The history of the United States from its inception in 1789 through the 1950s was one of relentless growth. The country and its people worked hard and smart, overcoming several devastating wars and depressions to keep growing the economy and producing the wealthiest nation in the world. Despite leading the world in material prosperity and military might, the U.S. could not provide the good life for all its citizens. A stubborn problem of poverty persisted throughout our rise to power on the global stage. Depending on what statistical yardsticks were used, about 20 per cent of the country were always poor and unable to share in the American dream of income security and material wealth.
Prior to the 1960s private charities addressed the persistent problem of poverty. These charitable organizations were located primarily in the big cities, and their efforts depended on infusions of money by wealthy donors and donations of food and other goods by millions of compassionate citizens. Also, an army of volunteers contributed their time to this charitable work because they could not tolerate watching their neighbors go hungry. As noble and determined as these efforts were, they were hopelessly outmatched in funds and people by the gargantuan task before them. 15 to 20 per cent of the country was a huge number of poor people. Providing all of them with adequate food, clothing, shelter, and health care was, and still is, an impossible goal.
Compounding the problem at that time was the parallel issue of racism. Many of those millions of poor Americans, especially in the big cities, were black. The southern states were still ruled by Jim Crow laws and even in the north white folks, who controlled almost all the money, preferred to help other white folks. Unemployment rates for blacks were routinely double those for whites. Poverty was a triple curse for black Americans; they were poor, they could not find a decent job, and the charitable organizations would not help them. From this triple whammy of urban misery was born both the civil rights movement and the war on poverty during the 1960s.
Fifty years ago we could not trust private citizens or private organizations to treat people of different races fairly and impartially. For that reason, the welfare system was developed as a government enterprise rather than as a concerted effort by private organizations. It was also felt that the massive amount of money needed to properly fund such an effort could only be raised through coercive taxation, not private donations. We could count on the government to treat all poor people equally and we, as taxpayers, sacrificed a significant chunk of our income to solving the poverty problem.
The Civil Rights Act and the Voting Rights Act of the 1960s went a long way to correcting decades of discrimination by whites against blacks. Those landmark laws gave minority citizens equal legal and voting rights that could never be taken away. They led to integration in the schools and workplace that brought the country together racially so that fifty years later the U.S. elected a black man as president of the country. The welfare system that was devised about the same time was far less successful in its mission to eradicate poverty. It had its strong points in eliminating the stark hunger that we still see in poor countries overseas. Welfare eased the day-to-day struggle of poor people because it gave them a place to live, clothes on their backs, and food to fill their bellies. The system also met an important, unstated objective: it made the millions of prosperous white Americans feel less guilty about the plight of their black countrymen. The legislation was as much about assuaging guilt as it was about helping the poor.
For 30 years after inception, the welfare system was criticized as a disincentive and ineffective. It was a disincentive because it punished working people by taxing them to pay for welfare and rewarded people who did not work with welfare checks and food stamps. Welfare was also ineffective because it did not reduce poverty. After 30 years the number of poor people in the U.S. remained at the same stubborn 18-20 per cent of the population. In 1996 welfare reform was passed in collaboration between a Democrat President and a Republican Congress. This measure limited welfare payments to a two- year period and the recipient was expected to attend school or find employment by the end of that temporary period of assistance. This reform alleviated one of the major flaws of welfare; that it provided a strong disincentive to work. Welfare instilled a financial and psychological dependency on government that ran against the grain of our national heritage. What we have accomplished as a people and a nation has been the result of hard work, innovation, and self-reliance. By simply giving people a livelihood rather than providing them with a way to earn it, we robbed them of their self-worth and treated them as dependents. Now that welfare has been reformed, poor people have been elevated to the status of temporary dependents. This may be a step up, but it certainly does not represent a solution to the problem of poverty.
Government funded welfare started with good intentions but the results have not even reached the level of mediocre. The welfare rolls have stayed unacceptably high for five decades, in good times and bad. The best that can be said about welfare is that it allows poor people to survive. Unfortunately, it does not even begin to reduce poverty in our society. The theory was that poor mothers would not have to worry so much about survival, so they could stay home with their children and go to school to develop the skills needed to land a decent job and finally escape poverty. The reality has been quite different. Millions of people on welfare are in fact the children of parents who were on welfare, who in turn were children of grandparents on welfare. We have not cured poverty; we have perpetuated poverty.
Poor people are not different from the rest of us; neither are the rich. In a famous exchange between F. Scott Fitzgerald and Ernest Hemingway, the former averred that the rich are different from you and me. Hemingway replied "Yes, they have more money". The same could be said about poor people. They simply have less money. The poor share the same desires, values, and ambitions as the rest of us. Their low station in life is mostly due to lack of opportunities. What any citizen needs to succeed, whether he is poor, middle class, or rich, is a steady job that pays him enough money so he can provide for himself and his family and save for his children's education and eventual retirement for him and his spouse.
Are we really helping the poor by providing them with monthly checks and food stamps? What good does it do them if they remain unemployed and their children attend lousy schools? Growing the government seven-fold, in real dollars adjusted for inflation, over the past half-century has sucked trillions of dollars out of the economy and reduced it to an anemic shell of its former, robust self. Since the poor and uneducated are always last in line for jobs, damaging the economy to build a huge government is hurting, not helping the poor. What the poor need is exactly what we all need, a smaller government and a stronger economy. Think how much more prosperous we all would be, the rich, the middle class, and the poor, if we had poured those trillions of dollars into the economy instead of the government.
Most Americans are probably unaware of the staggering cost of welfare programs in the U.S. This is not surprising given that Congress and state legislatures have funded hundreds of different and overlapping welfare programs over the past 50 years. Check out these numbers supplied by www.usgovernmentspending.com : All welfare spending: federal, state, and local varied between $1.89 trillion and 2.4 trillion during the past five years. During good and bad years, $2 trillion is a fair average of the cost.
These are very large numbers. To grasp just how much money we are talking about, consider that $1.89 trillion will pay the salaries of 63 million full-time workers paid at a wage rate of $15 per hour! But wait a minute - how many Americans are receiving welfare? According to www.fortunly.com, 59 million Americans receive welfare assistance from a myriad of programs nationwide. Of these 59 million welfare recipients, 24 million are children. This means that the 1.89 trillion dollars that could fund 63 million good-paying jobs is instead spent providing food stamps, monthly checks, section 8 housing, and other services to just 35 million adults and their families on welfare.
These numbers beg an obvious question: why don't we scrap this welfare system and replace it with an employment program to hire all 35 million Americans on welfare at $15 per hour and save over 40% of the money? Would it not make eminently more sense to hire these impoverished citizens and pay them a livable wage? Hiring 35 million people at $30,000 per year costs 1.05 trillion dollars, about half the $2 trillion we are currently spending. Even if we retain $300 billion for medicaid to cover the single mothers from welfare, we still save over half a trillion dollars by hiring the poor rather then running a grossly inefficient welfare bureaucracy to take care of them. Each former adult welfare recipient would earn $30,000 per year as a full-time government worker, more than the estimated $28,500 he or she currently receives in assorted welfare benefits. Maybe more importantly, these Americans get back their dignity and self-respect now that they are working for a living and are no longer freeloading from the American taxpayers.
Some exceptions must be made when moving millions of people from welfare to government jobs. First of all, not all welfare recipients are capable of working. Some are too old and some are disabled. If over 50 years of age, then it would make sense to give them the choice of working a government job at $15 per hour or continuing to receive welfare. If they are disabled, then the problem is more complicated. Ever since President Clinton and the Republican Congress reformed welfare back in the 90s, people have been migrating from welfare to the disability rolls. State governments have even hired private companies to solicit welfare recipients to move them over to the federal disability program that is funded by the Social Security system This saves the state millions of dollars. As a result, many people on the disability rolls are not truly disabled.
Currently, 6% of our workforce are receiving disability. Sociologists and historians have estimated that the number of people in any national population who can not take care of themselves is usually right around 1%. Clearly we have many people on our disability program that are capable of working. The system is to blame. To go on disability in the U.S. only requires a note from a doctor. It is easier to get on disability today than it was to get out of gym class in junior high school. This loophole needs to be closed.
More importantly, many Americans who receive disability checks would prefer to work for a living. The private sector does not hire them because they consider able-bodied employees to be more productive. The government should subsidize jobs for the disabled. Blind people can work over the phone, as can workers in wheelchairs. I have seen restaurants in Asia manned entirely by deaf workers. The customers come to the counter, and select what they want by pointing to a picture on a menu. The deaf workers take the order, cook the food, and serve the customers. With a little imagination and dedication to full employment, the U.S. could and should find employment for every American who wants to work. It is a win-win-win for the formerly disabled citizens, the government, and American society in general.
Such a dramatic change in government would entail other profound policy changes. Clearly, the minimum wage would have to be raised nationwide to $15 for all workers in the country, whether they work public or private jobs. This will cause an immediate jump in inflation, especially in the restaurant and hospitality industries. We can expect to pay more for a Big Mac at McDonald's when the higher minimum wage is implemented. How much more will we have to pay? According to an article in Market Watch dated January 30, 2021, a Princeton economist estimated that wage increases over a five-year period did increase the price of a Big Mac. The article estimated that a 10% increase in wages led to a 1.4 per cent increase in the Big Mac price. Therefore, raising the current average wage at McDonald's from $9 to $15 would produce a Big Mac costing 9.3% more.
If the Big Mac increase is representative of the inflation we would experience throughout the economy when the minimum wage is raised, then the American consumers would suffer 1970s style inflation for a year or two until all prices readjust to the new higher wage scales. This inflation may persist for several years, especially when the new minimum wage is indexed to the inflation rate to preserve the buying power of millions of minimum wage workers. This significant bump to the inflation rate will be countered by lower unemployment and a dramatic decrease in crime since poverty/unemployment is a major cause of crime.
Now let's take a look at the advantages of such a plan. First of all, every able-bodied citizen below retirement age would be working for a living. Even the millions of Americans that lack real work skills would find employment through the government. There is a tremendous amount of work that needs to be done in our country that does not get done because private firms can not turn a profit doing that work. For instance, millions of elderly Americans are home bound and need some assistance with meals, remembering to take their prescription drugs, cleaning their houses etc. These senior citizens and their families can not afford assisted living condominiums or nursing homes. They need help at home and their working children can not always be there to perform these many everyday tasks for them.
Child-care for parents working minimum-wage jobs is a dire need in our country. Many of them have to choose between looking after their children or working. The 35 million adults on welfare represent a large percentage of the people who desperately need reliable, affordable child care. It makes sense to employ many of them to operate such child care centers. 10 to 20 per cent of them could take care of the children while the other 80 to 90 per cent are freed up to work other government jobs. Employing former welfare recipients to look after their children will give these parents the peace of mind to know that their children are being cared for and not getting into trouble while the parents are working.
Millions of people on welfare today have a drug problem. They are addicted to dangerous drugs, or worst case, they are selling these drugs in their ghetto neighborhoods. Solving the drug problem in the U.S. is beyond the scope of this essay, but clearly we will have to provide free and effective drug rehabilitation programs for these people before expecting them to perform efficiently in government jobs. The ones that emerge "clean" from rehab can work jobs in the rehabilitation centers as a transition to more challenging government employment. They would make effective counselors because no one knows the perils and pitfalls of addiction better than a former addict.
Almost every year the Congress proposes expensive infrastructure bills to help repair the country's roads, bridges, and tunnels. More complex infrastructure projects are needed to upgrade the national electric grid and expand broadband Internet access to remote regions of the country. Most people on welfare are not skilled in civil or electrical engineering. Nevertheless, the companies that are contracted to do such work could benefit from an army of government subsidized workers to do menial, physical tasks like carrying equipment, laying down wires, digging trenches, etc. Here a public-private partnership could employ millions of former welfare recipients and update our infrastructure at a lower cost. The best and most obvious such partnerships would set these millions of new workers to the task of urban renewal. Millons of people on welfare live in city ghettoes. Rebuilding their own homes and neighborhoods would be very satisfying work for these former welfare recipients. We can expect that they would be highly motivated and help turn our cities around. Eyesores could be transformed into showplaces.
Admittedly, finding worthwhile jobs for 35 million welfare recipients most of whom lack education and work experience is a daunting task. The program may have to be phased in over a year or two as jobs are developed or become available. To facilitate the transition from welfare to working, the government should spend some of the $1 trillion it is saving (remember 2 trillion versus 1.05 trillion) to provide free job training to all minimum wage earners, including the former welfare recipients. This training could come in the form of community college courses, government training classes, or subsidized on-the-job training by corporations. In the latter case, the government could pay half and the company could pay half, since the firm will be the direct beneficiary of the training.
Think about what the nation will be accomplishing by moving 35 million Americans off Welfare and onto the employment rolls. At the same time everyone else working for minimum wage will get a substantial pay raise. With a little diligent study in the free training classes, millions of these Americans living and working at the bottom rung of the economic ladder can start moving up to better jobs at higher than minimum wage. In so doing they will add value to the economy and the country. This means the U.S. will restore a vital component of the American dream: upward mobility. The poor, and indeed most of the middle class, have been mired in "go nowhere" jobs at stagnated wages for decades. Finally, we will be moving up and prospering again!
Reforming our government and economy so that every able-bodied American is working for a living represents a far superior system to our current situation. In the 2012 presidential election campaign, the Republican candidate, Mitt Romney, cited a report showing that 47% of the voters did not pay any federal income tax. He averred that they all would vote for his opponent, President Obama. He was right about the percentage not paying taxes but wrong about their voting tendencies. Many of the non-taxpayers were retired and they favored Romney over Obama by 53% to 45%. The problem with such a high number of Americans not paying income tax, is that they are getting government for free and naturally will tend to favor more and bigger government. This is one of the reasons that our federal government is 7 times larger than it was in 1960, even allowing for inflation.
By moving 35 million Americans off welfare and into good-paying jobs, we remove some of the impetus for bigger and more expensive government. The goal for a sound capitalist economy is to employ a maximum of the citizens and deploy investment capital as productively as possible. What is most desirable is a country where we all work for a living, we all earn a decent, livable wage, we all pay taxes, and we all get treated the same by paying the same tax rates on all the money we earn. If we can achieve this lofty goal, then for the first time in some 60 years, we all will be on the same side again as workers and taxpayers, instead of 53% on one side and 47% on the other side.
This great divide that currently exists between taxpayers and non-taxpayers is a major source of the partisan, political division that eviscerates our government, its institutions, and national policies. For too long we Americans have been rancorously disagreeing with each other, pitting democrats against republicans, liberals against conservatives, and even blue states versus red states. If we all are on the same side - we all are working and all paying taxes, then we can have a national conversation about what services we want our government to provide and how much we are willing to pay for those services. This is the way a democracy is supposed to operate, where all citizens benefit from government and they all bear the cost of it by paying taxes.
Another plus to employing the poor rather than giving them welfare is we can expect a substantial decrease in crime. It is poor people who commit most of the crimes in our nation. They simply don't have enough money for the things they need and sadly turn to crime. With a $30,000 a year government job, a former welfare recipient will not need to resort to crime to pay his bills. Moreover, he will be too busy or tired from working 8 hours a day, five days a week to knock off convenience stores or sell drugs on the street.
Artificial Intelligence is transforming our economy and that of every advanced society on earth. A century ago the industrial revolution automated factory work with the assembly line and a thousand new machines and inventions. Half a century ago the computer revolution came along and automated many time-consuming manual office jobs. Now this latest technological revolution threatens to automate most of the jobs remaining in our economy. We will transport our selves and goods easily across long distances with little or no human supervision. We will order the goods we want via our smart phones and drones will deliver them to our door. We can expect jobs in our capitalist economy to disappear faster than new ones are created. The U.S. must get started now building the government structures for dealing with huge job losses due to ubiquitous automation. Establishing a federal employment program that guarantees a job for any American who can not find one in the private sector will provide a viable transition to our automated future where free enterprise can not create enough jobs for all our citizens. It is better to deal with the problem now, rather than wait until it becomes a huge problem later with millions of unemployed people rioting in the streets.
In conclusion, replacing welfare with employment is a win-win for people receiving welfare and the country. A poor person receives a slight bump in income with a $30,000 a year job instead of the national average of 28,500 in welfare services. Just as importantly, he gains the self-respect and pride that comes with working a job and earning a living to support his family. Such intangibles can not be measured, but they play a large role in elevating a poor person from a government dependent to a full-fledged American citizen.
The nation gains an increase in the workforce and a concomitant bump in productivity as many needed tasks are completed that previously could not be performed. Crime decreases nationwide and Americans feel safer on the streets of our cities. The political divisiveness that has persisted since the welfare state was created now starts to decline. As a nation we begin to unite again around our long-held values of hard work and equal and fair treatment for all our citizens.