Once you have a big enough welfare state you have to centrally plan the middle class economy as well?

“Of course US birth rates are falling – this is a harsh place to have a family” (Guardian, Amy Westervelt):

The reality is, for all its pro-family rhetoric, the US is a remarkably harsh place for families, and particularly for mothers. It’s a well-known fact, but one that bears repeating in this context, that the US is one of only four countries in the world with no government-subsidized maternity leave

Have we really built a “harsh place … for mothers”? A mother who has never worked can get a free apartment in San Francisco, Manhattan, Boston, or Cambridge, free health care for herself and her children, free food (SNAP), and a free phone. This could be regarded as a “government-subsidized maternity leave” of at least 18 years and, in most cases, a lifetime (since the entitlement to public housing doesn’t go away once the kids are grown up). See Book Review: The Redistribution Recession for how eagerly Americans have adjustd their behavior to qualify for this government offer.

I think what Ms. Westervelt means is that the U.S. is a harsh place for mothers who work at middle-income jobs. The definition of “harsh” is that their incomes may yield a spending power and lifestyle that is actually inferior to what welfare mothers obtain (see Table 4 in The Work Versus Welfare Trade-Off for a calculation by state; here in Massachusetts welfare pays 118 percent of the median salary, whereas in New York it is 110 percent and in California only 96.5 percent).

(Americans who choose their sex partners and sex location carefully can do a lot better than what the government provides. See “Child Support Litigation without a Marriage” for the cash flow that can result from having sex with higher-than-median earners. Also the Massachusetts chapter for the example of a custody and child support plaintiff with an Ivy League degree who out-earns Penn classmates by 3.2X via providing part-time care for one child.)

A friend’s wife is the author of “Paying Nannies Under the Table Is the Norm” (Slate):

After I interviewed over 60 potential nannies, and despite my offering paid benefits and overtime, a surprising number declined because being paid ‘over the table’ would affect their ability to qualify for government subsidies.

(i.e., she is surprised that in a country running a $1 trillion welfare state, some people want to keep receiving welfare benefits.)

Tax supports to help families pay for this child care are woefully inadequate, and caregivers’ pay seldom reflects their vital role in our economy. Yet the costs of child care, housing, and healthcare have risen sharply for both parties.

We need to recognize and cultivate talented professional caregivers, by transforming care into a financially viable, long-term career option for the millions of women who choose it.

“We have both devalued work that is historically associated with women, and continue to devalue the lives of the women of color who do the work. Until we as a society value care work, and make sure that all workers are protected by our laws, we will continue to see inequities and crises in the industry as a whole,” said Poo.

The husband proudly posted this article as a Facebook status. Some responses:

Me: What would be awesome is if every childless American would work 90 hours/week to subsidize those of us who have chosen to have kids, but don’t want to take care of them personally.

The author: Women are sole, primary or co-breadwinners in 2/3 of American households. The overwhelming majority of our workforce, that fuels and drives our economy that benefits all who live here, have the need for childcare to be able to work. It’s an economic imperative to make childcare affordable and accessible. … And 80% of women have children.

The author: There’s another side to this argument, it’s not just about the working families but the caregivers that are currently relying on subsidies in many cases to afford basic life-support (housing, healthcare, etc.) Those subsidies come from tax dollars. Nearly half of the domestic workers are immigrants, and working under the table perpetuates the generational cycle of poverty. When domestic workers age and don’t have enough savings in their elder years nor have they amassed social security benefits (despite how small that is) to qualify for social security offsets to medicare plans, their adult children (whether or not they have children of their own) and/or other social safety nets (i.e. welfare) pick up the tab to support their need to live.

Me: I am sure that you are right, but if people with children overall pay less for something, doesn’t that mean people without children will be the ones who have to subsidize them? Where else does money come from ?

The author: … As a whole, our society needs high rates of employment to function. High rates of employment are threatened when the population can’t afford childcare which enables them to work – or if caregivers can’t afford to be caregivers if that makes sense. This disproportionately affects women’s ability to succeed and ascend in the workforce and also on the caregiver side disproportionately affects women and minorities. …

Deplorable: [gently suggests that maybe the real problem is that not working in Massachusetts can pay up to $100,000 per year, tax-free]

The author: Although I understand your point, I don’t believe that the government is doing a ‘good job’ of subsidizing the needy. And frankly, people who work demanding full-time jobs plus overtime hours, should be able to afford to live in or near the cities they work in. The market rates for childcare givers, like jobs in almost every other industry, haven’t moved up to address inflation. Many of us (myself included) make salaries that haven’t changed much while the cost of living has gone up dramatically. This makes the availability of a subsidy not just attractive for some but essential (especially if they have themselves or a family member with a serious illness/requiring heavy health care needs.) It’s complicated, messy & really not serving anyone (or society for that matter) the way it exists today.

The part that I put into bold face ties into the recent Seattle homeless housing plan posting. As the U.S. heads for a population of 400 million and does not build any new cities where people want to live, there has to be a lot of competition for apartments located in walkable pleasant neighborhoods. If government central planners fill up one third of these apartments with people who don’t work then the remaining supply is going to be out of reach for workers like the journalist (since those apartments will be snapped up by people who work in more lucrative fields, such as health care and finance).

The Europeans have dealt with this by limiting housing subsidies for welfare recipients. The result is that they can afford apartments only in undesirable suburbs. Anyone who wants to live in a prime center-city neighborhood in Europe has to work or be married to someone who works (the UK is an exception; a brief marriage or having sex with a high-income partner can lead to child support and/or divorce profits that will enable a non-working citizen to enjoy central London; see this chapter on International family law).

I’m wondering if this drumbeat of articles about how working mothers don’t get enough government cash is an example of how the middle-class portion of the U.S. economy needs to be centrally planned as well. The focus seems to be on “mothers” rather than “women”. This would make sense if the above hypothesis is true because it is “mothers” who can most easily benefit from welfare programs. For example, a woman with no children who applies for a free government-provided house may be placed on a 10-year waiting list.

So if we accept the following assumptions:

  • a woman, regardless of income, wealth, or any other factors, should be able to have as many children as she desires
  • no child should live in poverty
  • every child should live with his or her mother
  • people on welfare as equally entitled to live in America’s most sought-after neighborhoods

then a woman will derive essentially no economic benefit from working at a medium-income job. All that she will do is suffer a loss of leisure time. Therefore, though she would likely never phrase it this way, she will demand to have a spending power and quality of life that exceeds what her non-working welfare counterpart enjoys. Because she is competing with the government to buy or rent an apartment in a desirable neighborhood, the only way that “fairness” can be restored is if the government somehow gives her extra cash. Because it is primarily women with children who can get welfare, the extra government cash should somehow be tied to her status as having custody of children.

Readers: What do you think? Is this a middle-class anti-welfare rebellion in disguise? Instead of the expected revolt against paying higher taxes to fund more lavish welfare, though, what we’re seeing is middle-class Americans saying “I also want to be on welfare”?

[Separately, maybe the observed decline in birth rate is due to the higher population density of the U.S.? “Population Density Key Factor in Declining Human Fertility” says “we find a consistent and significant negative relationship between human fertility and population density. Moreover, we find that individual fertility preferences also decline with population density”]

28 thoughts on “Once you have a big enough welfare state you have to centrally plan the middle class economy as well?

  1. I bet the countries with these great maternal benefits also have the world’s lowest replacement rates and populations in decline except for importing people from third world countries. So whatever these great welfare systems might accomplish they certainly don’t encourage the formation of families and the continuation of civilizations and cultures.

  2. Jack: Excellent point. http://money.cnn.com/2018/01/19/news/economy/countries-most-maternity-leave/index.html shows that Bulgaria and Greece have extended maternity leaves, but The Google tells us that their respective fertility rates are well below replacement.

    If you include a lifetime of welfare as a “maternal benefit”, though, I don’t think any country is more generous than the U.S. As noted in the original posting, however, the U.S. is not especially generous to women who have made the mistake of working at a medium-wage job.

  3. The women who work those jobs have more babies than never-married mothers, though. I totally agree it’s very hard to be a mother in American society, but married mothers are having the most children on an individual basis. The baby-having decline has hit never-married mothers the hardest, and married mothers the least. Apparently having children seems to be something women prefer to be married to do rather than to have sex with two or more fathers and collect portions of the assorted paychecks.

    I also think phil is not all that wrong about the building more cities thing. There is no particular reason we can’t build more neighborhoods or rebuild some of the ones that are crummy now. We have the technology and all that. And smaller cities that were heavily walkable would make a lot of logistics stuff in kid-raising easier. So maybe it would boost births.

  4. Practical: At least in 1995, moms receiving food stamps had an average of 2.6 children each (see https://www.census.gov/prod/1/statbrief/sb95_22.pdf ), compared to 2.1 for the non-food-stamp moms. The food stamp recipients were unlikely to be married.

    https://www.ncbi.nlm.nih.gov/books/NBK230345/ (1998) says “a majority of the newer studies show that welfare has a significantly negative effect on marriage or a positive effect on fertility”

    Are there more recent statistics showing that married women are leading the fertility race (if it is a race!)?

  5. There is a waiting list for a free house in San Francisco? That is sad. My California friends say that, after denouncing Donald Trump on Facebook, their #2 priority is helping the vulnerable. Given their passionate commitment to social justice and their pride in the vibrant California economy, why wouldn’t they raise state and local tax rates so that their government would be able to provide for everyone in need?

  6. > Given their passionate commitment to social justice and their pride
    > in the vibrant California economy, why wouldn’t they raise state and
    > local tax rates so that their government would be able to provide for
    > everyone in need?

    They have a value you failed to list: No new construction.

  7. The idea that those who need to rely on public housing assistance should live in low cost areas seems like a no-brainer. If we choose as a society to subsidize housing for someone, why would we subsidize public housing in San Francisco, at $300-500k per unit, instead of Fresno, at half or less the cost? This makes no sense.

  8. You have friends in SF? That’s a surprise…they must not read your blog…

    But seriously, where did you read it’s free?

  9. FL: The cost is a function of income, with a minimum of $50 per month for those smart enough not to work. But utilities are generally included (including enough electricity to mine Bitcoin?). Since the typical 2BR or 3BR apartment consumes more than $50/month in utilities, the “rent” is actually negative.

  10. Do you pull numbers out of the air for effect, because I don’t see no $50 apartments – http://sfmohcd.org/sites/default/files/Documents/MOH/Asset%20Management/2018%20SF%20Inclusionary%20Maximum%20Monthly%20Rent%20by%20Unit%20Type_0.pdf – but hey, why let facts get in the way of a good argument.

    Speaking of good arguments…since you’re not paying $30K/year at Friends School (maybe you are?), that means your kids “public schooling” (if they in fact go to public school) is actually negative? Oh and don’t forget to send them with their laptop so they can mine bitcoin while they’re playing Foundation instead of listening to the teacher.

  11. Yep close. Guess you’ll have to live under that bridge just a little bit longer. But hey, we’re the America of opportunity…don’t ya know it?

    But really, how’s that free public schooling working out for you?

  12. The $50 per month deal for no-income tenants is nationwide, incidentally. See https://www.cbpp.org/research/housing/policy-basics-the-housing-choice-voucher-program

    The real question is why this inequality does not bother people. Some Americans with zero income (well, zero W-2 income at any rate) get a $50/month apartment in a beautiful city, including utilities. Some get a place on a waiting list. Some get nothing. All have the same income. All are Americans. Why are their entitlements so different?

  13. 1) What’s holding you back from putting your name on the waiting list? I can imagine you might even double your blog readership if you started reporting from inside the welfare state. Heck, I’d even pay $10 for pay-per-view just to watch you move your furniture and family into the new apartment.

    2) “The real question is why this inequality does not bother people”
    Maybe that’s not the real question. Maybe the real question is why with 4.8M people getting some type of Federal Rental Assistance, we can’t figure out how to house the rest of the homeless (at just 0.5M)?

    https://www.cbpp.org/sites/default/files/atoms/files/2-24-09hous-sec2.pdf

  14. I wonder what a scatter plot of countries/societies where one axis is some measure of female empowerment or self-actualization and the other is total fertility looks like. If you look at a world map, sub-saharan Africa and parts of the Middle East seem to be fertility hotspots, and even in the U.S. fertility is higher among Hispanic and Black women and lower among White and Asian women; does anyone think that Hispanic and Black women have better access to jobs with more generous family leave policies in the United States? Is the Black community a less “harsh” place to have kids?
    While it might make sense for other reasons, I’m not sure that transferring wealth or more freedom of action to women (like family leave) will drive fecundity. (And, at first glance, the data would seem to suggest the opposite)

    How does stuff like this even get published?

  15. You must be taking lessons from PhilG…asking dumb questions that can be answered with a little bit of effort.

    Search for “graph of female empowerment or self-actualization and the other is total fertility looks like” and lookie there…a purty graph.

  16. Some guy: Before we decided that our kids needed to get daily tick bites were in an apartment building in East Cambridge that contained non-working families as well. The ministry of housing in Cambridge gets to allocate at least 10 percent of newly built apartments to those whom it deems worthy. Market rent for a 3BR is about $5,100 per month, but the $50/month tenants get the same square footage, the same windows, the same access to gyms and pool, the same right to BBQ hot dogs on the maintained-by-the-building gas grills in the courtyard, etc. So I already have personal experience with the welfare lifestyle!

  17. Why do you not view things like the farm bill and mortgage interest tax deduction and existence of FHA as subsidies/planned economy for the middle class?

  18. Yz: That’s an excellent point. We already have a lot of government-generated distortions in the market. I don’t think that farm subsidies are for the “middle class,” though. Back in 2007, https://www.heritage.org/agriculture/commentary/farm-subsidies-millionaires said “commercial farmers — who report an average income of $200,000 and net worth of nearly $2 million — now collect the majority of farm subsidies. Most farm subsidy dollars go to millionaires.”

    (In both real and nominal dollars, farmland is a lot more valuable today compared to 2007, so presumably the average net worth of a subsidy-harvesting commercial farmer is quite a bit higher than $2 million in 2018 mini-dollars.)

    Morgage interest deduction? That’s mostly welfare to the real estate industry, I think, including the mortgage-writing industry. For the median-income American the mortgage interest deduction hasn’t been worth much over and above the standard deduction.

    So… I think of farm subsidies and the MID as specific industries stealing from Americans in general. Whereas what the cited writers are asking for is a much broader subsidy (arguably people with kids stealing from people without kids).

  19. Next time buy them a gas grill so they can toast weenies under an overpass on Storrow Drive — that’ll learn ’em to be poor! Even better you’ll no longer have to grimace every time you see one in your building, wondering why you can’t be poor like them.

  20. Some guy: I don’t think people living on welfare in Cambridge are “poor”. They have a lifetime entitlement to an apartment (up to $60,000/year in value), $30,000+/year in health insurance (price for a private policy that pays for what MassHealth covers), free food for the whole family (SNAP), a free smartphone (Obamaphone), etc.

    Would you call someone “poor” whose parents set up a trust fund that pays him or her $100,000 per year after taxes? Would you call someone “poor” who had sex with a married radiologist and collects $150,000 per year in tax-free child support?

  21. I love how fixated you are on both poor people and divorced women getting more than their fair share…I’m sure a shrink would have a lot of fun with that.

    But back to my previous two questions which you seem to have conveniently ignored:
    – Who’s more “negative” — you using the public schools, or the person paying $50/month for an apartment?

    – If it’s such a good deal, what’s holding you back from putting yourself on the waiting list so you too can have a $60K/year apartment, free health care, free food, and a free Trump phone?

  22. As noted above, I was, in fact, already living the Cambridge welfare lifestyle and it was indeed sweet!

    What has held me back from officially going on welfare? As in San Francisco, there is sadly a huge amount of inequality that is tolerated. People who quit work at age 18 and got into public housing (maybe after a few additional years of living with the parents) are receiving a substantial subsidy. People who work for a few decades and then apply for public housing today may find that even the waiting list is closed. I personally don’t understand how this makes sense. If Americans are “entitled” to free housing then everyone who qualifies should get it. If there is no entitlement then the $5,000+/month apartments should be returned to the market. With Medicaid, SNAP, and Obamaphones, 100 percent of those entitled actually do receive these benefits. That at least makes logical sense to me.

    In any case, in just over 10 years I will join the welfare club via Medicare!

  23. Medicare != Welfare. You and I have been pre-paying our Medicare premiums for many many years. Welfare is an unfunded program, which you appear reluctant to apply for, though given that it has such amazing benefits I’m curious why you’re not down at the local BHA office right now signing up?!

  24. You don’t seem to be consistent in whether you treat a program the way most Americans/media see it vs the way you see it. I think most Americans naively interpret mortgage interest deductions as a subsidy/incentive that helps them. Same for the farm bill. I think most citizens would agree that corporations getting rich seems like an ok price to pay for not having food insecurity. Whether or not getting rid of farm bill would create food insecurity is unclear.

    I don’t view affordable housing, at least the way it’s implemented in the Bay Area, as a good-faith efffort to help those in need. It seems to mostly serve as a way to limit the total number of people living in a given area eg San Francisco, and maybe to socially engineer the type of people living in an area. Nonetheless, I think it would be dishonest for me to say that no one perceives affordable housing as a way to help poor people.

  25. Pankaj Mishra quotes Rousseau: “Why are the rich so hard toward the poor? It is because they have no fear of becoming poor.” (I’m imagining Philip’s rejoinder: Rousseau never met the Millionaires for Obama.)

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