The Effectiveness of American Federal Policies and Programs in Upholding a Minimum

Standard of Living

Word Count: 2197

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The Effectiveness of American Federal Policies and Programs in Upholding a Minimum

Standard of Living

To what extent are federal policies and programs effective in upholding a minimum

standard of living?

Introduction

The federal government implements laws and provides aid in an effort to achieve equity

for all American citizens to meet the minimum standard of living. However, this system of

governmental standards and welfare is becoming increasingly flawed as millions of Americans

who receive aid and/or earn the minimum wage are subject to a substandard life. Amy

Glasmeier, professor of Economic Geography and Regional Planning, and Cary Anne Nadeau,

an urban data scientist, define the minimum standard of living as access to basic necessities such

as food, health care, housing (Glasmeier & Nadeau, 2018). The Economic Policy Institute’s 2018

analysis found that a single parent working full-time earning the federal minimum wage cannot

earn enough to live above the poverty line (Zipperer, 2019). The Organisation for Economic

Co-operation and Development (OECD) defines the poverty line as half the median household

income of the total population (OECD, 2017).

As Dr. Martin Luther King Jr. famously wrote in his​ Letter from Birmingham Jail​, “law

and order exist for the purpose of establishing justice and that when they fail in this purpose they

become the dangerously structured dams that block the flow of social progress” (King, 1963). In

the spirit of justice and social progress, the outdated and inefficient system of welfare needs to be

reformed; current welfare programs do not adequately aid those who need it most. The main

types of Welfare Programs in the US that exist today include: Temporary Assistance for Needy
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Families, Medicaid, Food Stamps, Supplemental Security Income, Earned Income Tax Credit,

and Housing Assistance. In total, government spending on these programs exceeded 1.1 trillion

in 2017, as reported by Robert Rector, a leading authority on poverty and welfare programs in

America, and Vijay Menon, a research assistant (Rector & Menon, 2018). However, the

efficiency of these programs in providing assistance is insufficient despite massive spending.

The Minimum Wage

The rate of accumulation of income is the determining factor in a person’s standard of

living. Those who make more have a higher standard of living than those who make less in the

same span of time. In America, the distribution of wealth is greatly imbalanced, restricting the

flow of capital to the majority of working citizens. This inequitable income dispersal makes it

difficult for many working Americans to even reach a minimum standard of life. According to

the OECD, the United States’ poverty rate stands at nearly 0.2 as of 2017—a ratio that is

considerably higher than most other developed countries (OECD, 2017). According to the US

Bureau of Labor Statistics, this is partially due to the fact that the minimum wage after

accounting for inflation has approximately the same purchasing worth it did 40 years ago, but

paychecks have decreased (DeSilver, 2018).

Ben Zipperer, economist and low-wage labor market expert at the Economic Policy

Institute, argues that raising the minimum wage to at least $15 per hour would allow Americans

to maintain the minimum standard of living. He asserts that the US economy can afford to

sustain a minimum wage even over $20 per hour. However, Thomas MaCurdy, Professor of

Economics at Stanford University, argues that an increased minimum wage would mostly benefit

those in the top 40% of the income distribution system, instead of the targeted population: poor
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families and those on welfare (MaCurdy, 2015). He cites a previous study of the wage increase

effects which found that only 13 percent of affected workers were in poverty, and the rest of

those who benefitted were already earning above the poverty threshold. However, this is not in

line with the study cited by Zipperer, which found that raising the minimum wage would

significantly reduce the number of Americans families below the poverty line. It claimed that if

the US had a $12 national minimum wage, there would be 6.2 million people who would rise out

of poverty in one fiscal year (Zipperer, 2018).

Clearly, there is clashing evidence towards who benefits from a minimum wage increase.

Either way, both sides agree that the antipoverty efficacy of minimum wage is poor.

Additionally, Zipperer’s argument focuses on the need for a gradual wage increase until 2024,

rather than an immediate increase. He argues that a gradual increase will best assist

lower-income families by offsetting the immediate tax reductions that would otherwise reverse

the potential benefits. To that effect, the current minimum wage of $7.25 does not succeed in

providing the means for a person to attain the minimum standard of living, and is a principal

factor behind widening income inequality.

The Welfare Reform Act of 1996 and The 2008 Recession

In 1996, President Bill Clinton signed into law the Welfare Reform Act, which

fundamentally altered welfare programs in America. Paul Edelman, a professor at Georgetown

Law Center, and Barbara Ehrenreich, board member for the Institute for Policy Studies, argue

that it was this Act which made welfare minimally effective in “cushioning the blow of the

[2008] Recession” (Edelman & Ehrenreich, 2009). The Act’s underlying structural flaws were

exposed after the Great Recession hit, causing many people to be unable to receive aid.
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Robert Pear, a correspondent in the Washington Bureau for the New York Times, reports

that since the start of the Recession in late 2007, the number of people receiving food stamps

increased from 23 million to 39 million (Pear, 2010). Despite this increase, Edelman and

Ehrenreich reported that in 2009, still nearly 50 million Americans were in a state of food

insecurity. They also found that unemployment insurance covered only 57 percent of those who

lost their jobs in the recession, and the benefits amounted to less than half of their former wages.

According to Pear, the proportion of poor children receiving aid fell by more than half of what it

was before 1996, due to the Temporary Assistance for Needy Families (TANF) program

implemented by the Reform Act. Rector and Menon believe the inefficiency of TANF lies in the

fact that it makes states rely on their respective tax revenues instead of federal revenue to provide

assistance, causing a shortage of funds in many states (Rector & Menon, 2018). Edelman and

Ehrenreich argue that the Welfare Reform Act of 1996 was simply unprepared for an economic

decline, therefore forcing welfare budgets to be cut. According to their research, benefits in 30

states were cut to 30 percent of the federal poverty line, and 2.5 million people fell below this

line in the first year of the recession as a result (Edelman and Ehrenreich, 2009).

The evident outcome of the Great Recession was the inability of the current welfare

structure to effectively distribute aid. Those who lost their jobs were unfairly compensated,

people still went hungry, and the unpreparedness of the states to redistribute tax revenue to

recipients of TANF rendered the program inefficient. The failure of the federal government to

provide assistance led millions to fall below the poverty line and live a substandard life. Had the

government established a stronger infrastructure to the welfare system in 1996, the impact of the

Great Recession would not still be plaguing poor families today as they continue to struggle to
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attain basic necessities. Yet still, there are many people who argue against an increase in welfare

spending and/or reform to the system.

Work Requirements

Not unlike the Reform Act of 1996, in an effort to stem supposed dependence and

complacency, President Trump signed an executive order in April 2018 to increase work

requirements for recipients of welfare and cash supplements. However, Sharon Parrott, a senior

fellow at the Center on Budget and Policy Priorities, states, “Evidence shows that such [work]

requirements have few long-term positive effects on employment and often result in families

losing help they need to afford the basics,” (Horsley, 2018). The Trump administration will

effectively deny families their ability to afford the basic necessities to maintain a minimum

standard of living in an effort to decrease federal spending on welfare. White House budget

director Mick Mulvaney suggests that an increase in dependence on welfare is the motive behind

the work requirement increase (Horsley, 2018).

To the contrary, the U.S. Department of Health and Human Services, in their annual

report to Congress, state that by 2010, the dependency rate hit a recent peak of 5.3 percent,

before entering a trend of decline with 1.5 million fewer dependent individuals in 2015 (Crouse

et al., 2018). Furthermore, work requirements to be eligible for most welfare programs are

already demanding. For instance, at least 20 hours of work per week is required to participate in

SNAP (food stamp program), according to Chief Economics Correspondent for NPR, Scott

Horsley. Horsley goes on to argue that many recipients of government assistance already work,

but because of the ineffective minimum wage, they earn too little income to be able to attain a

minimum standard of living on their own (Horsley, 2018). Evidence points towards a decline in
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dependence rates and proves the inefficiency of the minimum wage to provide for the

maintenance of a minimum standard of living. Increased constriction for assistance via work

requirements will only worsen the situation.

Progressive Income Tax

Viewpoints opposed to welfare reform are all derived from the general idea that those

receiving aid are largely undeserving of it. The idea that welfare is a system of “handouts”

causing people to become complacent fuels the argument against a progressive income tax,

increased spending on welfare, and an increased minimum wage. The Social Darwinistic nature

of this belief suggests that those who do not/cannot work (and even those who work low wage

jobs and still qualify for welfare assistance) are undeserving of living life to the minimum

standard—of basic rights such as access to food and healthcare.

Advocates of a uniform tax in place of a progressive income tax argue that those who

make more money deserve to keep what they earned for themselves. However, the growing

income inequality gap could be reduced with a more aggressive income tax. Edward Wolff, a

professor of economics at New York University, found that the wealthiest 1 percent of

Americans own 40 percent of the entire country’s capital—the worst wealth disparity in 50 years

(Ingraham, 2017). Furthermore, according to Alan Carter, Head of International Tax Dialogue

Secretariat, and Stephen Matthews, OECD Center for Tax Policy and Administration, tax breaks

disproportionately favor those with a higher income (Carter and Matthews, 2012). It is in the

country’s best interest to maintain a progressive income tax system because, as reported by the

OECD’s analysis, due to this extreme inequality, economic growth is hindered an estimated 5

percentage points (OECD, 2015). Without access to costly education, those from lower-income
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communities are severely disadvantaged from escaping systematic poverty. With this lack of

social mobility, the economy is directly harmed as a result, according to the the OECD.

One such proponent of rolling back the progressive income tax is Keith Hall, the Director

of the U.S. Congressional Budget Office. In a 2017 letter to the Chairman of the Committee on

Finance in the Senate, Hall proposes to lower taxes for the richest American households and

increase taxes for the lowest income households (Hall, 2017). As evidence suggests, this

proposal will ultimately further depreciate wealth inequality and hinder economic growth on a

national level. A progressive income tax allows wealth to be redistributed to those who are

struggling to meet the minimum standard of living, and without it, basic rights are being denied.

Conclusion

Equality in terms of access to a minimum standard of living can not only provide a

person the means to better themselves, but also to benefit the nation as a whole. Yet the United

States federal policy and programs prove ineffective in networking a system which can allow

people to live at or above this standard. It cannot be denied that the current structure is

ineffective, but viewpoints diverge on the best approach to reform due to the complexity and

unpredictability of economics. Yet the historically partisan Grand Old Party’s (GOP) grip on

federal legislation means that access to welfare will only be further restricted and wages remain

frozen.

Bob Dylan, a songwriter and recipient of a Nobel Peace Prize in Literature, wrote in his

iconic song “Blowin’ in the Wind”: “how many times must a man turn his head/and pretend that

he just doesn’t see?/The answer, my friend, is blowing in the wind” (Dylan, 1963). Reflecting

Dylan’s lyrics, the answer to aid Americans is blowing in the wind: there is quantitative and
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qualitative evidence to suggest that an internal restructuring of welfare programs, an increased

minimum wage, and a progressive income tax would be a starting point to bridging the poverty

gap in America to allow all people to attain the minimum standard of living. In a nation founded

on the policy of guaranteed equality, it is a great disservice to its citizens that extreme income

imbalance is perpetuated by current legislation. It is this imbalance which bars rightful citizens in

their pursuit of life—even at its most minimum standard.

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Hall, K. (2017). Distributional Analysis of the Tax Cuts and Jobs Act, as Ordered Reported by

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