What is Welfare? Definition and Important Facts

Katie McBeth
A photo of block letters saying “welfare” in front of an American flag.
Reading Time: 8 minutes

There are many myths and misconceptions surrounding the purpose, and even the real meaning of “welfare” for American citizens. Welfare programs were first created in 1935 as a direct result of the Great Depression. For decades, they have provided a so-called “safety net” for many low-income families who are struggling to make ends meet.

The most recent numbers provided by the U.S. Census Bureau state that, in 2012, approximately 52.2 million, or 21.3 percent of the U.S. population, participated in some form of government assistance or welfare. This can include programs such as SNAP (formerly known as food stamps), Supplemental Security Income (SSI), Medicaid, and General Assistance.

Let’s explore the definition of welfare, what programs exist under this umbrella, what branch of the government controls welfare programs, and how they help families in need.

The Definition of Welfare

Welfare programs are government subsidized programs that were originally created to assist low-income families that are living under the federal poverty level. The purpose of welfare programs is to help provide a pathway to independence, work, and a better quality of life for American citizens that might be struggling to pay the bills and support their families.

Overall, the term “welfare” does not refer to a single program but can refer to a multitude of different programs that provide government financial assistance. These programs are generally funded and organized by the Department of Health and Human Services, although some programs may be run by different cabinet-level departments (such as the Social Security Administration). The individual programs will be discussed in more detail below.

Funding for these programs comes from taxpayers, and are awarded to recipients in either bi-weekly or monthly assistance checks, or as financial aid. There are also federal government grants that are given to states or institutions in order to empower them to run their own welfare programs.

Social vs. Corporate vs. Welfare Capitalism

There are also many different types of welfare programs, not just those reserved for aiding low-income families.

Social welfare is the creation of government assistance programs or benefits for citizens. Social welfare is a system that governments put into action as an attempt to combat poverty, which is what many of the welfare programs in the United States were originally designed to do. The programs in the U.S. are either established as a federal assistance program, or are assigned to states which are given federal aid to provide assistance to state residents.

Corporate welfare is government support, subsidies, or assistance to private companies and financial institutions. Often times this comes in the form of tax incentives, such as tax breaks for providing job growth. This sort of favorable treatment to corporations was first coined by Ralph Nader in 1956, and is often used to highlight a country’s double standard of providing aid to wealthy businesses instead of the poor. A commonly used example of corporate welfare is the U.S. “bank bailout” that occurred after the 2008 stock market crash.

Finally, welfare capitalism is capitalism that includes social welfare policies, but can also refer to the process in which businesses provide benefits or assistance to employees. Under a capitalist system, many Nordic countries operate in a “welfare capitalism” mindset — offering social services and benefits to citizens, while also running on a capitalist economy.

As for the business model, welfare capitalism was first put into practice by the chocolate makers Cadbury in England. They pioneered pension schemes for long-term employees, joint work committees, and a fully-staffed medical service for workers that were injured or needed medical assistance. In the U.S., Ford Motor Company was one of the first to put a welfare capitalism model into practice. Now, common examples of welfare capitalism in businesses can be wage incentives, internal promotions, cultural activities, and other, additional benefits. The overall goal is to reduce employee turnover, increase productivity, and foster goodwill with employees.

Means-Tested vs. Entitlement

All social welfare programs are means-tested, and those that qualify for these programs must be living under a defined income level depending on the size of their family and the federal poverty level.

This definition excludes entitlement programs such as unemployment, worker’s compensation, social security, or Medicare, because all Americans can qualify for those programs based on their payroll taxes or age, but regardless of their income.

Additionally, unlike entitlement programs, most social welfare programs have work requirements in order to prevent reliance on the welfare system. If applicants don’t already have an employer, this statute instructs applicants to find steady employment within two years of applying for aid. For example, the employment hour requirements for the state-run TANF are 30 hours per week for single parents and 35-55 hours per week for two-parent households.

Welfare Programs

Overall, there are six social welfare programs currently operating in the U.S. Those programs include:

Medicaid and Children’s Health Insurance Program (CHIP)

Medicaid and CHIP are federal and state health insurance programs for families in need. Each state has a different name for these programs, and may also have different requirements that must be met in order to qualify for them. Typical requirements involve meeting a specific age, income level, number of people in the family, or having a qualifying disability (including temporary disabilities, such as pregnancy).

There is one important distinction between Medicaid and CHIP. Medicaid is intended for low-income families, including: adults, children, pregnant women, seniors, and people with disabilities. Whereas CHIP is intended for children (up to age 19) in families that make above the federal poverty level but are unable to afford private insurance due to preexisting conditions or lack of employer provided coverage. CHIP includes both medical and dental care for qualifying children or teens.

Temporary Assistance for Needy Families (TANF)

The TANF program is a state-run program that is federally funded by block grants, that is intended to help needy families achieve self-sufficiency during difficult times. This program is the one most often referred to when discussing general “welfare” topics.

States that run these programs are required to meet at least one of the four purposes created for this program. According to the website, those purposes are to:

  1. “Provide assistance to needy families so that children can be cared for in their own homes.”
  2. “Reduce the dependency of needy parents by promoting job preparation, work and marriage.”
  3. “Prevent and reduce the incidence of out-of-wedlock pregnancies.”
  4. “Encourage the formation and maintenance of two-parent families.”

Qualifications for this program may vary by state, but most require that parents meet a minimum work requirement, as mentioned in the previous section. Additionally, families may only qualify for this program for a certain number of years, so as to avoid dependency on the benefits they receive.

Supplemental Nutrition Assistance Program (SNAP, formerly food stamps)

SNAP is another state-run, federally funded program that is intended to help families stretch their food budgets. Eligibility is dependent on income, family size, and resource limits (such as living in food deserts).

Most SNAP programs provide qualifying families with a reloadable electronic benefits transfer (EBT) card that they can use at qualifying grocery stores or markets. Typically, each state will have different restrictions on what families can purchase with their SNAP funds, such as not being able to purchase “pre-prepared” foods like freshly-baked pizza or restaurant items but allowing purchases of “take and bake at home” items. Some states also offer online access to help families monitor and manage their SNAP funds, but other states may require you to contact your local office, instead.

Supplemental Security Income (SSI)

SSI is administered by the Social Security Administration, and is a benefits program designed to help those that are disabled, blind, or over the age of 65 that have a limited income.

SSI is different than Social Security Benefits, as SSI benefits are not determined by prior or current work circumstances, are not funded by social security tax (but instead by general funds in the U.S. Treasury), and SSI can be collected along with other welfare programs (such as Medicaid or SNAP). Additionally, SSI recipients must adhere to strict qualifications that require them to not travel for more than 30 consecutive days.

Earned Income Tax Credit (EITC or EIC)

EITC is a benefit enforced by the IRS and reserved for moderate to low-income individuals that must meet certain requirements and file a tax return in order to qualify. The purpose of the program is to decrease the amount of taxes that a person owes, and potentially increase the amount they may receive in a refund. There is also an additional child tax credit (ACTC) that is reserved for families that may have a qualifying child but otherwise don’t meet the income requirements for EITC. Visit the IRS’s website to learn more about income and family size qualifications.  

Housing Assistance

Another common form of welfare is the housing assistance that can be provided by the U.S. Housing and Urban Development (HUD) committee. This includes programs such as basic FHA mortgages, Fair Housing Initiative Programs (FHIP), Good Neighbor Next Door Programs, and other forms of housing or rental grants, mortgages, or assistance. Visit Welfare Info to see a full list of welfare-based housing programs.  

Welfare Facts and Statistics

According to the same research study linked above by the U.S. Census Bureau, the most commonly used welfare programs in 2012 included:

  • Medicaid (15.3 percent participated of the 52.2 million overall participants)
  • Supplemental Nutrition Assistance Program (13.4 percent participated)

The Welfare Queen Myth

There are many myths that surround these helpful programs, most of which originated during Ronald Reagan’s presidency in the 1980s, when he created the faux-persona of the “welfare queen.” This created an image of a person that lived solely off the government benefits they earned, never seeking out employment, and somehow managing to afford a car and other monthly expenses. Unfortunately, this image is what resulted in financial cuts to social welfare programs in the 1990s, further limiting the amount of money low-income families could receive, as well as putting time limits on how long they can receive those benefits.

Now, many programs have job requirements, and the majority of people that partake in welfare programs have full time jobs. The issue, however, is that the jobs they already have and the income they collect is not enough to pay the bills; hence why many of these people fall back on welfare programs. According to a 2011 report from the Bureau of Labor Statistics, the largest expense for many families is housing, closely followed by food costs, transportation, and insurance costs. On average, the most common recipients of welfare benefits are single moms living on less than $18,000 a year (before taxes) or married couples living on a combined income of about $36,000 a year (before taxes).

Immigrants and Welfare Myth

There is also a common belief that undocumented immigrants have the ability to collect welfare checks, but the reality is the only program that immigrants are eligible for is Medicaid — and even then, only in emergency situations. Overall, many non-citizen households use welfare programs, but only on behalf of their children, and the most commonly used programs are SNAP and Medicaid — which is in conjunction with the Census findings listed above. DACA recipients are also not eligible for welfare programs, which is because qualification often requires proof of citizenship and a social security number. Natural-born citizens do qualify for welfare, but undocumented parents, DACA recipients, and green-card holders do not.

Welfare and Voting Democrat Myth

Additionally, a comment by Mitt Romney at a private party reflects another common myth about welfare recipients. According to the Washington Post, Romney stated: “47 percent of the American people — the voters who can be counted on to vote for Obama — are ‘dependent on government,’ ‘believe that they are victims,’ and think government ‘has a responsibility to care for them.’”

However, studies have shown that many social welfare recipients are so busy trying to work and make ends meet, that many of them feel like they don’t have time to vote in the first place, and are less likely to do so. Plus, many welfare recipients aren’t aware that they’re actually receiving what is deemed “welfare,” either because they are seeking out tax credits (EITC), or they don’t understand the purpose behind their assistance benefits and the influence it has on their financial situation. For social welfare recipients that do understand their benefits, they may favor one party over the other, but those that don’t understand may be less likely to vote on party lines.

The “Welfare Doesn’t Work” Myth

Another common myth is that welfare programs don’t work; if they did, then no one would be in poverty. However, the fact is that they have helped elevate millions of people out of poverty, and have helped save millions of families from financial hardships. The Economic Policy Institute (EPI) estimates that government programs helped millions of people in 2017, including:

  • “Refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit, kept 8.3 million, or 2.6 percent of Americans above the SPM poverty threshold.”
  • “Smaller (but still vital) programs, such as the Supplemental Nutrition Assistance Program or SNAP (commonly known as “food stamps”) and Supplemental Security Income each prevented over 3 million people from falling into poverty.”
  • “Government assistance programs were particularly important in keeping children out of poverty. [Of] the 8.3 million Americans that refundable tax credits lifted out of poverty, 4.5 million were children. Similarly, of the 3.4 million Americans that SNAP kept out of poverty, 1.5 million were children. Housing subsidies shielded almost 900,000 children from poverty.”

There are a host of other myths surrounding welfare programs and those that rely on these benefits. However, statistics will continue to show that welfare programs are vital to protecting families, and can provide essential temporary aid for those most in need in our communities.

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