Entitlement programs

SIGNIFICANCE: In the United States, entitlement programs such as Old-Age, Survivors, and Disability Insurance (OASDI), Medicare, Supplemental Security Income (SSI), Unemployment Compensation (UC), Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF) embody the idea of the right to a minimum level of economic welfare and security according to standards prevailing in society. A question of fairness arises since contributors to and beneficiaries of such programs vary in race and ethnicity.

The Social Security Act of 1935 established a two-tiered system primarily of cash benefits. The higher-benefit tier comprised old-age insurance, more commonly known as the Old-Age, Survivors, and Disability Insurance (OASDI) program or Social Security, and unemployment compensation for the industrial labor force. The lower-benefit tier included two income or means-tested assistance programs, Aid to Dependent Children (which became Aid to Families with Dependent Children, or AFDC) and Old-Age Assistance (later incorporated into the Supplemental Security Insurance, or SSI, program), which provided minimal support to those low-income individuals considered to be outside the wage-labor pool. An examination of two programs—the OASDI, commonly known as Social Security; and Temporary Assistance for Needy Families (TANF), which replaced the AFDC in 1997—illustrates the relationship between race and ethnicity and entitlements. These programs challenge prevalent notions of fairness, thus working against harmonious racial and ethnic relationships.

Old-Age, Survivors, and Disability Insurance

The Social Security Act of 1935 excluded agricultural workers and domestic servants—who were mostly African Americans—from both old-age insurance and unemployment compensation. In 1935, more than three-quarters of African Americans lived in the South, where many of them worked as sharecroppers, and the federal old-age insurance benefit of fifteen dollars per month would have provided more cash than a cropper family would typically see in a year. Because of Southern opposition, the act was written so that agricultural workers and domestic servants were eligible only for means-tested assistance programs.

Although coverage was expanded to most of the workforce by 1960 and benefits were indexed to inflation and maximum taxable wages were indexed to future wages in 1972, pockets of old-age poverty remained, primarily among minorities and women. In 1972, the poverty rate among White males over age sixty-five was 11.3 percent, compared to 20.6 percent of White females over sixty-five and 39.9 percent of all African Americans over sixty-five. Although poverty rates subsequently dropped across all groups, this disparity remained, with 5.8 percent of older White men, 10.5 percent of older White women, and 17.4 percent of older African Americans of all genders still living below the poverty line in 2013. A decade later, this disparity remained, with 7.7 percent of White Americans living below the poverty line compared to 17.9 percent of Black Americans.

Social Security also distributes costs and benefits unevenly because African American women are less likely than White women to qualify for a spousal benefit. Upon reaching retirement age, a person is entitled to receive either their full benefit amount, based on their own work history, or one-half of their spouse's benefit amount, whichever is higher; if the spouse is deceased, the survivor is entitled to the spouse's full benefit amount. Such spousal benefits are classified as “noncontributory” because they are not the result of taxes paid by the beneficiary throughout their working life. In order for a divorced retiree to receive noncontributory spousal benefits, the marriage must have lasted ten years or longer. Because Black women are less likely than White women to be married, and those who are married are less likely to stay married for ten years or more, this results in a racial disparity among women receiving noncontributory benefits. In 1970, 73.5 percent of White women aged forty-five to sixty-four were married, compared to 54.1 percent of Black women; 20.4 percent of Black women were separated, divorced, or had an absent husband, compared to only 7.3 percent of White women. Although those percentages have changed over time, the overall picture remains the same: in 2014, 65.3 percent of White women and 38.6 percent of Black women between ages forty-five and sixty-four were married; 30.3 percent of Black women and 21.6 percent of White women in that same age group were separated, divorced, or married with an absent husband. In addition, married Black women are more likely than married White women to be equal earners with their spouses. As a result, according to a 2005 article by Harrington Meyer et al., White women are nearly two times as likely as Black women to receive noncontributory spousal benefits. The Social Security taxes of Black working women have historically subsidized the spousal benefits of White homemakers.

Issues regarding the fairness of Social Security also extend to ethnic groups with high concentrations of working legal immigrants. Such immigrants contribute to the payroll tax that supports the present generation of retirees, but they are ineligible for future Social Security benefits (unless they become citizens) even though they might have the requisite earnings history. The Immigration Reform and Control Act of 1986 promoted family reunification. As a result, many Latinos and Asian Americans encouraged their able-bodied relatives to come to the United States from such countries as Cuba, the Dominican Republic, Mexico, Peru, Cambodia, Korea, Laos, Japan, and Vietnam. These ethnic Americans may be denied the economic protections of Social Security in the event their working immigrant relatives retire in the United States with little or no savings.

Temporary Assistance for Needy Families

Temporary Assistance for Needy Families (TANF), formerly Aid to Families with Dependent Children (AFDC), was nearly federalized in the early 1970s and turned over to the states in 1996. In both instances, race and ethnicity played pivotal roles. Coming off the civil rights movement and related urban riots in the late 1960s, President Richard M. Nixon’s proposed welfare reform initiative, known as the Family Assistance Plan (FAP), would have provided a federally guaranteed income for the working and nonworking low-income adults. FAP sought to quell urban disturbances and decrease welfare dependency by providing incentives for African American men to become family breadwinners and for African American women to stay home with their children, while also paradoxically promising to encourage women on welfare to work more.

In effect, however, the FAP would have nearly tripled the welfare rolls and would have had its greatest impact on the South. In 1971, about ten million people were AFDC recipients; welfare reform would have made twenty-eight million people eligible for assistance. Overall, 52 percent of those covered by welfare reform would have been Southerners, and two-thirds of low-income African Americans in the South would have received some payment. Because family size determined benefit levels, welfare reform would have doubled or tripled household incomes. It would also have increased wage levels to nearly triple a farm laborer’s income. Southerners joined members of organized labor, who opposed the welfare reform requirements of working at jobs paying the prevailing rather than the minimum wage, and welfare mothers, who thought the benefits too low, to defeat the measure in the Senate in 1972.

Between the 1970s and 1990s, an increasing proportion of welfare benefits went to young, single mothers. Trends in out-of-wedlock births were such that in 1993, White illegitimacy rates approached 24 percent, close to the rate that led many in the 1960s to believe that the Black family was near collapse, and the Black illegitimacy rate was 69 percent. In addition, by the early 1990s, immigrant welfare participation was, on average, higher than that of native-born Americans—9.1 percent versus 7.4 percent respectively. Some Latino and Asian immigrant groups received welfare at a rate far above that of native-born African Americans (13.5 percent). Dominican and Cuban immigrants had welfare rates of 27.9 percent and 16.0 percent respectively, and Cambodian and Laotian immigrants had rates of 48.8 and 46.3 percent, respectively.

Most White Americans came to see welfare recipients not as equal citizens with justifiable needs but increasingly as undeserving low-income individuals and began to view those needing assistance as welfare stereotypes and not as deserved support for people in need but as handouts for shirkers. By the mid-1990s, the political climate regarding the role of government had changed so that increased reliance on market forces eclipsed income maintenance and other interventionist strategies designed to ensure a modicum of income equality and economic well-being. Over the objection of many minority congressional leaders, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ended the federal mandate for welfare and set a five-year outside limit on the amount of time a family could receive cash assistance. In addition, the law barred future legal immigrants from receiving SNAP, Medicaid, disability benefits, and most other forms of federally funded social services for the first five years they were in the country. Because of their disproportionate participation in these programs, low-income African American, Latina, and Asian American women and their children were thought to be most adversely affected by the legislation.

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