, from state or local general assistance programs. General assistance benefits and eligibility vary not only from jurisdiction to jurisdiction but within jurisdictions, depending on the availability of funds and the attitude of the controlling body at the time (for example, city councils and county commissioners). Thus the only programs that are general in nature are financed and controlled entirely by the states or their subdivisions. Even in the joint federal and state categorical assis­ tance programs, the scope of state and local responsibility is significant. The decision to operate a program lies with the states--and, to a degree, so does the determination of those eligible for benefits, how much can be granted, and under what conditions.38/ Thus, it may be argued, there are structural barriers under the present system to any nationwide public as­ sistance policy. State and local governments continue to direct and in many instances finance public welfare. Federal programs are primarily grants-in-aid to assist the states, which administer the disbursement of benefits. Existing federal programs recognize--implicitly, at least--that general relief for individuals is essentially a local problem.

But the wisdom of state and local control of general income maintenance has not gone unchallenged. Some observers contend that many of the poor do not receive any assistance and that this is due to state eligibility requirements. Thus, it is said that one of the reasons why public assis­ tance under federal programs fails to reach many in need is strict inter­ pretation of eligibility at the state level. And it is argued that federal standards of eligibility and benefit payments are necessary to remove state­ to-state inequities that characterize the present system. The range of average annual AFDC payments for a four-person family--from $3,730 in New York to $670 in Mississippi--is far greater than the disparity in prevailing income and living standards between the two areas.39/ Differences in ad­ ministrative standard!- and practices are equally great. Should aid to a child vary so much from one state to another? Such variations may reflect a state's financial inability to provide more adequately. Can they be corrected without establishing a federally financed and federally deter­ mined income floor?

-58- It may not be enough for the affirmative to show that the states in the past have spent an inadequate amount. What is adequate? The affirmative should be prepared to argue that the states cannot or should not finance and direct future programs of income maintenance for a variety of reasons. There are a number of ways in which the affirmative can approach that job.

The first resort of any affirmative team can be the traditional argument that the states are simply incapable of financing the affirmative proposal. During the early 1960s several states experienced real financial crisis and appeared to have only narrowly escaped what in business or industry would have been called "insolvency."40/ In other words, the states have had "the most trying experience in finding tax revenues."41/

On the other hand, there are some recent trends that indicate that state revenues are improving and, indeed, the states may be in better financial shape than the federal government. Representative John B. Anderson (R-Ill.) pointed out in December 1972: "Now we find the federal budget facing an inflationary $10 to $15 billion surplus this fiscal year. If this trend continues, it could reach $24 billion by 1975. "42/ Some examples of anti­ cipated state surpluses are: Mississippi, $80 million; Georgia, $50 mil­ lion; California, $850 million; and Michigan, $220 million.43/ At the start of 1973 governors in thirty-nine states pledged no increase in taxes and only eight governors say they may have to raise taxes. But even if states do increase revenues, there are many other projects clamoring for state revenues which are often more attractive to state legislators than the kind of public welfare involved in a guaranteed annual income.

Many states argue that their tax rates are at the highest possible levels and there is considerable pressure for tax relief now that state finances have improved. On the other hand, there are untapped tax revenues and no affirmative could argue that the states cannot do the job without taking these into account. In 1967 a number of states had untapped resources: ten states had no general sales tax, though all had selective sales taxes, including collection of taxes on motor fuels, alcoholic beverages, tobacco products, insurance, public utilities, pari-mutuels, and amusements; four­ teen states had no individual income tax; six states had no state property tax; and twenty-nine states had no severance tax.44/ Whether any of these untapped resources should be used is a question that demands further exam­ ination by debaters of this year's topic. In some states, use of some of these sources might not make good economic sense. The severance tax, for example, is a tax imposed on removal from land or water of natural products, such as oil, gas, other minerals, timber, and fish.45/ Would use of the severance tax undermine incentives for mineral exploitation? The arguments about state fiscal ability are as old as the first attempts to involve the federal government in aiding social welfare. In terms of the current debate topic, the affirmative's position may be reinforced by the fact that the federal government already pays more than half of all

-59- the financing of public assistance programs.46/ Such statistics must be approached with care, however. Even when there is federal financing, the states generally remain in.substantial control of most programs. Furthermore, federal outlays are confined to the federal public assistance program which is only one of the income maintenance pro­ grams directly aimed at the poor. In terms of all public welfare, in 1970 the federal government contributed $10.4 billion, while the states and localities contributed $19 .9 billion (states, $13.2 billion; localities, $6.7 billion) .47/ Thus, the percentage contributed by the federal govern­ ment under the"""'i)ublic assistance program does not reflect the total welfare burden of the states and localities. Indeed, the question of state ability is an issue that is not easily resolved. Both affirmative and negative teams should be prepared for it. It may be possible, of course, for the affirmative to avoid the issue of state financial-ability. The affirmative may argue instead that the states and their subsidiary localities are disabled by some other factor. It is often argued that many states fear that increased taxes will hamper their efforts to attract new industry and revitalize their economies. This prob­ lem should be considered in the light of the disparity between the various parts of the country and the relative abilities of different regions to foot a large bill in financing a guaranteed annual income. Per capita income is much lower in some parts of the country than others--and the disparity in the relative total tax bases may be even greater, because taxable industry, commerce, and finance are not likely to be located where per capita income is low. If the poorer states are forced to increase their taxes in substantial amounts, the net result may even be to discour­ age badly needed new industry from entering those states. Thus the long­ run effect of forced tax increases in the poorer states could be a net decrease in total revenues, rather than the hoped-for increase. In other words, what some states may need more than anything else is a fresh in­ fusion of capital to improve economic conditions and widen the tax base. On the other hand, there are those, including AFL-CIO President George Meany, who contend that the relatively small differences between tax rates in the various states have no significant impact on where industry locates. In testimony before the House Ways and Means Committee, Meany stated: Many states consciously pursue a policy of underfinanc­ ing as part of an industrial development program to attract new industry through low payroll taxes. I doubt whether the small variation in rates between states actually has any significant influence on plant movement but the lower rates effective in some states are frequently among the sales arguments of those states.48/ The affirmative might also argue that the demands of efficient administra­ tion require a federal guarantee of a minimum annual income rather than

-60- state or local action in this area. Between 1960 to 1967, it was estimated that one out of two Americans changed living quarters.49/ With American people moving from state to state, it might be difficult to achieve a work­ able income maintenance system that is not national in scope. It is con­ ceivable that the administrative burden would become almost unbearable if agencies constantly had to register and then strike recipients from their benefit rolls. On the other hand, perhaps this is the way that many wel­ fare programs operate today. In this context, the states' major concern has been to prevent an influx of potential recipients from less generous states. Until recently, many states used residency requirements to stem the flow of such people seeking higher welfare benefits. However, it ap­ pears that the Supreme Court decision of April 22, 1969, to the effect that residency requirements are unconstitutional, has removed the barrier to welfare-induced migration from low to high benefit areas.SO/ In proposing the Family Assistance Plan in August 1969, President Nixon said, after citing differences in welfare payments among the states, "One result of this inequity is to lure thousands more into already over-crowded inner cities as unprepared for city life as they are for city jobs.SI/ On the other hand, a recent study conducted by the Census Bureau casts

-61- and to aid debaters in discussing the question of primary responsibility. If the primary responsibility now rests with the states, the affirmative team, in debating this year's topic, has the burden of demonstrating why they advocate substituting federal for state action.

What Do We Mean by "Guarantee"?

The presence of the word "guarantee" in the resolution affects the affirma­ tive's burden of proof. It is not enough for the affirmative to prove that the federal government should assist the states in maintaining or setting up income-maintenance programs, as it does today. What must be demonstrated in order for the affirmative to meet its burden of proof is that the federal government should "guarantee" or ensure that some minimum income be availa­ ble to all family units. The substantive implications are not always easy to define. Professor James Tobin of Yale University isolates what he con­ siders the fundamental differentiation between a guaranteed income proposal and present categorical income-maintenance plans. He advocates a plan in which the amount of assistance to which each economic unit--an individual or a family--is entitled would be objectively related to its income and family size and composition. The assistance benefit, given the circum­ stances of the family, should be "a matter of right, not of charity. "54/- If Tobin's view of what constitutes a guarantee is accepted, it might -;eem that the affirmative could not tie its proposal in with conditions such as compulsory job training or employment. Instead, a guaranteed income seems to promise every citizen that, no matter what the reason for his unhappy circumstances, he will receive from the government payments keyed to a predetermined schedule.

There are a number of reasons why the proponents of the annual income in­ sist that it be guaranteed, in the sense that Tobin intends when he speaks of grants conditioned only upon family income. One of these would remove administrative discretion which determines that family A gets more assis­ tance this month to buy a teenage girl a new dress and family B more next month to buy a new refrigerator. Another reason is presented by economist Robert Theobald. Theobald is concerned with the potential misuse of power if the government is subsidizing a large number of citizens without a con­ stitutional guarantee. He fears the illegitimate use of political power to undermine fundamental institutions. His solution is to adopt the guar­ anteed annual income as an absolute constitutional right. His specific proposal is : We will need to adopt the concept of an absolute consti­ tutional right to an income. This would guarantee to every citizen of the United States, and to every person who has resided within the United States for five consecutive years, the right to an income from the federal government sufficient to enable him to live with dignity. No government agency,

-62- judicial body, or any other organization whatsoever should have the power to suspend or limit any payments assured by these guarantees.SS/

There may be two very real difficulties with this constitutional plan. The first relates to the size of payments. If the Constitution set up a payment schedule (which would be unusual indeed) and did not allow for a change in such payments, then the guaranteed income proposal could not respond to changes in economic conditions such as inflation. If, on the other hand, the Constitution simply provided for guaranteed income in principle but allowed some authority to make changes in the level of in­ come, it is arguable that the danger of political manipulation would re­ main.

The second problem with a constitutional guarantee relates to the nature of the democratic process in the United States. Social welfare proposals are inherently unpredictable in their effects. Social scientists discuss them prospectively but only experience can demonstrate their worth. Con­ sequently, such proposals have almost invariably been adopted through the legislative process. If they fail to meet their claimed potential, they can be repealed. To freeze such proposals into the Constitution might result in a situation where an unwise policy could take years to abandon. It might also result in increasing inflexibility in the federal budget. With a substantial proportion of revenues committed by the Constitution to be spent on the guaranteed income, the federal government might not be able, in time of need, to shift priorities in a way that would serve the best interests of the nation. Of course, one might question whether Theo­ bald's fears about governmental manipulation are justified.

The thrust of Theobald's advocacy of an absolute constitutional guarantee of a minimum annual income is that a desirable income-maintenance program should be conditioned only upon the level of family income. This raises an interesting question: Does his interpretation, which Tobin shares, mean that no other conditions may be attached to its proposal? Could recipients of the guaranteed income be required to accept offers of employ­ ment? Is a work requirement consistent with the concept of guarantee in the debate proposition? Conditioning income only upon the level of family resources in any given year seems to be justified by the use of the words "minimum annual income." The affirmative is asking for the federal govern­ ment to guarantee a minimum, so in order to determine the size of the pay­ ment necessary to obtain the minimum for any given family, it is necessary to take that family's other income into account. Thus, the condition called for by Tobin and Theobald seems also to be called fbr by the resolu­ tion. Other conditions may be inconsistent with the concept of an absolute financial floor below which no family will be permitted to fall, no matter what the reason for its personal income or resources. If this reasoning is accepted, it appears that the affirmative will have the burden of es­ tablishing the need for or the advantages of the plan that makes financial need the only criterion for assistance.

-63- However, there does seem to be a way in which the affirmative might justi­ fy the inclusion of willingness to work as a requirement for receipt of benefits. This all hangs on the definition of "income." On the one hand, we might define personal income as disposable personal income--what people have left to spend or save after they have paid their taxes.56/ If this definition is accepted, then the previous discussion of the meaning of guaranteeing an income seems valid; that is, an income guarantee precludes the idea of conditioning the benefits upon the rendering of services by the recipient. On the other hand, income can be also looked upon as the product of effort--the result of labor or capital input.57/ Given this definition, the proposition seems to require that the federal government do nothing more than guarantee to all citizens a meaningful opportunity to earn wages sufficient to produce a given minimum income. This could be done in one of two ways: the federal government could condition the receipt of benefits on the applicant's willingness to seek, or accept, employmen� or the government could require that all recipients make them­ selves available for appropriate public service employment. Of course, it must be noted that such a work-centered program would have to take into account the argument that there are many who simply cannot work.

What Do We Mean by a Minimum Annual Income?

The word "minimum" evokes the image of a welfare recipient freed from financial worries by the receipt, according to a regular schedule, of a cash subsidy from the federal government. He would not be paid for his ability to overproduce, as in the farm program, but for his failure to gain sufficient resources. Despite the apparent simplicity of this image, the idea of a minimum annual income raises many problems, both theoretical and practical. For example, does the presence of the word "annual" require that payments be keyed to the current year's income, or does it permit a schedule based on the beneficiary's income record in the preceding year? This section will attempt to deal with such problems. The discussions will include references to certain distinguishing features of the various guaranteed income proposals.

Cash vs. Income-in-Kind. At the outset, it should be noted that most guar­ anteed income proposals are cash income proposals. The debate proposition does not use the term minimuni""annual cash income but rather minimum annual income. Over the past thirty-five years, the United States has developed an intricate and extensive welfare system. The underlying assumption of this system is that special programs are needed to take care of the diver­ gent needs of the poor. Benefits under these various programs take the form of direct cash payments, or benefits in kind (for example, indirect or vendor payments for services, merchandise payments, or subsidies). Thus, there are programs that offer cash assistance or payments and there are programs that provide goods and services (aid-in-kind) to certain groups on the basis of need. Included in the latter group are child care, subsi­ dized housing, medical services, and several forms of food distribution.

-64- Since the debate topic does not specify cash income, presumably the affirma­ tive may choose cash or aid-in-kind or perhaps include both in their pro­ posal. However, because many advocates of guaranteed income proposals are disenchanted with existing aid-in-kind programs, they usually favor cash plans. For example, Tobin characterizes current welfare as a mixture designed to control the use of public assistance by its beneficiaries. Such controls, in his view, are not only imperfectly coordinated but they "reinforce a demoralizing sense of dependence and incompetence" upon their recipients.SS/ The aim of the minimum income programs which Tobin and others propose is to allow the poor to do what they will with the benefits they receive; the benefits would be in cash rather than in kind so that the government could not supervise how the money is spent.

On the other hand, it has also been argued that any effective guaranteed income proposal must be accompanied by a structure of essential services. Tobin, for example, has suggested the necessity for some program to subsi­ dize heavy medical expenses. Such suggestions are obviously concerned with the establishment of supplementary programs dealing with services in kind rather than with a cash income. If the increased provision of such services is necessary to an effective affirmative plan, the debate proposi­ tion does not exclude it. However, a note of caution is necessary. Assum­ ing the affirmative employs a cash income proposal, then the affirmative may derive advantage from these additional provisions of the plan. After all, any benefits derived from universal medical care could be obtained without accepting a guaranteed annual income, even if provisions for medi­ cal care are not part of the affirmative's proposal.

Types of Minimum Income Proposals. A guaranteed income may establish mini­ mums in a number of ways. It might ensure that every family unit will re­ ceive enough of a subsidy to bring its income up to $3,000 a year, or that every family will receive sufficient funds to raise its income to $3,000 for the head of the family and $500 for each dependent. There are also more sophisticated approaches. If the income tax system is used as a basis, the family of four with exemptions plus standard deductions equal to $4,000 might be designated to receive up to $2,000 a year from the gov­ ernment, using a negative tax rate of 50 percent. Professor Milton Fried­ man of the University of Chicago exemplifies the principle involved: If ... a family (of four) had a total pre-tax income of $2,000, it would have a negative taxable income of $1,000. Under a negative income tax, it would be entitled to receive a payment, the amount depending on the tax rate. If the tax rate ...were .. . 14 percent, it would be entitled to re­ ceive $140, leaving it with a post-tax income of $2,140. If the tax rate were 50 percent, the highest rate that seems to me at all feasible... , it would be entitled to receive $500, leaving it with a post-tax income of $2,500.59/

-65- So in Friedman's model--with a 50 percent tax rate--there exists what is in effect a 50 percent tax on all earned income. That is, the family loses a portion of its subsidy equal to only one-half of the money it receives from gainful employment. Thus, for a family of four, Friedman's plan guar­ antees an absolute minimum of $1,500, though self-help can raise the income level without sacrificing all of the subsidy; under this "filling the gap" approach the same family of four is assured of $3,000, though its income cannot exceed that figure so long as it continues to receive governmental aid. There is yet a third approach to the establishment of the guaranteed annual income. President Nixon's Family Assistance Plan would provide direct fed­ eral payments to all needy families with children, whether they are "depen­ dent families" headed by a female or by an unemployed father, or "working poor families" headed by an employed male. Federal payments to families would be determined according to a formula based on $500 for each of the first two family members and $300 each for additional members, a $720 an­ nual earnings exemption and a 50 percent marginal tax on nonexempt earnings. The basic benefit for families with earnings of $750 a year or less would be $1,000 for a family of two, $1,600 for a family of four, and so forth. As family earnings moved above $750, the benefit would be reduced 50 cents for each dollar of nonexempt earnings until benefits reached zero and earn­ ings were carrying the full load of family support. The ''break even" point would be reached at an earning level of $2,720 for a family of two and $3,920 for a family of four. The payment schedule is designed to encourage efforts toward self-sufficiency by seeing to it that recipients would al­ ways be better off by working.

Finally, a fourth approach generally involves providing a certain stipulated sum for each individual or family in any given year regardless of income. Because the guarantee here would be given to all families, not just to poor ones, the cost of such a proposal would be very large unless it were tied to some form of tax reform. In any case, this scheme, which is often re­ ferred to as social dividend taxation, seems to meet the requirements of the resolution as clearly as the other plans suggested above. All four would set a firm minimum--a definite income level. There is nothing sacred about the figures employed for illustrative pur­ poses in the preceding analysis. One could fill the gap between actual income and any desired figure, no matter how high. Friedman's approach could be based on a figure four times as large as the sum of deductions in standard and personal exemptions. The specific figures, then, are not important at this stage; what is important is to understand the principles that underlie the various schemes. As we have seen, all of them in one way or another provide a minimum. The important difference among the schemes is the relation of the minimum to the maximum level. "Filling the gap" establishes a minimum that is, in effect, also a maximum. Fried­ man's plan has both a minimum and a maximum, with a sliding scale of benefits.

-66- The mechanics of the Family Assistance Plan are similar. Although all of these plans meet the proposition's requirement that a minimum be set up, they do so in different ways.

Problem of Periodicity. On its face, the word "annual" appears to be in­ cluded in the resolution for the sake of convenience. It suggests that the affirmative plan should set up its proposed system of guaranteed in­ come so that the minimum is expressed in terms of an amount per year. If this is the correct interpretation, perhaps the affirmative need not worry about the problems associated with a single lump-sum payment once each year. However, such a single payment would not meet what most experts consider a desirable goal for all public welfare--the provision of a set income at regular and convenient intervals. The virtue of regular inter­ vals is that it supposedly protects the poor from their own excesses; if an indigent family received its entire subsidy at one time, it is argued, the family might spend it neither wisely nor well and would not have help when it might be needed most. Then society would once again be confronted with the problem of what to do with a family that lacks the resources to support itself. But payment at regular intervals by no means ends the argument relating to whether the poor will spend money intelligently. One common complaint regarding the controls established within the current welfare system is that parents will spend money intended for children on themselves. We can only raise the issue here, but debates will have to face the issue and attempt to resolve it in debating the proposition.

A number of difficulties are associated with the periodicity of annual income. The difficulty involves the following question: how can annual need be measured? This question is particularly difficult because of the uncertainties involved in predicting the financial state of any family a year in advance. One approach is to lag the allowance payments so that the subsidy a family receives in 1973, for example, would be based on its income record in 1972. This solution has been criticized on a number of different grounds. First, it fails to take into account the fluidity of the poverty situation. One estimate indicates that approximately 30 per­ cent of persons with incomes below $3,000 in one year do not have similarly low incomes the following year.60/ Consequently, a "lagging" approach would aid a substantial number of people when they are no longer in need. There is an equally serious problem in dealing with persons who are at or near the poverty line year in and year out. Christopher Green describes the problem in this way:

It can be argued justifiably that many of the poor are poor year in and year out so that they would receive sub­ stantial allowances each year. But if there is a year's lag in paying allowances, fluctuating incomes would tend to raise the allowances when a family's income rose and to lower allowances when the fami.ly's income fe 11 and the family was in greater need.61/

-67- Green's analysis can be understood better by the use of an example. Assume a "filling the gap" approach which assures an income of $3 ,000 a year to the family in question. If the family had an income of $1,000 in the first year of the program's operation, it would receive a subsidy of $2,000 in the second year. However, in the second year, the family might have a self-help income of $2,000; as a result its overall receipts in the second year would be $4,000. Then, in the third year it would receive government aid of $1,000 (the $3,000 guarantee minus $2,000 of the earned income in the second year). If its earned income the third year was only $1,000, then its total receipts in that year would be $2,000. Thus, under the approach that lags payments, a typical family would have incomes of $1,000, $4,000, and $2,000 in each of three years. It appears questionable whether a proposal which resulted in such wide fluctuations and patent inequities would in reality meet the requirement in the resolution for a guaranteed annual minimum. In any case, such fluctuations do not seem conducive to helping those in poverty--an aim that will generally constitute the heart of the affirmative discussion.

A dismissal of the "lagging" approach either for its lack of topicality or for its lack of utility creates the necessity for the affirmative to esta­ blish an alternative mechanism for disbursing funds. Most advocates of the guaranteed income have urged the adoption of a system keyed to predict­ ing needs in the current year. How will the government know how large any family's supplement should be? There is the possibility of requiring per­ sons who apply for help from the guaranteed income system to file a pre­ liminary estimate for the year. However, the incomes of the poor might be so unpredictable that this might be an unworkable device. Moreover, experience with Medicare indicates a general inability on the part of the poor to understand or use relatively complicated financial procedures.62/ Christopher Green discusses the possibility of meeting the problem of pre­ dicting income by providing the poor with help in filling out the necessary forms, and by using a system similar to the Internal Revenue procedure for determining the amount of income to be withheld from taxes.63/

Green presents a number of other suggestions; like the two just mentioned, they could not be wholly successful either, since none of them meets the fundamental problem--the inherent unpredictability of the fluctuating in­ comes of the poor.64/ One suggested approach is to utilize a system that estimates as close�s possible to prospective income and rectifies the errors of overpayment and underpayment at the end of the year. In the case of overpayment, the recipient would reimburse the government, or an amount equal to overpayment could be withheld from future benefits.

Each Family Unit When the proposition speaks of a guarantee to "each family unit," it employs a term that can create a multitude of problems. In offering several defini­ tions, Black's Law Dictionary states that the term "family" "has no uniform,

-68- definite meaning" and suggests that its legal meaning is often a matter of statutory definition.65/ Webster defines a family as "a social unit consisting of parents andchildren that they rear."66/ The Census Bureau defines a family as two or more people living together who are related by blood, marriage, or adoption.67/ In addition to the wife and children of the head of the family, the Census Bureau definition includes other rela­ tives living in the same house, but excludes grown children and estranged spouses living elsewhere. The Nixon administration Family Assistance Plan excludes single persons and childless couples from its provisions. Green proposes that the family unit, for purposes of a guaranteed income system, be defined as "mother, father, or legal guardians, unmarried children and students under 23 years of age."68/

Does the term "family unit" exclude single or unrelated persons from in­ come supplements? For example, we indicated in Chapter 1 that the 1971 census estimated that there were 5.1 million unrelated individuals who received cash incomes that did not provide a standard of life above poverty. As matters .stand, there does not seem to be an easy definition of "family unit." The proposition does not use the term "all citizens," as in pre­ vious debate propositions. Even an acceptable definition of family unit would not solve all problems. What should be done about a family member who obtains more than half of his support from outside the family? These and other problems can arise and they must be considered when the affirma­ tive frames its plan.

Concluding Comments It now seems clear that the affirmative's basic problem with this topic is threefold. First, the affirmative must justify the adoption of a guaranteed income proposal. Second, it must justify a federal rather than a state guarantee. Finally, it must construct a plan that takes into account the many technical difficulties involved in any general income maintenance pro­ posal.

In this chapter we have attempted to point out some of the implications of the terms of the proposition and to discuss some related issues. Obviously, there are no easy answers to many of these problems.

-69- PUBLIC EMPLOYMENT FOR THE EMPLOYABLE POOR

The Proposition

The second national debate proposition is "that the federal government should provide a program for the employment of all employable United States citizens living in poverty." This chapter will focus on the meaning and implication of the resolution's terms. Many of the issues involving assistance for the employable poor have been discussed in Chap­ ter 3. This chapter discusses three principal terms in the resolution: ( 1) "fed­ eral government," (2) "should provide a program of employment," and (3) "all employable United States citizens living in poverty."

Why the Federal Government? The preceding debate topic raised the issue of whether the states and lo­ calities rather than the federal government should undertake a given type of program. Since the public service employment proposals provide that most of the work would be performed in the states and localities, should those units be primarily responsible for its financing and operation? If so, the affirmative should be prepared to argue that state and local ef­ forts are inherently inadequate. Because we have dealt with this issue in the previous chapter, we will not pursue it further here.

It may be argued that employment of the employable poor should not be a direct responsibility of government at any level but should be left to the private sector. Nonetheless, since the 1930s the federal government has tended more and more toward assumption of responsibility for unemployment. For instance, the Congress enacted the Employment Act of 1946, which enun­ ciated a national objective of "full employment." The act includes the following language, which has served as the basic statement of federal policy over the ensuing years:

...it is the continuing policy and the responsibility of the Federal Government to use all practical means consis­ tent with its needs and obligations and other essential considerations of national policy with the assistance and cooperation of industry, agricultural, labor, and state and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining in a manner calculated to foster and promote

-71- free competitive enterprise and the general welfare, con­ ditions under which there will be afforded useful employ­ ment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maxi­ mum employment, production and purchasing power.69/

As indicated in Chapter 3, a major emphasis of federal programs since World War II has been on manpower development programs designed to make available to the unemployed or the underemployed training and services leading to enhanced employment opportunity. The rationale underlying such programs has been that with marketable skills most workers can find work within the private economy. Despite the emphasis on manpower development and training, a federal role in the more direct creation of employment opportunities did not disappear. Periods of economic recession in the early 1960s and President Johnson's War on Poverty have given rise to fed­ eral programs over this period whose objectives included the promotion and creation of job opportunities. Among significant federal job-creating ef­ forts during this period have been:

Accelerated Public Works. A 1962 act authorized $900 million in federal spending and aid to states and localities for an immediate program to ac­ celerate existing public works projects. Designed by the Kennedy admin­ istration to stimulate lagging employment, the measure was a temporary program.

Appalachian Regional Development Act. First of President Johnson's "Great Society" measures to be enacted by Congress (in 1965), the Appalachian Regional Development Act established a federal-state regional commission to devise regional economic development plans, and authorized a six-year total of $840 million to help the Appalachian region obtain basic public facilities needed to upgrade living standards and to attract industrial expansion providing jobs for workers of the area. Of the more than twenty federally assisted manpower training and support programs now in existence, the great majority are designed to assist the unemployed and the poor to obtain satisfactory employment.70/ Youth Corps, Operation Mainstream, and Public Service Careers provide some public work experience along with train­ ing efforts. The Public Employment Program initiated by the Emergency Em­ ployment Act (EEA) of 1971 represents the most recent public employment effort. The EEA, which provided $1 billion in its first year to state and local governments for hiring unemployed workers and to help meet growing needs for public services, represents a compromise between the proponents of a large-scale public job creation approach to poverty and unemployment and the Nixon administration's opposition to the concept of public employ­ ment to combat poverty. The program provided fewer jobs than its supporters wanted (about 150,000 in all). Thus, EEA lacks a federal commitment to employ all employable poor and is a temporary program. This section has attempted to determine the nature of federal manpower and employment policies as they apply to the poor in order to throw some light

-72- on the question: "why the federal government?"

11 " .••Should Provide a Program for the Employment.�· . Employment Guarantee in the Private Sector. At the outset it should be noted that the proposition does not refer to any specific type of employ­ ment, such as public service. It states only that the federal government provide a program for some form of employment of all employable citizens living in poverty. Does this mean that the affirmative could meet the terms of the proposition with a federal guarantee of employment that uti­ lized the private sector? For instance, under the existing Job Opportuni­ ties in the Business Sector (JOBS) program, the government contracts with employers to cover the cost of employing designated disadvantaged workers. In essence, the government subsidizes employment in the private sector. Initially, an impressive number of workers were hired, almost half of whom were under age twenty-two and who otherwise might have remained unemployed. However, ·the JOBS program has been hampered by the economic situation. As one study points out, private sector programs may be ineffective in a de­ clining economy.71/ Federal subsidies to help the disadvantaged become less attractive to employers when qualified workers are available and seeking employment. But if an affirmative plan relies entirely on the JOBS approach, presumably it must guarantee that all of the employable poor will be employed in such a program.

Public Sector Employment. Most proponents of a federal guarantee to employ the poor emphasize public service employment. The most direct way to em­ ploy the poor,of course, is to put them to work in the public sector. For example, during the depression of the 1930s, the New Deal placed major re­ liance on two programs--public works and work relief--to assist the unem­ ployed. The public works program, designed to meet the need for public facilities, largely relied on private enterprise to construct the facili­ ties. Some observers argue that most present public works construction projects provide relatively few job opportunities for the poor. The most basic reason is that public works construction now relies primarily on skilled labor. Since the poor and the hard core unemployed workers are often unskilled, it appears that these projects offer few benefits to them. On the other hand, work relief emphasizes job creation. Under this type of program, the New Deal used the unemployed on tasks such as repairing streets and public buildings. This employment required few, if any, skills, less advance planning, and in most cases it did not require the use of much equipment. Since planning and equipment costs were small, most of the money spent went directly to the worker.

Current federal efforts to aid the poor do not place much emphasis on mas­ sive job creation or work relief. Current job creation and work relief programs are more selective. If special revenue sharing is adopted, as proposed by the Nixon administration, the states and localities will assume

-73- a larger role in selecting manpower programs to suit their needs.72/ Some observers have opposed the large role which the federal government has assumed, including the job training programs. They would prefer that pri­ vate industry play a mUJCh larger role at all levels. On the other hand, existing federal programs which highly emphasize job training are criti­ cized in terms of job availability. If no jobs are waiting at the end of the road, economist Eli Ginzberg argues, elaborate training amounts to nothing more than a frustrating spinning of the wheels. "As I see the 1960s," states Ginzberg, "we experimented with manpower training without really relating it to jobs, which is the necessary end point in the affair."73/

Supporters of the public employment approach cite the failure of the pri­ vate sector to provide adequate employment for many of the employable poor. Public employment, they argue, can be aimed directly at those groups most in need of help, such as the hard core unemployed and the underemployed. Moreover, they point out that public sector jobs can be filled locally, where these groups can be identified.74/

Proponents of public service employment also cite a backlog of unmet needs in the public sector. In 1966 the Commission on Technology, Automation, and Economic Progress stated that there were 5.3 million public service jobs that could be filled.75/ Other estimates suggest that local govern­ ments could use 3 to 4 million more employees to provide basic services.76/ Proponents promise to meet vital public service needs on the broadest scale while helping the poor. Of course, the affirmative has the problem of arguing that the two goals are compatible. Obviously, lower skilled workers and less educated workers are over-represented among the unemployed while many public sector needs are concentrated in the more skilled categories. Preliminary experience with the Emergency Employment Act indicates that when local officials are given free rein to fill the jobs they consider most vital, they may hire the most qualified from the unemployed but not necessarily those living in poverty by-passing over many poor or disad­ vantaged workers.77 I As indicated in Chapter 3 the "typical" person hired under the Emergency Employment Act is a white high school graduate between twenty-two and forty-four years old; fully 78 percent are high school grad­ uates or higher.

Thus in framing a public employment plan, the affirmative must establish firm, sensible guidelines if it wishes to meet vital public sector needs and actually end up helping the poor with employment. The Emergency Em­ ployment Act, as pointed out in Chapter 3, is an effort to ease unemploy­ rnerit. The act established the incidence of unemployment as a basis for geographical allocation of funds and individual eligibility. This type of formula distributes funds among many relatively prosperous high growth areas of the country such as California, which has had above-average unem­ ployment rates. The reason for this may have absolutely nothing to do with poverty. Rather, it may be due to the migration of large numbers of people seeking to better their economic opportunities. In-migrants always experience

-74- above-average unemployment after they arrive in a new area but they cannot be classified as poor. Thus, experts point out that in order to ensure that the funds will actually be targeted to employ the poor, the rules for area allocation and eligibility must utilize information on duration of unemployment, age, wage in last job, reason for low income, and the like. Another key requirement of a well-targeted job creation program is that the type of jobs created be realistically in line with the ability of poorer workers. If the program establishes fairly high-quality jobs, this may greatly reduce employment of the poor because they lack the skills to per­ form the jobs. On the other hand, if the quality of job creation is set at a low level, how can the program avoid "make-work" or leaf-raking jobs? Ideally, the affirmative would be able to show that such jobs are socially necessary and contribute to the occupational development and upward mobility of the poor. If the affirmative's program would create "make-work" jobs with very little socially useful output involved, it may make little sense to transfer a poor worker from his private sector job where society would be exchanging his positive (if small) social product in the private sector for his smaller or zero product in the public sector. If the working poor need more money income, perhaps the most realistic policy is guaranteed annual income that simply places more money at their command.

" ... All Employable United States Citizens Living in Poverty... "

Who Is Employable? The resolution calls for the federal government to em­ ploy all the "employable" poor. Thus it recognizes that some of the poor are not employable. Senator Ribicoff has indicated that the 13 million people living on welfare include children (55 percent), the aged (15 per­ cent), and the blind and disabled (9 percent).78 / Thus, it appears that fully 70 percent of the welfare population could not be expected to per­ form much work. Who are the employable poor? The President's 1970 Man­ power Report defines "disadvantaged persons" as persons "who are poor, not having suitable employment, and either (1) a high school dropout, (2) a member of a minority, (3) under 22 years of age, (4) 45 years of age or older, or (5) handicapped." The House Committee on Ways and Means suggests a definition of the employable poor that would exclude a person... if he were unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or has lasted, or is expected to last, for not less than 12 months. A child under age 18 who i� not engaged in any substantial gainful activity would be con­ sidered disabled... if he suffers any medically determin­ able physical and mental impairment of compatible severity. An individual (other than a child under age 18) would be found disabled if his impairments are so severe that he is not only unable to do his previous work, but cannot

-75- considering his age, education, or work experience, engage in any other kind of substantial gainful work which exists in the national economy.... 79/

The debate proposition does not state that the individual must seek employ­ ment but rather that the federal government should provide "a program" for employment. Thus the objective seems to be to make jobs available to the willing and employable. Accordingly, it may be argued that the affirmative plan must provide the opportunity for the poor to work, but not necessarily the incentive to work.

Proponents of public service jobs for the poor stress the necessity of appropriate job training in addition to making jobs available. For instance, there is the case of welfare mothers. About 18 percent of 13 million people on welfare are mothers with children. According to Senator Ribicoff, 14 percent of these mothers work, and 7 percent are in work training; an addi­ tional 35 percent could work if adequate day care facilities were available for their children; 5 percent would have employment potential following extensive social rehabilitation efforts, and the remaining 39 percent have little employment potential because they care for small children at home, have major physical or mental incapacities, or other insurmountable employ­ ment barriers.80/ Some argue, for instance, that a mother with small chil­ dren is not employable because she is needed at home.

"· .. United States Citizens... "

The use of the words "United States citizens" means that only those who are natural-born or naturalized citizens of the United States will be en­ titled to receive benefits under the proposal. Many existing programs now extend benefits to lawfully admitted resident aliens. The reason for the resolution's exclusion of aliens is not clear. Present laws contain pro­ visions which seem to ensure that there will not be a flood of aliens seek­ ing public sector employment.

" ... Living in Poverty."

When the proposition speaks of providing employment to all employable citi­ zens "living in poverty," it employs a term that can create a multitude of problems. The problem of defining poverty has been dealt with extensively in Chapter 1 and we will not go into these issues here. Of course, the affirmative has an obligation to define the poor that it intends to help. Obviously, this can be a complicated task because poverty is a relative term for which there are several definitions and the negative may choose to challenge the affirmative's definition. Initially, time will not permit an elaborate definition by the affirmative even if it wishes to anticipate the negative raising the issue. Perhaps the most expeditious path is to

-76- accept the current poverty-line definition employed by the Bureau of the Census to determine the poverty status of families and unrelated individuals in the United States. Of course, employing this definition by no means ends the argument and the affirmative will be well advised to prepare to defend its definition.

Pro�onents of public service employment to aid the poor frequently cite their unemployment as the cause of their poverty. Public work is often proposed to assist both the poor and the unemployed. Can the affirmative establish a strong link between those living in poverty and the fact that they are unemployed? As we indicated in Chapters 1 and 3, this could prove to be a difficult task. Recent evidence indicates that fully half of all poor heads of families and unrelated individuals are in poverty for reasons that are totally unrelated to unemployment but also are only remotely re­ lated to the labor market in any way--old age, disability, illness, and family disorganization. For the other half, those who worked full time or part time, the inability to obtain anything but low-paying jobs, rather than unemployment, is the major cause of their poverty. Although the an­ nual incidence of unemployment among the working poor is about twice that among the working nonpoor, the fact that work is possible for about half of the poor reduces unemployment as a major cause of poverty in the current U.S. economy.

As we indicated in Chapter 1, unemployment data gathered during a survey week in February 1973 suggests that unemployed males who were both job­ losers and unemployed for twenty-seven weeks or more came to about 125,000. To the extent that poverty is related to unemployment problems, the size of the problem is such that perhaps a very modest public employment pro­ gram--125,000 jobs--could handle it.

On the other hand, the affirmative may be able to establish a strong link between the work performed by the poor and their poverty. Obviously, if all the working poor could receive high enough wages, then a large amount of the poverty problem would be eliminated. Manpower policy in the 1960s held that if the poor could only be readjusted--reeducated, retrained, or relocated--then the labor market would take care of the rest of the prob­ lem. This view implied that the task of government was not job creation but rather to promote an expansionary employment policy with doses of mone­ tary and fiscal policy. Despite these efforts, unemployment among the poor remained high relative to the nonpoor. Thus, some argue that a policy goal of helping the poor to help themselves requires more than education and training, even in the best of times when unemployment is at or below 4 per­ cent. It has been said that job creation is a necessary complement to training and retraining efforts, and that such jobs should include not only "last resort" employment for the aged and temporary income sources for poor youths in school, but also permanent jobs with built-in oppor­ tunities for advancement.81/ According to Representative Henry S. Reuss, the target population for� long-term policy aimed at the reduction of

-77- poverty should consist of those groups in our society who suffer from per­ sistently high rates of unemployment or underemployment during both pros­ perity and recession.82/ It is argued that a permanent program, aimed at this group, can stimulate real economic growth by getting work done that needs to be done, thus increasing the flow of services to the economy. Advocates of this view suggest that this approach would pay for itself: (I) by decreasing such explicit governmental costs as welfare and other services connected with poverty, (2) by reducing the social costs which stem from poverty, (3) by producing vitally needed public goods and ser­ vices that are now lacking.

Opponents of permanent public employment doubt that such a program would be effective for the following reasons: First, experience with the Emer­ gency Employment Act has demonstrated that where public job requirements demand skills, the poor worker often lacks these skills. 1hese positions are more apt to be filled by experienced and skilled nonpoor. Second, the actual public sector jobs secured by the poor are more likely to be make­ work jobs with very little social output involved. Also, the argument is made that putting the poor into artifically created public employment jobs would indicate to many of them that they have no potential for development. Given the uncertain tenure and possibly depressing nature of the job slots that would be created, this approach would create a "second-class" category of jobs to go unfilled or to be filled by complacent and inefficient work­ ers.83/ 1hird, government, at all levels, is already a major source of employment, having in excess of 12 million jobs supported by a heavy tax burden.

-78- A FEDERAL PROGRAM OF COMPREHENSIVE WELFARE

Introduction

The third high school debate proposition is: "Resolved: That the federal government should enact a program of comprehensive welfare for United States citizens living in poverty." This chapter provides a general introduction to the proposition, with a focus on the meaning and implication of its terms. Many questions raised here have been discussed at greater length in earlier chapters. This chapter discusses two of the principal terms in the resolution: "a program of comprehensive welfare" and the "federal government." Two other terms, "United States citizens" and "living in poverty," were discussed suf­ ficiently in earlier chapters and are not dealt with here.

"... A Program of Comprehensive Welfare ..." Webster defines "comprehensive" as 'Healing with all or many of the relevant details; including much; inclusive."1/ At the outset it will be necessary to decide whether existing federal programs meet this test. In Chapter 2, we divided existing welfare programs into two distinct cate­ gories: 1. Programs that offer cash assistance. The major programs in this group are old age, survivors, and disability insurance; public assis­ tance programs, which also fall under the Social Security Act; general assistance, which is financed exclusively by the states and localities for needy persons not covered by the Social Security Act; and pensions for needy veterans. 2. Programs that provide services and goods ("in kind") to the poor on a basis of need. Included in this category are the programs ini­ tiated under "the war on poverty," as well as subsidized housing, several forms of food distribution, and health services. In toto, the current range of welfare benefits extended to the poor pro­ vides for an elaborate welfare system. Is it a "comprehensive" welfare program? It may be argued that the present system satisfies the resolution, which calls for the enactment of a program of comprehensive welfare for the poor. On the other hand, it may be argued that many of the poor are denied comprehensive welfare services for one reason or another, and that in any

-79- event the present system is not exclusively a federal program as called for in the resolution. In general, it may be argued that many poor are denied comprehensive welfare benefits because the existing federal-state­ local mix of programs excludes some poor or they are denied benefits be­ cause state and local governments either establish standards which fail to provide adequate levels of support or uniform standards of administra­ tion. In this section, we deal with the existing mix of programs.

Ten years ago the then Secretary of Health, Education, and Welfare, Abra­ ham Ribicoff, said: "We admit.•. that our welfare systems are in trouble ... there are some cases of second and even third generation families receiving welfare."85/ About eleven years later, President Richard Nixon stated in a message to Congress:

The American welfare system is a national disgrace ..•• Its widely varying, discriminatory benefits continue to force needy families, millions of children, and the needy aged, blind, and disabled into a web of inefficient rules and economic contradictions.86/

These statements point to the general agreement that America's welfare system requires basic reform. At this point, however, agreement ends. There is, however, widespread agreement on what a good welfare system should do. Almost everyone would agree that: (1) it should ensure that no one has to live below a minimum decent standard, (2) it should provide incentive for the able-bodied to work, (3) it should encourage families to stay together, (4) it should be fair and administered fairly, and (5) it should not cost any more than necessary to achieve these benefits. We now turn to some of these criteria and related issues.

It Should Ensure a Decent Minimum Standard. To a large extent, many of the arguments over whether welfare provides a decent level of benefits are related to the issue of state determination of the benefit levels. This question is discussed in the next section. Official sources say there are a large number of American citizens who need assistance if they are to free themselves from poverty and that in many cases that need is not sat­ isfied. What is the reason for this situation? The most important reason, some argue, is that current programs, for the most part, are structured to bene­ fit specific types of poor individuals and if someone in need falls out­ side all of the categories, he usually finds it very difficult to obtain sufficient assistance. Otto Eckstein, professor of economics at Harvard University, reports:

...there are still important gaps in our income maintenance system. Families suffering from chronic unemployment are ineligible for public assistance in many states. There are

-80- only limited provisions against loss of earning power due_ to temporary disability. There are still many individuals and families who receive little help because they... are poor for such reasons as mental illness, alcoholism, and drug addiction.87/ After surveying all such restrictions, Christopher Green concludes that "... there must be millions of poor families who are not eligible for any of these categorical forms of public assistance."88/ One analyst asserts that this situation occurs because supporters of public assistance--except for the general assistance programs--are not convinced that government should provide aid to the able-bodied poor.89/ If all social insurance and assistance is taken into account, it has-been estimated that half of the American poor are left entirely on their own.90/ Directed and cate­ gorical approaches, it is argued, have not responded to their needs.

A number of programs are typical of the directed approach. Current federal manpower programs emphasize training and education, as discussed earlier. Social security, for example, is confined to particular beneficiaries; those who have the major claim to payments are not poor.91/ Veterans bene­ fits, by their very nature, are confined to a select group of the popula­ tion. It may be argued that none of these programs is adequate as a gen­ eral approach to the problem of poverty. However, a combination of the programs might appear capable of handling at least a large part of the problem. After all, social security and veterans benefits encompass many of the old. Social security benefits are heavily weighted in favor of low­ wage earners, and only minimum qualifications are needed for a person to receive benefits.92/ Although present veterans programs may not permit all veterans and their dependents to escape poverty, major steps have been taken to provide for their needs, particularly among older veterans and surviving dependents. In 1969, there were about 22 million married vet­ erans with 33 million children in the United States.93/� These programs help many of the poor and they might be expanded.

The groups not reached by the categorical programs are left for state and local general assistance. In August 1969, estimated state-local outlays for general assistance ran at an annual rate of $480 million, about 8 per­ cent of all public assistance expenditures. This is the primary program for many of the poor who fail to qualify for categorical aid--perhaps half of the poor. Thus the Advisory Commission on Intergovernmental Relations concludes that general assistance is inadequate.94/ Do the states disa­ gree with the estimates of need? Are they unable"°"or unwilling to finance general assistance programs at a higher level? Fifteen of the states leave all financing to local authorities.95/ This situation again raises the question of state and local responsibility for income maintenance. Assum­ ing that state and local programs are inadequate at present, can it be demonstrated that state and local governments are inherently incapable of doing the job? It may not be enough to argue that these programs are now

-81- inadequate in size. The affirmative--to indict them successfully--may be called upon to demonstrate that there are inherent barriers preventing their expansion to an adequate level. Some of the possible arguments are suggested in Chapter 4.

It Should Encourage the Able-bodied to Work. Some proponents of reform contend that the current welfare system encourages many people to avoid work. Much of the controversy involves the AFDC program concerning mothers with dependent children. As indicated in Chapter 2, the 1971 Talmadge Amendment requires each state to register for employment at the Public Employment Service a minimum percentage of certain categories of its adult AFDC recipients. Despite this, it is alleged that the program discourages welfare mothers from taking a job.96/ Each state determines how much in­ come a female-headed family may have and still be in need of assistance. If, before qualifying for AFDC, a woman takes a job which pays a wage at the need level, she cannot get any help. So, the temptation not to accept full-time work and thus qualify for AFDC is strong. Blanche Bernstein of the New School for Social Research in New York City points out that about 25 percent'of the welfare mothers in New York City have at least a high school education, making them eligible for many advertised jobs.97/ Half of these mothers have only one or two children, making day care arrange­ ments feasible. On the other hand, Senator Abraham Ribicoff is not con­ vinced that the employment of welfare mothers can or should be greatly expanded. As indicated in Chapter 5, he cites figures which show that about 40 percent of the welfare mothers have little employment potential because they care for small children at home, have major physical or mental incapacities, or have other work barriers. Some argue that a mother with small children is not employable because she is needed at home.

Of the 13 million individuals receiving welfare benefits in 1971, about 1 percent, or 126,000 people, were able-bodied, unemployed adult males, according to the Department of Health, Education, and Welfare (HEW). About half of these were enrolled in work training programs. The accuracy of the HEW 1 percent able-bodied male figure, however, has been challenged.98/ Richard Snyder, a member of the Pennsylvania Senate's Health and Welfare Committee, cites a policy in Pennsylvania which permits any physical impair­ ment of either parent--however trivial--to qualify the family for federal and state funds under the federal work incentive programs. In the 1967 public welfare amendments to the Social Security Act, Congress fashioned a combination of incentives, services, and penalties designed to move welfare recipients into training and work. But complaints continue that this is not effective. Under the Family Assistance Program proposed by the Nixon administration but not adopted by Congress, most able-bodied heads of households would be required to accept "suitable" opportunities when offered. Are such requirements necessary, practical, and enforceable? Testifying before the House Committee on Ways and Means, AFL-CIO President George Meany noted the poor record of the 1967 amendments and asked:

-82- How can people be compelled to take jobs that aren't avail­ able to them or to take training programs that aren't yet functioning, or put their children in day care centers that haven't been built ... ? [When these things are provided] if we find welfare rolls still expanding ... while at the same time truly productive jobs go begging, we may then wish to consider whether compulsory work requirements would be desirable.99/

The report of the Heineman Commission, issued in November 1969, advanced the following arguments against work requirements:

The only meaningful determination of employability for an individual is the outcome of a freely operating labor market; no timeless definitions of employability can be drawn. Inevitably, any simple test will deal harshly with some of those who cannot find work. Any degree of complexi­ ty involved in the test would introduce elements of subjec­ tive evaluation to be exercised at the lowest administra­ tive level....

In any case, we do not believe that employment tests are needed.... Most of the poor want to work. They want to improve their potential and be trained for better jobs. ...

Unless jobs were abundant and training programs had ade­ quate capacity, any requirement that unemployment recipients of income support accept training would be meaningless. The Commission believes that market incentives and not compulsion should be the basis for accepting both employment and train­ ing.100/

Finally, some argue that a mandatory work requirement would not be enforced. They ask: If a person refuses a job or a training assignment, what will the administrators of the program do?

It Should Encourage Families To Remain Together. It is frequently charged that the current welfare system provides a strong incentive for the break­ up of families. In 1962, Congress attempted to encourage the states to make payments to families with an unemployed male head, but only twenty­ five states have joined the program. Thus, in Minnesota, for example, an unemployed father of three children who stays with his family does not qualify for AFDC benefits. If the father leaves the family, however, the mother and children would receive $220 per month under the rules in effect in 1969. Moreover, it is possible even in the twenty-five states that per­ mit families with fathers to receive AFDC benefits for a father with a low­ paying job to improve the lot of his family by deserting them. Do fathers desert in order to make their families eligible for AFDC? Until recently,

-83- most welfare specialists have suspected that this occurs, but in recent surveys clients did not volunteer such information to their caseworkers. A recent study of New York City's AFDC caseload, undertaken by HEW and the New York State Department of Social Services, found that:

Almost half of the net increase in caseload between 1961-67 (and presumably since then) is due to the deser­ tion of wives by their husbands and 25 percent to un­ married mothers .... [Further] New York City, which has about 4 percent of the country's population, accounted for almost 63 percent of the national net increase in the number of deserted wives on AFDC rolls between 1961 and 1967.101/

Another recent study, Lawrence Podell's "Families on Welfare in New York City," found that "most deserted mothers reported that separations from their husbands occurred following the receipt of assistance rather than before."102/ In addition, it is pointed out that the incidence of female­ headed families is somewhat greater, on the average, in states which allow benefits to families where fathers remain at home than in the twenty-five states which do not allow such benefits. Apparently, as long as welfare benefits are sufficiently high, many poor husbands feel free to desert their families, knowing that essential needs will be met. And wives and unwed mothers may decide they are about as well off on welfare as they are with the low earnings a husband could provide.103/

It Should Be Fair. Should welfare coverage be extended to working poor families? A basic argument for this proposal is that the current exclusion of working poor families creates intolerable work disincentives and in­ equities, and, in many instances, makes it possible for working people to be better off by going on welfare. For example, today a working mother who is not on AFDC and has earnings above a state-defined need standard is not eligible for welfare. But a second working mother, who enrolled in AFDC before getting her job, can under the incentive formula of "30 plus one-tltlrd" end up with higher total income than the non-AFDC working woman. Moreover, if she increases her earnings above the standard, she will still be eligible for benefits up to the cutoff level, so her advantage over the nonwelfare mother would increase.104/ In 1969, cash public assistance benefits were distributed to an average monthly caseload of 8.9 million persons, which was estimated to include only 30 percent of the poor.105/ The Nixon administration's Family Assistance Plan would extend cash benefits to the working poor and it is estimated that this would more than double the number of welfare recipients and bring it to about 11 percent of the total population.106/ These additional recipients, for the most part, would be families headed by working men who work part time at wages too low to keep their families out of poverty.

If low wages appear to be a factor in the poverty of many of the working poor, the solution would seem to be to increase minimum wages. Yet the

-84- role of minimum wages in the war against poverty has been a matter of de­ bate. Administration witnesses have contended that the problem created by excluding the working poor cannot be solved by raising the minimum wage, as some have proposed, because the effect would be to destroy the jobs of those whose economic productivity is low.107/ However, these same spokes­ men contend that extention of welfare coverage to the working poor, com­ bined with an incentive benefit schedule, will accomplish the objective sought by minimum-wage advocates, that is, higher family income, without destroying jobs.

The major arguments against welfare coverage for the working poor are that it would create inequities of its own and would greatly increase public assistance costs. First, critics assert that, under the Family Assistance Plan, the average worker with five children would get no subsidy, but the one with ten children would be classified as "working poor" and would re­ ceive $1,360 per year.108/ Such treatment, critics assert, is unfair to the average family man-.�It is also argued that welfare payments to working fathers would weaken incentive, pride, and family discipline because, in effect, it would be official recognition of failure. Moreover, it is argued that such coverage would tend to lock in the working poor at their present occupations or their present levels of earnings. Such payments could prove to be a strong disincentive to improve their earning capacity.109/ Some opponents of wider coverage ask whether it is unreasonable to expect an able-bodied father to support his family, when jobs are plentiful and when programs such as unemployment compensation, medicaid, and manpower training provide basic protection against the major threats to income security.

Also, the argument that wider coverage will eventually reduce caseloads by eliminating disincentives has been described as a theoretical argHment, unsupported by convincing evidence. In New York City, where the working poor have been covered for some forty years, caseloads have not only in­ creased in recent years, which has been a period of expanding job oppor­ tunities, but have increased at an accelerating rate. But a major reason, according to critics of the system, must be the fact that the "increase in the welfare allowance in recent years ... has been substantially greater than the increase in wages."110/ Thus, opponents of wider coverage hold that the problem with the current system is not so much disincentives re­ sulting from coverage limitations. It is, rather, the fact that welfare benefits in some areas, particularly the industrial centers, are too high in relation to expected wages.

Cost and Cost Control. The welfare cost issue often takes one of two direc­ tions: those who believe the costs are too great or those who argue that more should be spent. In pressing for welfare reform, the Nixon administra­ tion cited welfare costs which rose from $6.2 billion in 1969 to an esti­ mated $9.4 billion in 1971, a 51 percent increase in two years. In the same period, the overall welfare caseload rose from 9.6 million people to 13.5 million.111/ Proponents of the Family Assistance Plan argue that the

-85- cost of the present, open-ended welfare program will continue to spiral upwards and that the proposed refonn "represents an effort to gain control over the ever-increasing costs." On the other hand, some argue that a meaningful income maintenance program that would lift the poor from poverty has been rejected because the cash payments would run into billions.112/ Edward C. Banfield, professor of urban government at Harvard University, concludes that cost detennines that no welfare system can be satisfactory. Banfield states:

A system that provides a high level of support for all who are by some reasonable definition poor will ipso facto offer powerful incentives that will induce a great many people to become (or pretend to become) poor in order to qualify for benefits and will in the process give rise to intolerable side effects.

On the other hand, a system that does not offer incen­ tives powerful enough to produce these effects will ipso facto not provide generously, or even adequately, for the poor. There is no way out of this bind. One must make a choice among evils.113/

Some observers believe that if welfare becomes more abundant, more respect­ able, and more dependable as a source of income, more people will make downward adjustments in their income aspirations and choose welfare, or part welfare, over a demanding job. Moreover, given political pressures, is it realistic to expect the basic benefit to remain unchanged for long?

For example, according to Representative Al Ullman, a member of the House Ways and Means Committee:

Once you start down this road of income supplements, there is only one way costs can go, and that's up .... And the pressure will be to raise the payments constantly. So, we're starting down a road... of mushrooming welfare costs. And we're obviously going to have to raise taxes to do it.114/

Caseworker Costs. Some critics charge that the methods employed to deter­ mine welfare eligibility are too expensive and are also demeaning to the poor. In order to detennine need, the system generally relies on the method of frequent caseworker inquiry and the contention is that this makes the process time-consuming and uncertain, and that many families genuinely in need of assistance do not apply. Moreover, it has been said that under present methods an inordinate amount of caseworker time is "wasted" on eli­ gibility verification, and that this accounts in part for the high turnover rate of caseworkers. Advocates of a simple self-declaration technique in­ sist that it would free caseworkers to apply their professional skills to

-86- social services and also protect recipients from embarrassment. Prelimin­ ary findings in a three-year New Jersey experiment indicate that "it ap­ pears to be quite feasible to require low income families to file monthly income statements containing sufficient information to permit efficient operation of a relatively sophisticated, impersonal transfer program." The findings indicate that, after a brief learning period, it was possible to cut the size of the field staff in half.115/ In the New Jersey experi­ ment, families submitted to quarterly interviews and reported family com­ position and income monthly. Payments were made monthly. Also, with re­ spect to cheating, advocates of self-declaration predict that under such a system cheating would not present a substantial problem. The method works with the positive income tax, they say, and in their view the poor are no less honest than the nonpoor. Opposition to, or skepticism about, the self-declaration method is widely expressed. The major argument of opponents is that this method would offe irresistible temptations to lying and cheating. For example, if a family should claim more than its actual number of eligible recipients or less than its actual income, the facts would be almost impossible to uncover without caseworker investigation. And if it were uncovered and proven, what would be likely to happen? Would administrators send the parents of such a family to jail, or deprive them of support? Opponents of self­ declaration assert that the analogy to the income tax does not hold; that, as a matter of hard fact, the poor are under more economic pressure than the nonpoor and therefore are less susceptible to normal legal restraints. The major argument of the skeptics is that experience with self-declaration is too limited to demonstrate either its feasibility or its effect on case­ loads. The New Jersey experiment is only one experiment, the findings are only preliminary, and independent analysis of those findings has not yet been possible. Also, critics of the proposal say that evidence from New York City welfare centers experimenting with self-declarations is incon­ clusive at best. Dr. Blanche Bernstein cites one study that found accep­ tance rates on welfare applications to be much higher in centers using self-declarations than in centers following usual procedures. She comments that "a higher rate of acceptance does not mean a higher rate of ineligibi­ lity but it is presumptive evidence."116/ Her conclusion is as follows: At best one would have to conclude that the studies which have been undertaken so far have been based on small samples and do not provide a firm base for making a decision which can have far reaching consequences. Further, the studies which have been carried out cannot reflect the impact over time of the use of this looser procedure. For neither defenders and critics of the system have pointed out that the analogy of the welfare client to the taxpayer is faulty. The government does not rely exclusively

-87- on taxpayer's self-declaration. It long since has had, as a check, the W-2 form filled out by employers on all salaries and wages paid and, more recently, reports... on interest and dividend payments. It would appear, therefore, that unless some substi­ tute for the W-2 form for those receiving welfare benefits is devised, the wisdom of eliminating the present type of investigation, except for the aged, the blind and disabled, must be questioned.117/

Why the Federal Government? As is the case with the two previous debate topics, this topic raises the issue of whether the federal government rather than the states or locali­ ties should undertake a given type of program. Thus, the affirmative team must be prepared to explain why federal action is preferable to state and local solutions. If it is argued that the state and local governments-­ those closest to the problem--should control distribution of welfare, the affirmative must be prepared to counter that state and local solutions are inherently inadequate. The contention that the states and localities are mainly responsible for welfare runs as follows: Federal public assistance titles are enabling legislation. The decision to operate a program gener­ ally lies with the states--and, within certain limitations, so does deter­ mination of those eligible for benefits, how much can be granted, and un­ der what conditions. Second, the programs are usually administered by the states and localities under the authority of state laws--with the proviso, however, that administrative responsibility be lodged in a single state agency operating under a federally approved statewide plan. Since the 1930s, the federal government has tended more and more toward assuming responsibility for welfare programs; however, federal action in this area has not eliminated the responsibility of the lesser governmental units. One result of the state-federal mix is a wide disparity in program coverage and administrative practices from state to state. For example, out of fifty­ four jurisdictions, only twenty-five operate the optional AFDC-unemployed parent program. Nevada has no program of aid to the disabled. Many states have adopted the optional earning exemptions for old age assistance, aid to the disabled, and AFDC children under age eighteen, but others have not. Similarly under the WIN program, there are great state-to-state differences in work referral procedures for "appropriate AFDC adults" and in-training program availability. As to the latter, the "special work project provi­ sion in WIN has only been implemented in a meaningful way in one state. "118/ It may not be enough for the affirmative to argue that the states in the past have spent an inadequate amount on welfare. What is adequate? The affirmative should be prepared to argue that the states cannot or should

-88- not finance and direct future programs of welfare for a variety of reasons. There are a number of ways in which the affirmative can approach that job. Several basic strategies are suggested in Chapter 4, so we now turn to the argu­ ments raised against the current mix of federal-state-local welfare programs.

First, it is argued that a federal income floor is necessary to remove the state-to-state inequities that characterize the present system. The range in average AFDC monthly benefits from $66 in New Jersey down to $10 in Mississippi is far greater than the disparity in prevailing income and living standards between the two areas.119/ Differences in administrative standards and practices are equally great. Why should dependent children have better access to aid in one state than in another? Variations may often reflect a state's financial inability to provide more adequately, but it may be argued that this can be changed by establishing a federally financed and federally determined income floor.

Second, it is alleged that the disparities in welfare benefits among states encourage uneconomic migration from states with low benefits to those with more liberal benefits. The Citizens Budget Commission, a New York research group that studies urban finances, contended that areas in the rural South with low levels of welfare payrne�ts have succeeded in shifting about a tenth of the national welfare load to the urban North since 1959. The group found that a rapid and unchecked flow of poor people into the northern core areas had become "a major cause of the urban crisis."120/ The Supreme Court decision on April 22, 1969 to the effect that residency requirements are unconstitutional has removed the barrier to welfare-induced migration from low-to high-benefit areas. In the words of former HEW Secretary Robert H. Finch, "the decision makes uniform standards absolutely essential: You've got to have a national minimum standard when you knock out residency require­ ments."121/ Moreover, a national standard that raises the low end of the welfare benefit spectrum might induce some migration back to areas where living costs are lower and where poor families can be supported at less cost to the taxpayer.

Third, the contention is that the present system generates pressures among states to cut welfare assistance. More than twenty states, for instance, do not accept all the federal welfare funds available for the poor within their borders, thus avoiding having to come up with matching funds.122/ And in terms of the costliest program, AFDC, only half of the states pay relief on the level of need they themselves have determined to be minimal. There is also evidence which suggests that states may employ low benefit levels to reduce the welfare load. For example, the Citizens Budget Com­ mission reports that New Jersey, which pays the second highest AFDC benefits in the nation, experienced a 288 percent increase in the AFDC burden between 1959 and 1968. South Carolina, on the other hand, which ranks forty-eighth in its payments, experienced a 31 percent decrease in its AFDC caseload.123/

Fourth, it is argued that the present welfare system has created an admini­ strative quagmire that is becoming almost impossible to administer. Welfare

-89- administration is becoming virtually outmoded in this country, with 1,152 'separate state and local welfare jurisdictions.124/ In the administrative area, especially, there is an "incomprehensible variety of management phi­ losophies, operating policies and methods, and personnel arrangements." Under such conditions, there are "major management problems which exacer­ bate the skyrocketing costs and add to the growing public concern about welfare."125/ It is argued that the problems of welfare administration can best be solved by adopting a national welfare system. Opponents of a shift to national standards make two points. First, state responsibility is not only traditional to the American federal system, but it is also the best way to ensure that the provision for welfare re­ flects local and, to some extent, regional needs and concerns. Conditions vary greatly from one state or region to another, so that a standard tha� is high enough for one area would be excessive in another, and one that is low enough for a given area would be meaningless in another. Federali­ zation would tend to stifle the local experimentation that is needed if better welfare approaches are to be devised, according to opponents of federal control.126/ Second, the shift to a federally determined and federally financed welfare system would weaken restraints that have served, thus far, to moderate pressures for higher benefits. It is easier, opponents of further federali­ zation assert, for welfare activists and expansionists to influence the President and Congress than it is for them to affect fifty governors and state legislatures.

-90- NOTES TO TEXT

Notes to Chapter 1 l/ See, for example, James R. Storey, Public Income Transfer Programs: The Incidence of Multiple Benefits and the Issues Raised by Their Receipt, a study prepared for the use of the Subcommittee on Fiscal Policy of the Joint Economic Committee, U.S. Congress (Washington, D.C.: U.S. Government Printing Office, April 1972). Y Individuals who are part of intact male-headed families with low in­ comes do not, in most states, qualify for any cash public assistance (see Chapter 2).

� Rose D. Friedman, Poverty: Definition and Perspective (Washington, D.C.: American Enterprise Institute, 1965). jJ Ibid., Table 5, p. 11.

Y For a discussion of these issues, see Jacob Mincer, "Poverty and the Labor Market," The National Bureau of Economic Research Survey of Research into Poverty Labor Markets: Final Report, prepared for the Office of Economic Opportunity, 1972. §.! This figure is arrived at by dividing the total number of poor people who experienced unemployment at all in 1971 (estimated from Table 6 to be about 1 million) by 5 and dividing the result in half. Dividing by 5 assumes that the average duration of unemployment is about 11 weeks. Dividing the result in half is to allow for the usual amount of short-duration unemployment experienced by all workers.

J_/ For a detailed summary of the research findings on this issue, see Proposed Minimum Wage Amendments, Legislative Analysis no. 5, 93rd Congress (Washington, D.C.: American Enterprise Institute, 1973). Although most economists are in agreement, it is not the case that all interested parties (for example, labor unions and civil rights groups) feel that minimum wage laws are undesirable.

§! See, for example, Zvi Grilliches and William Mason, "Education, Income and Ability," Journal of Political Economy, vol. 80, no. 3, part II (May-June 1972).

2f For additional information, see Gary S. Becker, The Economics of Dis­ crimination (Chicago: University of Chicago Press, 1957).

-91- See Dave O'Neill, "The Effect of Discrimination on Earnings: Evidence from Military Test Score Results," Journal of Human Resources, vol. 5, no. 4 (Fall 1970).

Notes to Chapter 2 .!.!f Milton Friedman and Wilbur Cohen, Social Security: Universal or Selective? (Washington: American Enterprise Institute, 1972), p. 25.

'}1j Ibid., pp. 24, 37. � It was explicitly noted at the time that so-called general a.ssistance programs, under which any needy person or family might be given assis­ tance, were to remain the full responsibility of the states and locali­ ties. The idea here was that only the local authorities would be able to judge the merits of these cases sui generis--on a case-by-case basis.

14/ A few jurisdictions (for example, New York, Illinois, and Detroit) have programs of general assistance that provide supplementary cash assistance to families where the father is present and working but earning a very low income. These programs are fully financed, however, by state and local revenues.

1i.l The terms "negative income tax" and "minimum annual income" refer to types of noncategorical assistance programs involving cash transfers.

16/ Until 1961, the father had to be either dead, disabled, or absent from the home (by divorce, desertion, et cetera) in order for the mother and the dependent children to be eligible for benefits under AFDC. In 1961 the federal law was amended to allow states, if they want to, to aid families with children in which the father is present but un­ employed. In order to qualify, the father must either have exhausted his unemployment benefits or otherwise be ineligible to receive unem­ ployment insurance benefits. Only about half of the states have chosen to adopt this extension of AFDC coverage. In states that have adopted it, it is called the AFDC-UP Program.

17/ Welfare Policy and Its Consequences for the Recipient Population: A Study of the AFDC Program, A report prepared by the Bureau of Social Science Research, Inc., submitted to the U.S. Department of Health, Education, and Welfare, Social and Rehabilitation Service, Office of Research, Demonstrations, and Training, Division of Intramural Research (Contract No. 405-WA-OC-67-07), December 1969.

18/ Child care is also subsidized and provided under a variety of federal programs. However, child care (unlike food, shelter, clothing, recrea­ tion, et cetera) is not obviously a direct source of utility or satis­ faction to all individuals. In technical economic terms, child care

-92- (continued) has some of the characteristics of an "intermediate" as well as a "final" good. For some families (especially low-income families), it is very likely that child care will be viewed more as a means of allowing the mother to earn a living than as a source of direct satisfaction to the family. Moreover, in a number of the federal child care programs (for example, Head Start) the probable effect of a program on a child's future life chances is considered the major justification for it. Child care programs are discussed in Chapter 3 in connection with policy for eliminating the causes of poverty. The other types relate to providing free food through the schools-­ surplus commodities, special milk programs, et cetera. This is an over-simplified statement. Since food stamps are in-kind income, they are not perfect substitutes, dollar for dollar, for cash income. This point is discussed more fully in the next section. For a detailed discussion of this topic, see Henry J. Aaron, Why Is Welfare So Hard To Reform? (Washington, D.C.: Brookings Institution, 1973). It is important to note here that none of the reform packages discussed in Congress made any provision for extending cash assistance to unre­ lated individuals and to childless couples. Thus, in effect, even the reform proposals would retain categorical features--presence of chil­ dren would be required in addition to low-income status. Gary Appel, Effects of a Financial Incentive on AFDC Employment: Michigan Experience Between July 1969 and July 1970 (Minneapolis, Minn.: Institute for Interdisciplinary Studies, 1972).

Notes to Chapter 3 See note 7 supra. William Landes, "The Effect of State Fair Employment Legislation on the Economic Position of Non-White Males," unpublished Ph.D. disserta­ tion, Columbia University, 1966. Willie S. Griggs et al., v. Duke Power Company, Supreme Court of the United States, No. 124, October Term, 1970 (ruling on March 8, 1971). James S. Coleman et al., Equality of Educational Opportunity, a publi­ cation of the National Center for Educational Statistics, Department of Health, Education, and Welfare (Washington, D.C.: U.S. Government Printing Office, 1966).

-93- Arthur R. Jensen, "How Much Can We Boost IQ and Scholastic Achievement?" Harvard Educational Review, vol. 39, no. 1 (Winter 1969); and Christopher Jencks, Inequality: A Reassessment of the Effect of Family and Schooling in America (New York, London: Basic Books, 1972).

For a detailed discussion of vouchers, see Financing the Schools, Spe­ cial Analysis, High School Debate Series (Washington, D.C.: American Enterprise Institute, 1972).

Detailed information about the progress of these experiments may be obtained from the Office of Policy, Research, and Evaluation, Office of Economic Opportunity, Washington, D.C. l This section is based on work ,<;lone by Dr. Dave M. 0 'Neill, one of the authors of this analysis. The material will appear in a forthcoming American Enterprise Institute study, Public Claims on U.S. Output: Federal Budget Options in the Last Half of the Seventies.

For detailed surveys of existing studies see: Dave M. O'Neill, MDTA­ Institutional and Job Corps Programs, a forthcoming American Enterprise Institute study (copies available on request); and Ernest Stromsdorfer, Review and Synthesis of Cost/Effectiveness Studies of Vocational and Technical Education (Columbus, Ohio: Eric Clearinghouse on Vocational and Technical Education, The Center for Vocational and Technical Educa­ tion, The Ohio State University, 1972).

See Stromsdorfer, note 32 supra.

See Sar A. Levitan and Robert Taggart, "The Emergency Employment Act: An Interim Assessment," Monthly Labor Review, June 1972; and The Public Employment Program: An Evaluation by the National Urban Coalition (Washington, D.C.: The National Urban Coalition, 1972).

See Harold Sheppard's article in The Political Economy of Public Service Employment, Sheppard, Harrison and Spring, eds. (Lexington, Mass.: Lexington Books, 1972).

Notes to Chapter 4

36/ Christopher Green, Negative Taxes and the Poverty Problem (Washington, D.C.: Brookings Institution, 1967), pp. 35, 38. 37/ The Bill To Revamp the Welfare System (Washington, D.C.: American Enterprise Institute, 1970), p. 29. 38/ Welfare Reform Proposals (Washington, D.C.: American Enterprise Insti­ tute, 1971), p. 6.

-94- 39/ See Table 6, p. 13.

40/ �w York Times, November 25, 1962, p. 52; May 26, 1963, p. 53; and June 23, 1963, p. 49.

41/ Frederick C. Mosher and Orville Pound, The Cost of American Government (New York: Dodd, Mead and Co., 1964), p. 69. 42/ "State Gravy," New Republic, March 9, 1973, pp. 9-10.

43/ "The Fiscal Forecast Is Fine for the States," Business Week, February 17, 1973, p. 68.

44/ Facts and Figures on Government Financing (New York: Tax Foundation, Inc., 1967), pp. 176-77. 45/ Ibid., p. 255.

46/ Federal outlays of public assistance cash benefits were $3.4 billion in 1969, equal to 57 percent of total program outlays of $5.7 billion. These figures do not include the state general assistance programs. In August 1969, estimated state-local outlays for general assistance ran at an annual rate of $480 million. Bill to Revamp the Welfare System, p. 6.

47/ Statistical Abstract of the United States (Washington, D.C.: U.S. Government Printing Office, 1972), p. 411.

George Meany, testimony before the House Committee on Ways and Means, Hearings, Employment Security Amendments, 89th Congress, 2nd session (Washington, D.C.: U.S. Government Printing Office, 1965), p. 832.

49/ New York Times, August 12, 1967, p. 12E.

50/ Shapiro v. Thompson, 394 U.S. 618.

51/ New York Times, August 9, 1969, p. 1

52/ Douglas E. Kneeland, "Welfare Study Minimizes Impact of Migrant Blacks," New York Times, April 29, 1973.

Henry Hazlitt, "Compounding the Welfare Mess," National Review, February 24, 1970, p. 205.

James Tobin and W. Allen Wallis, Welfare Programs: An Economic Ap­ praisal (Washington, D.C.: American Enterprise Institute, 1968), p. 15.

-95- SS/ Robert Theobald, The Guaranteed Income (Garden City, New York: Anchor Books, 1967), Appendix, p. 233. 56/ George Leland Back, Economics (Englewood Cliffs, New Jersey: Prentice­ Hall, 1963), p. 62.

57/ Ibid., p. 483. Tobin and Wallis, Welfare Programs, p. 16. Milton Friedman, Proceedings of the National Symposium on Guaranteed Income (Washington, D.C.: Chamber of Commerce of the United States, 1966), p. 49. Friedman presented this model six years ago and the original figures are used for illustrative purposes. 60/ Council of Economic Advisers, Annual Report of the Council of Economic Advisers (Washington, D.C.: U.S. Government Pr1nt1ng Office, 1967), p. 163. 61/ Green, Negative Taxes, p. 109. 62/ Thomas K. Hitch, "Why a Negative Income Tax Won't Work," Challenge, July-August 1966, p. 15. 63/ Green, Negative Taxes, p. 106. 64/ Ibid., p. 110. 65/ Henry Campbell Black, Black's Law Dictionary, 4th ed. (St. Paul: Minnesota: West Publishing Co., 1951), pp. 727-31. 66/ Webster's New World Dictionary of the American Language, 2nd ed., p. sos. 67/ William Petersen, Population (New York: Macmillan, 1964), p. 232. 68/ Green, Negative Taxes, p. 101.

Notes to Chapter 5 69/ U.S. Congress, Senate, Subcommittee on Employment and Manpower, Labor and Public Welfare Committee, Toward Full Employment Proposals for Comprehensive Employment and Manpower Policy in the United States, 88th Congress, 2nd session, 1964, p. 29. 70/ See generally, U.S. Department of Labor, Manpower Report of the Presi­ dent (Washington, D.C.: U.S. Government Printing Office, March 1970).

-96- 71/ Statement of Sar A. Levitan in U.S. Congress, House, Select Subcommittee on Labor, Committee on Education and Labor, The Employment and Manpower Act of 1972, 92nd Congress, 1st session, March 1972, pp. 147-148.

72/ David Nyhan, "Job Training: It's Not a Growing Business," Boston Globe, May 20, 1973, p. 58,

Statement of Eli Ginzberg, Employment and Manpower Act of 1972, p. 726.

Edward T. Chase, "The Job Finding Machine: How To Crank It Up," in Arthur B. Shostak and William Gamberg, eds., New Perspectives on Poverty (Englewood Cliffs, New Jersey: Prentice-Hall, 1965), pp. 88-94.

National Commission on Technology, Automation, and Economic Progress, Technology and the American Economy, vol. 1 (Washington, D.C., 1966), p. 36.

Abraham Ribicoff, "The Myths of Welfare," Washington Post, January 16, 1972.

Levitan and Taggart, Emergency Employment Act, p. 4.

Ribicoff, ''Myths of Welfaret'

U.S. Congress, House, Committee on Ways and Means, The Social Security Amendments of 1971 Concerning Provisions Relating to Assistance for the Aged, Blind, and Disabled, Opportunities for Family Program, and Family Assistance Program, 92nd Congress, 1st session, May 1971, p. 148.

Ribicoff ,"Myths of Welfare."

See Sar A. Levitan, Programs in Aid of the Poor for the 1970s (Baltimore, Maryland: The Johns Hopkins Press, 1969), p. 57.

Statement of Representative Henry S. Reuss, Employment and Manpower Act of 1972, p. 773.

Statement of Senator Winston L. Prouty, Congressional Digest, March 1971, p. 87.

Notes to Chapter 6

84/ Webster's New World Dictionary, Second college edition (New York: World Publishing Co., 1968), p. 292. 85/ Department of Health, Education, and Welfare, press release, October 24, 1961.

-97- 86/ Office of the White House Press Secretary, press release, March 27, 1972. Otto Eckstein, Studies in Income Maintenance (Washington, D.C.: The Brookings Institution, 1967), p. 2.

88/ Green, Negative Taxes, p. 37. Lewis Meriam, Relief and Social Security (Washington, D.C.: The Brookings Institution, 1946), pp. 7-9. Robert J. Lampman, "Approaches to the Reduction of Poverty," American Economic Review, May 1965, p. 526.

Ibid. Sar A. Levitan, The Great Society's Poor Law (Baltimore, Maryland: The J.ohns Hopkins Press, 1969) , p. 5.

Ibid., p. 6.

1966 State Legislative Program of the Advisory Committee on Intergov­ ernmental Relations (Washington, D.C., October 1965), p. 443. Ibid.

Executive Office of the President, Workfare: Reforming the Welfare System (Washington, D.C.: U.S. Government Printing Office, 1971), p. 4. 97/ Richard A. Snyder, "Welfare: Separating Myth and Fact," Wall Street Journal, January 27, 1972.

98/ Ibid.

99/ George Meany, testimony before the House Committee on Ways and Means, Hearings on Social Security and Welfare Proposals, 91st Congress, 1st session (Washington, D.C.: U.S. Government Printing Office, 1969), pp. 1791 -1 792 .

100/ Report of the President's Commission on Income Maintenance Programs (Washington, D.C.: U.S. Government Printing Office, 1969), pp. 59-60. 101/ Blanche Bernstein, "Welfare in New York City," City Almanac (Center for New York City Affairs, New School for Social Research, February 1970), p. 7.

102/ Hearings on Social Security, see note 99 supra.

-98- 103/ Bernstein, Welfare in New York City, p. 8.

104/ John G. Veneman, Undersecretary of HEW, statement before the Senate Select Committee on Nutrition and Human Needs, March 6, 1970.

105/ Bill To Revamp the Welfare System, p. 6.

106/ Ibid. , p. 29.

107/ See generally, John M. Peterson and Charles T. Stewart, Jr., Employ­ ment Effects of Minimum Wage Rates (Washington, D.C.: American Enterprise Institute, 1969).

108/ Chamber of Commerce of the United States, press release, March 1970.

109/ Ibid.

110/ Bernstein, Welfare in New York City, p. 7.

111/ White House, press release, March 27, 1972.

112/ Levitan, Great Society's Poor Law, p. 11.

113/ Edward C. Banfield, "Welfare Reform: Choose Your Evil," Wall Street Journal, August 14, 1969.

Interview on "What's the Issue" over the Mutual Broadcasting System, March 19, 1970.

115/ Office of Economic Opportunity, statement, Hearings on Social Security and Welfare Proposals, p. 306, see note 99 supra.

116/ Bernstein, Welfare in New York City, p. 9.

117 I Ibid. , p. 10.

118/ U.S. Congress, House Report No. 91-904, Report of the Committee on Ways and Means on H.R. 16311 (Family Assistance Act of 1970), 9lst Congress, 2nd session, p. 33.

Executive Office of the President, Workfare, p. 9.

Peter Kihess, "South Fostering Relief Rise Here," New York Times, October 14, 1968.

"As I See It," Forbes, June 15, 1969, p. 78. Francis X. Clines, "Welfare: A Patchwork of Federal and State Programs," New York Times, December 31, 1970.

-99- 123/ "Citizens Groups Urge Welfare Assistance Be Federally Directed," Wall Street Journal, October 14, 1968.

124/ White House, press release, March 27, 1972, p. 5,

125/ Ibid.

126/ "National Standards and Welfare," Wall Street Journal, October 9, 1968.

-100- BIBLIOGRAPHY

I. Poverty in General American Jewish Conunittee. The Tyranny of Poverty: A Selected Biblio­ graphy of Books, Pamphlets, Articles, and Memoranda on .... New York: American Jewish Committee, Institute of Human Relations, 1966. American Public Welfare Association. Poverty--Selected Reading Refer­ ences. Chicago, 1964. Bachrach, Peter. Power and Poverty. New York: Oxford University Press, 1970. Baldwin, S. Poverty and Politics. Chapel Hill: University of North Carolina Press, 1968. Ball, Robert M. "Is Poverty Necessary?" Social Security Bulletin, vol. 23 (August 1965), pp. 18-24. Bell, Carolyn S. The Economics of the Ghetto. Indianapolis, Indiana: Pegasus, 1970. Binstock, Robert. The Politics of the Powerless. Cambridge, Massa­ chusetts: Winthrop Publishers, 1971. Bloomberg, Warner. Urban Poverty. Beverly Hills, California: Sage Publishers, 1970. Caplovitz, David. The Poor Pay More. New York: Free Press, 1963. Chamber of Commerce of the United States. Task Force on Economic Growth and Opportunity. The Concept of Poverty. Washington: Chamber of Commerce of the United States, 1965. Chamberlin, William Henry. "The Cure for Poverty: Individual Effort." Freeman, vol. 16 (February 1966), pp. 3-9. Clark, Henry. The Christian Case Against Poverty. New York: Association Press, 1965. Coles, Robert. Migrants, Sharecroppers, Mountaineers. Boston, Massa- chusetts: Little, Brown, 1971.

-101- The South Goes North. Boston, Massachusetts: Little, Brown, 1971.

Still Hungry in America. Boston, Massachusetts: Little, Brown, 1969.

Coll, Blanche D. "Deprivation in Childhood: Its Relation to the' Cycle of Poverty." Welfare in Review, vol. 3 (March 1965), pp. 1-10.

Cosby, Arthur G. "An Experimental Approach to the Study of Poverty." Sociology and Science Review, vol. 53 (January 1969), pp. 163-70.

Downs, Anthony. Who Are the Urban Poor? New York: Committee for Economic Development, 1970.

Dubeg, Sumati, and Grant, Morris. "Powerlessness Among Disadvantaged Blacks." Social Observer, vol. 51 (May 1970), pp. 285-90.

Economic Research Service. The People Left Behind--Four Years Later. A Report on the Effectiveness of Implementation of the Recommendations of the Presidential Commission on Rural Poverty. Washington, D. C.: Economic Research Service, 1971. 66 pages. "The Economics of Poverty." American Economic Review, vol. 55 (May 1965), pp. 510-48. Contents: "Investing in Poor People: An Economist's View," by Theodore W. Schultz. "Approaches to the Reduction of Poverty," by Robert J. Lampman. "Poverty: The Special Case of the Negro," by Alan Batchelder.

Farley, Reynolds. "The Changing Distribution of Negroes within Metro­ politan Areas." American Journal of Sociology, vol. 75 (January 1970) , pp. 512-29.

Friedman, Milton. "Poverty: A Direct Approach." Context, A University of Chicago Magazine, vol. 2 (Winter 1964), pp. 1-3.

Friedman, Rose D. Poverty: Definition and Perspective. Washington: American Enterprise Institute for Public Policy Research, 1965.

Galbraith, John Kenneth. The Affluent Society. Boston: Houghton Mifflin Company, 1958.

Gastil, Raymond D. "Social Indicators and the Quality of Life." Public Administration Review, vol. 30 (November 1970), pp. 596-601.

Glazer, Nathan. "Paradoxes of American Poverty." Public Interest, no. 1 (Fall 1965), pp. 71-81.

-102- Gottlieb, David, America's Other Yc•lth. Englewood Cliffs, New Jersey: Prentice-Hall, 1971.

Hansen, Niles M. Rural Poverty and the Urban Crisis: A Strategy for Regional Development. Bloomington: Indiana University Press, 1971. 363 pages.

Harrington, Michael. The Other America. New York: Macmillan, 1962.

Hirsch, Herbert. Poverty and Politicization. New York: Free Press, 1971.

Humphrey, Hubert H. War on Poverty. New York: McGraw-Hill, 1964.

Hurley, Rodger L. Poverty and Mental Retardation. New York: Random House, 1970.

Kelley, Marjorie G. The Culture of Poverty: An Exploration in Culture and Personality. Raleigh:. Center for Occupational Education, North Carolina State University, 1971. 47 pages.

Klebaner, Benjamin J, "Poverty and Its Relief in American Thought, 1815-1861." Social Service Review, vol. 38 (December 1964), "-,. pp. 382-99.

Lampman, Robert J, Ends and Means of Reducing Poverty. University of Wisconsin Institute for Research on Poverty, Monograph Series. Chicago, Illinois: Markham Publishing Co.

"One-fifth of a Nation." Challenge, vol. 12 (April 1964), pp. 11-13.

Leacock, Eleanor B. The Culture of Poverty. New York: Simon and Schuster, 1971.

Leighton, Alexander H. "Poverty and Social Change." Scientific American, vol. 212 (May 1965), pp. 21-27.

Levine, Robert A. "The Silent Majority: Neither Simple nor Single­ Minded." Public Opinion Quarterly, vol. 35 (Winter 1971), pp. 571-77.

Lindecke, Fred W. "Poverty's Second Generation." Nation, vol. 199 (September 28, 1964), pp. 163-65.

Loof, David M. Appalachian Children. Lexington: University of Ken­ tucky Press, 1971.

-103- May, Edgar. The Wasted Americans. New York: Harper and Row, 1963. McKenney, Nampeo D. R. et al. The Social and Economic Status of the Black Population in the United States, 1971. Current Population Reports, Series P-23, no. 42. Suitland, Maryland: Bureau of the Census, 1972. 119 pages. Moomaw, I. W. Crusade Against Hunger: The Dramatic Story of the World­ wide Antipoverty Crusades of the Churches. New York: Harper and Row, 1966. 1st edition. 199 pages. Myrdal, Gunnar. Challenge to Affluence. New York: Pantheon, 1962. National Federation of Settlement and Neighborhood Centers. "A Roof Is Not Enough." Social Education and Action Committee. New York, 1965. 32 pages. Orshansky, Mollie. "Counting the Poor: Another Look at the Poverty Profile." Social Security Bulletin, January 1965. Orwell, George. The Road to Wigan Pier. New York: Berkley Publishing Corporation (paperback), 1972. Parker, Seymour, and Kleever, Robert. "The Culture of the Poor: An Adjustive Division." American Anthropology, vol. 72 (June 1970), pp. 516-27. Pinkney, Alphonso, and Woock, Roger R. Poverty and Polttics in Harlem. New Haven, Connecticut: College and University Press, 1970. Poirot, Paul L. "Property and Poverty." Freeman, vol. 16 (February 1966), pp. 10-15.

"Poverty Fighters Must Choose Among Types of Poor Where to Focus Help." Journal of Housing, vol. 22 (July 1965), pp. 367-70.

"Poverty in America." New Leader, vol. 4 7 (March 30, 1964), pp. 7-23. Contents: "Our Permanent Paupers," by Paul Jacobs. "The New Poor," by A. H. Raskin. "Statistics and Reality," by Herman P. Miller. "A Glib Fallacy," by Michael Harrington. "Poverty and Pecksniff," by Irving Kristol. "Poverty in Our Midst." Social Action, vol. 30 (April 1964).

Reissman, Frank. "The Lessons of Poverty." Am·erican Education, vol. 1 (February 1965), pp. 21-23.

-104- Ribich, Thomas I. Education and Poverty. Washington, D. C.: The Brookings Institution, 1968. Rogers, Edward. Poverty on a Small Planet: A Christian Looks at Living Standards. New York: Macmillan Company, 1965. 125 pages. Rose, Gordon. "Regulating the Poor: A Review Essay." Social Service Review, vol. 45 (December 1971), pp. 393-99. Seligman, Ben B., ed. Aspects of Poverty. New York: Cromwell, 1968. Permanent Poverty. Chicago, Illinois: Quadrangle Books, 1968. Shostak, Arthur B., and Gomberg, William, eds. New Perspectives on Poverty. Englewood Cliffs, New Jersey: Prentice-Hall, 1965. Shriver, S�rgent. Point of the Lance. New York: Harper and Row, 1964. Poverty. New York: Americana Corporation, 1965. Sneden, Lawrence E., ed. Poverty. Berkeley, California: Mccutchan, 1970. Steiner, Gilbert. Social Insecurity. Chicago, Illinois: Rand McNally, 1966. The State of Welfare. Washington, D. C.: The Brookings Institution, 1971. Theobald, Robert. "Poverty in the Affluent Society." Challenge, vol. 11 (January 1963), pp. 22-24. Thurow, Lester C. Poverty and Discrimination. Washington, D. C.: The Brookings Institution, 1969. Titmuss, Richard T. Essays on the Welfare State. New Haven: Yale University Press, 1958.

U.S. Bureau of the Census. Current Population Reports, P-60, no. 86. "Characteristics of the Low Income Population, 1971." Washington, D. C.: U.S. Government Printing Office, 1972. U.S. National Advisory Commission on Rural Poverty. Rural Poverty in the United States. Washington, D. C.: U.S. Government Printing Office, 1968. U.S. President's Commission on Income Maintenance Programs. Background Papers. Washington, D. C.: U.S. Government Printing Office, 1970.

-105- U.S. President's Commission on Income Maintenance Programs. Poverty Amid Plenty: The American Paradox. Washington, D. C.: U.S. Government Printing Office, 1969.

U.S. President's Task Force on Manpower Conservation. One-third of a Nation. Washington, D. C.: U.S. Government Printing Office, 1964.

Washington Center for Metropolitan Studies. A Selective Bibliography of Writings on Poverty in the United States. Washington, 1964.

Weaver, Thomas, and Magid, Alvin. Poverty: New Interdisciplinary Perspec­ tives. San Francisco, California: Chandler, 1969.

Wiel, Robert H., and Vatter, Harold G., eds. Poverty in Affluence: The Social, Political, and Economic Dimensions of Poverty in the United States. New York: Harcourt, Brace and World, 1965.

Winter, J. Alan. The Poor: A Culture of Poverty, or a Poverty of Culture. Grand Rapids, Michigan: Eerdmans, 1971.

Wisenstein, Fannie P. "Poverty and Poetry--The Revolution of Abundance." Public Welfare, vol. 22 (October 1964), pp. 235-41, 275.

Zimbalist, Sidney E. "Drawing the Poverty Line." Social Work, vol. 9 (July 1964), pp. 19-26.

II. Public Assistance

Aaron, Henry. Why Is Welfare So Hard To Reform? Washington, D. C.: The Brookings Institution, 1973.

Advisory Council on Public Welfare. Having the Power, We Have the Duty. Report of the Advisory Council on Public Welfare to the Secretary of Health, Education, and Welfare. June 1966. 148 pages.

Allen, Jodie. A Funny Thing Happened on the Way to Welfare Reform. Washington, D. C.: The Urban Institute, 1972.

Perspectives on Income Maintenance: Where Do We Go from Here and How Far? Washington, D. C.: The Urban Institute, 1972.

Bernard, Sydney. Fatherless Families: Their Economic and Social Ad­ justment. Papers in Social Welfare, no. 7. Waltham Massachusetts: lfrandeis University, The Florence Heller Graduate School for Ad­ vanced Studies in Social Welfare, 1964. 68 pages.

-106- Besner, Arthur. "Economic Deprivation and Family Patterns." Welfare in Review, vol. 3 (September 1965), pp. 20-28.

Burgess, M. Elaine, and Price, Daniel 0. An American Dependency Challenge. Chicago: American Public Welfare Association, 1963.

Burton, Phillip. H.R. 335: A Bill to Amend the Social Security Act to Establish a National System of Minimum Retirement Payments for All Aged, Blind, and Disabled Individuals. 90th Congress, 1st session, U.S. House of Representatives, January 10, 1967.

Byrd, Robert C. Advisory Council on Public Welfare Report. Remarks in Senate. Congressional Record (daily ed.), vol. 113 (February 21, 1967), p. S 2400.

Carsen, Clarence. The War on the Poor. New Rochelle, New York: Arlington House, 1969.

Chilman, Catherine.S. "Child-rearing and Family Relationship Patterns of the Very Poor." Welfare in Review, vol. 3 (January 1965), pp. 9-19.

"Social Work Practice With Very Poor Families: Some Implica­ tions Suggested by the Available Research." Welfare in Review, vol. 4 (January 1966), pp. 13-22.

Cloward, Richard A. "The War on Poverty: Are the Poor Left Out?" Nation, vol. 201 (August 2, 1965), pp. 55-60.

Coles, Robert. "The Poor Don't Want To Be Middle-class." New York Times Magazine, December 19, 1965, pp. 7, 54-58.

Committee for Economic Development. Improving the Public Welfare System. New York, 1970.

"The Controversy Over the Federal Anti-poverty Program: Pro and Con," Congressional Digest, vol. 45 (March 1966).

"Do We Need an OEO?" New Generation, vol. 49 (Summer 196 7) . Contents: "A Look Into the Future of the Office of Economic Opportunity." Views by: Richard W. Boone, Congressman Charles E. Goodell, Hyman Bookbinder, Kenneth E. Marshall, S. M. Miller.

Elman, Richard M. The Poorhouse State: The American Way of Life on Public Assistance. New York: Pantheon Books, 1966. 305 pages. "Family Allowances at Whose Expense?" Economist (Great Britain), vol. 221 (December 3, 1966), pp. 1002-03.

-107- Gerdes, Victor. "Social Security and Family Income Requirem:nts: Argu­ ments For and Against Family Allowances." Journal of Risk and In­ surance, vol. 33 (June 1966), pp. 225-35.

Handler, Joel F. Reforming the Poor. New York: Basic Books, 1972.

Heise, Kenan. They Speak for Themselves: Interviews with the Destitute in Chicago. Chicago: Young Christian Workers, 1965.

Hoshino, George. "A Conceptual Analysis of the Nixon Welfare Proposal." Social Casework, vol. 51 (March 1970), pp. 157-66.

"Hunger." Social Service Review, vol. 44 (March 1970), pp. 77-78.

Hunter, Daniel M. "Social Action to Influence Institutional Change." Social Casework, vol. 51 (April 1970), pp. 225-31.

Hush, Howard; Kahle, Joseph; McDonald, Joseph; and Watson, Edwin. "Relevant Agency Programs for the Large Urban Conununity." Social Casework, vol. 51 (April 1970), pp. 199-208.

Johnson, Donald E. "Legal Regulations of the Social Work Profession." Social Casework, vol. 51 (November 1970), pp. 551-55.

Kahn, Si. How People Get Power. New York: McGraw-Hill, 1970.

Klein, Woody. "Housing the Poor." Conunonweal, vol. 82 (June 11, 1_965), pp. 377-79.

Lander, Bernard, and Birnbaum, Richard. The Utilization of Subsidized Housing in Family and Welfare Services. The Lavanburg-Corner House, 1964. 90 pages.

Lempert, Richard, and Ikeda, Kiyoshi. "Eviction of Public Housing." American Sociology Review, vol. 35 (October 1970), pp. 852-60.

Levi, Julian H. "Focal Leverage Points in Problems Relating to Real Property." Columbia Law Review, vol. 66, no. 2 (February 1966), pp. 275-85.

Levin, Jack, and Taube, Gerald. "Bureaucracy and the Socially Handi­ capped: A Study of Lower Class Tenants in Public Housing." Sociology and Social Research, vol. 54 (June 1970), pp. 209-14.

Levitan, Sar A. et al. Work and Welfare Go Together. Baltimore, Maryland: Johns Hopkins Press, 1972. Levy, Charles S. "The Social Worker as an Agent of Policy Change." Social Casework, vol. 51 (February 1970), pp. 102-08.

-108- "Low-income Families." Family Economics Review, March 1965. 28 pages. Lubene, Roy, ed. Poverty and Social Welfare in the United States. New York: Holt, Rinehart and Winston, 1972. McGee, Reece. "Welfare in Affluence: The Mirage of Rationalism." Nation, vol. 202 (February 14, 1966), pp. 174-80.

Merriam, Ida C. "Social Welfare Expenditures, 1965-66." Social Security Bulletin, vol. 29 (December 1966), pp. 9-21.

Miller, Henry. "Characteristics of AFDC Families." Social Service Review, vol. 39 (December 1965), pp. 399-409.

Morris, Peter. Dilemmas of Social Reform. New York: Atherton Press, 1967.

Moynihan, Daniel P. "The Case for a Family Allowance." New York Times Magazine, February 5, 1967, pp. 13, 68-73.

Muth, Richard F. Public Housing: An Economic Evaluation. Washington, D. C.: American Enterprise Institute for Public Policy Research, 1973.

Myers, Robert J. Social Insurance and Allied Government Programs. Home­ wood, Illinois: Richard D. Irwin, Inc., 1965. (The Irwin Series in Risk and Insurance.) 258 pages.

Ornati, Oscar A. "Two Approaches to Welfare." Monthly Labor Review, vol. 88 (March 1965), pp. 296-97.

Otis, Jack. "Problems and Promise in the Use of Indigenous Personnel." Welfare in Review, vol. 3 (June 1965), pp. 12-19. Parsens, Jack R. "The Paranoid Style in American Politics: An Essay Review." Social Service Review, vol. 44 (June 1970), pp. 184-95.

Piven, Frances F., and Cloward, Richard A. Regulating the Poor. New York: Pantheon Books, 1971.

Rosenheim, Margaret. "The Constitutionality of Durational Residency Requirements." Social Service Review, vol. 44 (March 1970), pp. 82- 93. Shlonsky, M. R. "Welfare Programs and the Social System." Social Service Review, vol. 45 (December 1971), pp. 414-25. Staples, John. "Urban Renewal." Western Political Quarterly, vol. 23 (June 1970), pp. 294-304.

-109- Starr, Roger. "Which of the Poor Shall Live in Public Housing?" Public Interest, vol. 23 (Spring 1971), pp. 116-24.

Schaller, Lyle E. "Housing for the Nation's Poor: II. Are Rent Supplements the Answer?" Christian Century, vol. 83 (January 12, 1966), pp. 44-47.

Stein, Bruno. On Relief. New York: Basic Books, 1971. Tobin, James, and Wallis, W. Allen. Welfare Programs: An Economic Appraisal. Washington, D. C.: American Enterprise Institute for Public Policy Research, 1968.

United States Conference of Mayors-. Economic Opportunity in Ci ties: Local Anti-poverty Programs. Washington, 1966. 107 pages.

U.S. Congress. Joint Economic Committee. Studies in Public Welfare. A Volume of Studies Prepared for the Subcommittee on Fiscal Policy. Washington, D. C.: U.S. Government Printing Office, 1973.

Wehner, Harrison G. Sections 235 and 236: An Economic Evaluation of HUD's Principal Housing Subsidy Programs. Washington, D. C.: American Enterprise Institute for Public Policy Research, 1973. Weicher, John C. Urban Renewal: National Program for Local Priorities. Washington, D. C.: American Enterprise Institute for Public Policy Research, 1972. "Welfare Reform, 1971 Style." Social Service Review, vol. 45 (December 1971), pp. 482-85.

"Workfare." Social Service Review, vol. 45 (December 1971), pp. 485-87.

Worsnop, Richard L. "Public Housing in War on Poverty." Washington, D. C.: Editorial Research Reports, July 22, 1964, pp. 523-40.

Zimbalist, Sidney, and Andersen, Claire. "The Social Welfare Manpower Crisis Revisited." Social Service Review, vol. 44 (December 1970), pp. 452-59.

Zimring, Franklin, and Hawkins, Gordon. "The Legal Threat as an Instru­ ment of Social Change." Journal of Social Issues, vol. 27 (August 2, 1971), pp. 33-48.

-110- III. Employment, Educatfon, and Manpower Policies Americ �n Enterprise Institute for Public Policy Research. Proposed Minimum. Wage Amendments. Legislative Analysis No. 5, 93rd Congress, 1st session. Washington, D. C., May 1973. Appel, Gary Louis. Effects of a Financial Incentive on AFDC Employment: Michigan's Experience Between July 1969 and July 1970. Minneapolis, Minnesota: Institute for Interdisciplinary Studies, 1972. Banfield, Edward. The Unheavenly City. Boston: Little, Brown & Company, 1968.

Benjamin, Judith G., and Freedman, Marcia K. Youth Employment Programs in Perspective. Washington, D. C.: U.S. Department of Health, Education, and Welfare, Welfare Administration, 1965. 121 pages.

Berg, Ivar. Education and Jobs: The Great Training Robbery. Boston: Beacon Press, Inc., 1971.

Brozen, Yale. "The Effect of Statutory Minimum Wage Increases on Teen­ age Unemployment." Journal of Law and Economics, April 1969.

Clark, Henry. "Cybernation: A Challenge to Christian Ingenuity." Christianity and Crisis, vol. 25 (January 24, 1966), pp. 310-12.

Coleman, James S. et al. Equality of Educational Opportunity. National Center for Educational Statistics. Washington, D. C.: U.S. Govern­ ment Printing Office, 1966.

Cummings, Laurie D. "The Employed Poor: Their Characteristics and Occupations." Monthly Labor Review, vol. 88 (July 1965), pp. 828-35.

Dale, Edwin L., Jr. "The Big Gun on Poverty." New Republic, vol. 153 (August 7, 1965), pp. 13-15.

Durbin, Elizabeth E. Welfare Incomes and Employment: An Economic Analysis of Family Choice. New York: Frederick A. Praeger, 1969. Everett, Robinson 0., ed. Anti-Poverty Programs. New York: McGraw-Hill, 1966.

"The Federal-State Employment Service and the Antipoverty Program." Employment Service Review, vol. 2 (November 1965). Ferguson, R. "Employment and the War on Poverty in the United States." International Labor Review, vol. 101 (March 1970), pp. 247-69.

-111- Orientation of Goodwin, Leonard. "How Suburban Families View the Work the Welfare Poor." Social Problems, vol. 19 (Winter 1972), pp. 337-48. Do the Poor Want to Work? Washington, D. C.: The Brookings Institution, 1972.

Gordon, David M. Theories of Poverty and Underemployment. Lexington, Massachusetts: Lexington Books, 1972. Handler, Joel F. Reforming the Poor: Welfare Policy, Federalism, and Morality. New York: Basic Books, 1971.

Harrison, Bennett. Education, Training, and the Urban Ghetto. Baltimore, Maryland: Johns Hopkins Press, 1972.

Jencks, Christopher, and associates. Inequality: A Reassessment of the Effect of Family and Schooling in America. New York: Basic Books, 1972.

Jensen, Arthur R. "How Much Can We Boost I.Q. and Scholastic Achievement?" Harvard Educational Review, Winter 1969,

"Jobs for the States." Feminist, vol. 237 (December 5, 1970) , pp, 43-47,

Kaplan, Roy, and Tausky, Burt. "Work and the Welfare Cadillac." Social Problems, vol. 19 (Spring 1972), pp. 469-83.

Kershaw, Joseph A. Government against Poverty. Washington, D. C.: The Brookings Institution, 1970.

Kosters, Marvin, and Welch, Finis. "Effects of Minimum Wages on the Distribution of Changes in Aggregate Employment." American Economic Review, vol. 62 (June 1972), pp. 323-34.

Lens, Sidney. Poverty: Anierica's Enduring Paradox. New York: Cromwell, 1969.

Levine, Robert A. The Poor Ye Need Not Have with You. Cambridge, Massa­ chusetts: MIT Press, 1970. Levitan, Sar A. The Great Society's Poor Law: A New Approach to Poverty. Baltimore, Maryland: Johns Hopkins Press, 1969. Programs in Aid of the Poor for the 1970s. Baltimore, Maryland: Johns Hopkins Press, 1969. Work and Welfare Go Together. Baltimore, Maryland: Johns Hopkins Press, 1972.

-112- Levitan, Sar A., Cohen, Wilbur, and Lampman, Robert J., eds. Toward Freedom from Want. Madison, Wisconsin: University of Wisconsin, Industrial Relations Research Association, 1968. "Work and Welfare." Journal of Human Resources, vol. 8 (1973), supplement.

Lovell, Michael C. "The Minimum Wage, Teenage Unemployment and the Business Cycle." Western Economic Journal, December 1972, pp. 414-27.

Moore, Thomas. "The Effect of Minimum Wages on Teenage Unemployment Rates." Journal of Political Economy, August 1971, pp. 897-903.

Monat, William R. "The Once and Future Revolution: Manpower Policies in the United States." Public Administration Review, vol. 30 (January 1970), pp. 69-78.

Mosteller, Frederick, and Moynihan, Daniel P. On Equality of Educational Opportunity. New York: Random House, 1972.

Moynihan, Daniel P. Maximum Feasible Misunderstanding. New York: Free Press, 1969. Myers, Robin, compiler. Poverty on the Land--In a Land of Plenty. New York: National Advisory Conunittee on Farm Labor, 1965. 65 pages.

National Industrial Conference Board. Education, Training and Employment of the Disadvantaged. Public Affairs Study No. 4, 1969.

O'Neill, Dave M. "The Effect of Discrimination on Earnings: Evidence from Military Test Score Results." Journal of Human Resources, vol. 5 (Fall 1970).

"Why the Government Should Definitely Not Provide a Program for the Employment of All Employable Citizens Living in Poverty." Current History, August 1973.

= . MOTA-Institutional and Job Corps. Washington, D. C.: American ----�En-terprise Institute for Public Policy Research, 1973.

Padfield, Harland. "New Industrial Systems and Cultural Concepts of Poverty." Human Organization, vol. 29 (Spring 1970), pp. 29-36.

"Public Service Jobs." Social Service Review, vol. 45 (December 1971), p. 487.

-113- Reeves, Earl J. "Making Equality of Employment Opportunity a Reality in the Federal Service." Public Administration Review, vol. 30 (January 1970), pp. 43-49.

Rottenberg, Sirner. "A Critical Examination of Manpower Policy." South Atlantic Quarterly, vol. 71 (Spring 1972), pp. 246-56.

Sheppard, Harold et al., eds. The Political Economy of Public Service Employment. Lexington, Massachusetts: Lexington Books, 1972. Stromsdorfer, Ernst. Review and Synthesis of Cost/Effectiveness Studies of Vocational and Technical Education. Columbus, Ohio: ERIC Clearinghouse on Vocational and Technical Education, 1972.

Stone, Robert C. Welfare and Working Fathers. Lexington, Massachusetts: Heath, 1971. Theobald,.Robert. Free Men and Free Markets. Proposed: A Guaranteed Income. New York: Doubleday & Co., 1965. (Anchor Books edition.) 173 pages.

"The Goal of Full Employment." New Republic, vol. 156 (March 11, 1967), pp. 15-18.

The Guaranteed Income: Next Step in Economic Evolution? New York: Doubleday & Co., 1966. 233 pages. "Guaranteeing an Income." Commonweal, vol. 80 (September 4, 1964), pp. 603-07.

"Jobs For All or Incomes For All: An Urgent Choice." Public Welfare, vol. 24 (January 1966), pp. 43-49.

U.S. Bureau of Labor Statistics. Youth Unemployment and Minimum Wages. Bulletin 1657. Washington, D. C.: U.S. Government Printing Office, 1970.

U.S. Department of Labor. Manpower Report of the President. Washington, D. C.: U.S. Government Printing Office, 1973.

IV. Guaranteed Annual Income American Child, vol. 48 (Summer 1966). Issue devoted to a discussion of the guaranteed annual income. Contributors are Martin Rein, Garth L. Mangum, Robert Theobald, James M. Lyday, Richard A. Cloward, Frances Fox Piven, Edgar Cahn, George A. Wiley, Robert Schrank, and Eli E. Cohen. 32 pages.

-114- "America's Poor: Should They Have To Work At All?" Nation's Business, vol. 54 (September 1966), pp. 34-72. Burns, Eveline M. "Social Security in Evolution: Toward What?" Social Service Review, vol. 39 (June 1965), pp. 129-40. "Cause for Debate." Christian Science Monitor, February 5, 1966. (Editorial.) Chamber of Commerce of the United States. Proceedings of the National Symposium on Guaranteed Income. Washington, D. C., December 9, 1966. 81 pages. Papers presented: Representative Thomas Curtis, "The Guaranteed Opportunity To Earn an Annual Income." (Also in Congressional Record, daily edition, January 31, 1967, pp. H 810-24.) Robert Theobald, "The Guaranteed Income--What and Why?" James Tobin, "Income Guarantees and Incentives." Henry Hazlitt, "Income Without Work." (Also in The Freeman, vol. 16 [July 1966], pp. 20-36.) Milton Friedman, "The Case for the Negative Income Tax." Cloward, Richard A. "A Strategy to End Poverty." Nation, vol. 202 (May 2, 1966), pp. 510-17. Democratic Study Group Full Employment Steering Committee. An Action Program for Full Employment. Reproduced by Hon. James H. Scheuer in the Congressional Record (daily edition), January 19, 1966, pp. A 209-13. Eckstein, Otto. Studies in the Economics of Income Maintenance. Washing- ton, D. C.: The Brookings Institution, 1967. 254 pages. Edwards, Don, and La Latta, Delbert. "Should We Have a Guaranteed Minimum Income for All Americans?" American Legion Magazine, vol. 82 (Feb­ ruary 1967), pp. 22-23. Fisher, O. C. "A Guaranteed Minimum Income For All, Whether They Work or Not, Is Not a Definite Threat." Congressional Record (daily edition), September 22, 1966, pp. A 4927-29.

Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago Press, 1962. See pp. 191-95. "The Case for the Negative Income Tax." National Review, vol. 19 (March 7, 1967), pp. 239-41. Gallaway, Lowell E. "Negative Income Tax Rates and the Elimination of Poverty." National Tax Journal, vol. 19 (September 1966), pp. 298-307.

-115- Gans, Herbert J. "Income Grants and 'Dirty Work.'" The Public Interest, Winter 1967.

Green, Christopher. Negative Taxes and the Poverty Problem. Washington, D. C.: The Brookings Institution, 1967. A background paper prepared for a conference of experts held June 8-9, 1966, together with a summary of the conference discussion. 210 pages.

Greenberg, David H. Income Guarantees and the Working Poor in New York City: The Effect of Income Maintenance Programs on the Hours of Work of Male Family Heads. New York: Rand Institute, 1971. 114 pages.

Guthrie, Harold W. "The Negative Income Tax: A Way to Maintain Prosperity." Business Review, vol. 24 (January 1967), pp. 6-8.

Hardcastle, Daniel A. "A Welfare Transfer for the Poor." Social Service Review, vol. 45 (December 1971), pp. 426-39.

Hawkins, Donald E. "Pro and Con: The Guaranteed Income." Parks and Recreation, vol. 2 (March 1967), pp. 45-46, 70-71. Hazlitt, Henry. "The Coming Crisis in Welfare." National Review, vol. 19 (April 18, 1967), pp. 416-18.

Hildebrand, George H. "The Negative Income Tax and the Problem of Poverty." Cornell University. (Undated, mimeographed.) Hitch, Thomas K. "Why the Negative Income Tax Won't Work." Challenge, vol. 14 (July-August 1966), pp. 13-15.

"How About a Negative Income Tax for the Poor? A Pro and Con Discussion." Scholastic Teacher, vol. 88 (April 22, 1966), pp. 14-15.

"Income Maintenance Proposals." Social Service Review, vol. 44 (March 1970), pp. 76-77.

Keyserling, Leon H. "Guaranteed Annual Incomes." New Republic, vol. 156 (March 18, 1967), pp. 20-23.

Klein, William A. Some Basic Problems of Negative Income Taxation. Madison, Wisconsin: Institute for Research and Poverty, University of Wisconsin, 1966. 25 pages. Reprinted from Wisconsin Law Review, no. 3 (Summer 1966), pp. 776-800.

Lampman, Robert J. Approaches to the Reduction of Poverty. Papers and Proceedings of the Seventy-seventh Annual Meeting of the American Economic Association, May 1965. In American Economic Review, May 1965, pp. 521-29.

-116- Lekachman, Robert. "The Guaranteed Annual Income: Con." Christianity and Crisis, vol. 25 (January 24, 1966), pp. 307-10.

Levitan, Sar A. "The Pitfalls of Guaranteed Income." Reporter, vol. 36 (May 18, 1967), pp. 12-15. Inserted by Senator Jacob K. Javits in Congressional Record (daily edition), May 19, 1967, pp. s 7158-60. Littner, Ner. "An Income Floor for All Americans." Public Welfare, vol. 24 (April 1966), pp. 141-44.

Marmor, Ted. Poverty Policy: A Compendium of Cash Transfers Proposals. Chicago, Illinois: Aldine-Atherton, Inc., 1971.

Moynihan, Daniel P. The Politics of a Guaranteed Income. New York: Random House, 1973.

"The Negative Income Tax." Symposium at the University of California, Berkeley. Industrial Relations--A Journal of Economy and Society, vol. 6 (February 1967), pp. 121-65. Contents: C. Green and R. J. Lampman, "Schemes for Transferring Income to the Poor." G. H. Hildebrand, "Second Thoughts on the Negative Income Tax." E. R. Rolph, "The Case for a Negative Income Tax Device."

Nicol, Helen O. "Guaranteed Income Maintenance: A Comparison of Two Approaches." Welfare in Review, vol. 5 (January 1967), pp. 15-16.

"Guaranteed Income Maintenance: A Discussion of Negative Income Tax Plans." Welfare in Review, vol. 4 (April 1966), pp. 1-10.

"Guaranteed Income Maintenance: A Public Welfare Systems Model." Welfare in Review, vol. 4 (November 1966), pp. 1-12.

"Guaranteed Income Maintenance: Another Look at the Debate." Welfare in Review, vol. 5 (June-July 1967), pp. 1-13.

Nuti, D. M. "Vulgar Economy in the Theory of Income Distribution." Science and Society, vol. 35 (Spring 1971), pp. 27-33.

Pelly, Thomas M. "Guaranteed Minimum Incomes." Remarks in the House of Representatives, Congressional Record (daily edition), April 27, 1967, pp. H 4797-98.

"President's Action Spurs Debate of Guaranteed Income." Congressional Quarterly Weekly Report, vol. 25 (March 10, 1967), pp. 349-52. Quaal, Ward L. The New Majority. Commencement Speech at Northern Michigan University, January 21, 1967. Inserted by Representative Harold R. Collier in Congressional Record (daily edition), March 23, 1967, pp. A 1516-18.

-117- Reagan, Michael D. "Washington Should Pay Taxes to the Poor." New York Times Magazine, February 20, 1966, pp. 24-25, 84, 88, 90. Ribicoff, Abraham. "The Competent City: An Action Program for Urban America." Remarks in the Senate. Congressional Record (daily edition), January 23, 1967, p. S 721. Ripon Society. "The Negative Income Tax: A Republican Proposal To Help the Poor." Ripon Forum, April 10, 1967. Inserted by Representative Charles W. Whalen in Congressional Record (daily edition), May 4, 1967, pp. H 5098-5102. Schorr, Alvin L. "Against a Negative Income Tax." The Public Interest, no. 5 (Fall 1966), pp. 110-19. Schwartz, Edward E. "A Way To End the Means Test." Social Work, vol. 9 (July 1964), pp. 3-12. Seligman, Ben B. "Guaranteed Incomes and Negative Taxes: Pro." Christianity and Crisis, vol. 25 (January 24, 1966), pp. 304-07. Shaffer, Helen B. "Guaranteed Income Plan." Editorial Research Reports, vol. 1, no. 21 (June 8, 1966), pp. 401-17. Speizman, Milton D. "Speenhamland: An Experiment in Guaranteed Income." Social Service Review, vol. 40 (March 1966), pp. 44-55. Tobin, James. "The Case for an Income Guarantee." The Public Interest, vol. 4 (Summer 1966), pp. 31-41. "On Improving the Economic Status of the Negro." Daedalus, vol. 94 (Fall 1965), pp. 878-98. Tower, John G. "Guaranteed Annual Income." Remarks in the Senate. Congressional Record (daily edition), January 30, 1967, p. S 1082.

U.S. Council of Economic Advisers. Economic Report of the President, together with the Annual Report of the Council of Economic Advisers. Transmitted to the Congress, January 1966, pp. 114- 15. See also the issue for January 1967, pp. 17, 140-42.

Wade, Alan D. "The Guaranteed Minimum Income: Social Work's Challenge and Opportunity." Social Work, vol. 12 (January 1967), pp. 94-101. Wehrwein, Austin C. "Economist Says Negative Tax Should Replace All Poverty Aid." New York Times, December 19, 1965, p. 41.

-ll8- Weiss, E. B. "What Will Guaranteed Income Do to Us?" Advertising Age, vol. 37 (April 4, 1966), p. 93.

Whalen, Charles W. "The Great Society--A Critique and Alternative." Congressional Record (daily edition), May 2, 1967, pp. H 4951-54.

Wickenden, Elizabeth. "The Legal Right to a Minimum but Equal Level of Living." Journal of Home Economics, vol. 59 (January 1967), pp. 14-19. (Also in Public Welfare, vol. 25 [January 1967], pp. 8-14.)

Wirtz, W. Willard. Speech before United Automobile Workers, 19th Con­ stitutional Convention, Atlantic City, New Jersey, March 23, 1964.

Wright, M. A. "The Guaranteed Income: What Does It Guarantee?" Tax Review, vol. 28 (May 1967), pp. 19-22.

-119-