THE TIERED WELFARE STATE, 1930-1960
This
outline should be read in conjunction with previous postwar order/military
Keynesianism/military industrial complex, as these two cannot really be
separated when gaining an understanding of the welfare state that existed in
1950s.
THE
TIERED WELFARE STATE 1930s
·
Comparison:
In Europe, the general direction of state-based capitalism and its benefits was
toward universal benefits for citizens (see Jill Quadagno reading). There the
idea of a social wage—the idea that if the state had to save capitalism, all
citizens should have a degree of security beyond just wages while they had a
job--took root in a different kind of politics (fostered by strong labor and
socialist parties) that extended health care, retirement, vacation, housing
benefits more equitably, to a wider range of the population than in the U.S.
(It’s also why they achieved shorter hours and longer vacations)
·
In
the U.S., the “social wage”—the ability to earn a decent income and retirement
and security---applied mostly to a high perecentage of white males after the
1930s, while most women not attached to white males, and most black men, were
excluded from securities like pensions, health benefits, and decent housing.
For white men in the US, a good deal of the “social wage” was gained through
private benefits, that is, through attachment to particular core corporations
with a monopoly or oligopoly control of the market (GM, GE, etc), or government
jobs, or military service, rather than as a right of citizenship. Many of these
core corporations benefited from military expenditures.
o
Example:GM
received major infusion of money from defense contracts. They passed on some of
this leadership in the market and government expenditures as benefits and
pensions.
o
But
those workers in marginal industries without the government contracts did not
have “rights” to those benefits.
·
Because
social security benefits were tied to the workers earnings, those who worked in
the leading corporations got a larger
slice of the pie than those who worked at non-union, non-core economy jobs.
·
Public
spending on domestic programs in the 1940s and 1950s continued to create a two
and three tier system of benefits instead of universal entitlements. Let’s look
at some of the history:
While social security provides a safety net and security unknown previously in the U.S. previous to the New Deal era, there was a racial and gender bias to the benefits established during the New Deal.
Social Security Act of 1935
While we associate social security with only the retirement benefit program, the Act of 1935 actually set up several programs, some that were perceived as a right
--Set
up a 2-tier system—some benefits were seen as an earned right, while others
were seen as unearned—which reinforced rather than challenged the inequities of
the capitalist labor market.
Capitalist labor market depended on a surplus labor supply (unemployment) to keep labor supply high and thus wages low, a condition that affected a significant part of the population during the Great Depression. Almost all blacks and most women were part of a “surplus labor supply” and racial and gender biases resulted in placement in low-paid, lower-rung jobs or domestic and agricultural labor, jobs that didn’t provide for sustenance. Private employers discriminated as a standard practice of business.
1)
old
age retirement, which people paid into through payroll deductions, was seen as
a right.
o However, 3/5s of blacks (and many Latinos) were automatically written out of these benefits because of Southern Congressmen who sought to keep the surplus labor supply. Agricultural and Domestic laborers not covered. S. Congressmen connived to ensure that blacks wouldn’t be provided for in old age or unemployment, using the mantle of “state’s rights.” Succeeded in removing 2 clauses from old-age assistance, one that said states were required to provide “a reasonable subsistence compatible with decency and health,” and another requiring states to designate a single state authority to administer the plan. Southerners would not allow the federal government to dictate standards or set benefit levels.
“The going rate for day laborers was
two dollars per one hundred pounds of cotton, a day's labor for a strong
worker. Outside the cotton fields black women worked as maids, earning perhaps
$2.50 a week. Federal old-age insurance
paid directly to retired black men and women, even at the meager sum of $15 a
month, would provide more cash than a cropper family might see in a year.”
o 50% of women were intentionally written out as well, because it was believed that they should get their entitlements through marriage.Excluded job categories dominated by women, including nurses, teachers, domestic servants, retail.
2)
Unemployment
benefits were also established under the SSA, but under states’ control, and
resulted in mostly biased dispensing. If one had a good job and high wages, and
kept it for a significant amount of time, access to unemployment benefits
helped sustain survival during economic downturns, but this wasn’t available to
all. Certainly women and blacks who were excluded from old age retirement
program were also excluded from this.
3) United States Employment Service was established under SSA, but under states control, and the evidence confirms that this agency funneled workers to employers through racial and gender biases.
o
The employment offices set up by the program were
notorious for enforcing a racial code, even in the north. One study of Illinois
showed that the unemployment offices channeled black workers to lower paying
jobs and accepted employer discrimination as a basis of their operation. A black woman in Illinois applying for jobs
would be sent to domestic service primarily, for example. In 1948 75% of unskilled
jobs at employment agencies & in Michigan newspapers specifically excluded
blacks. Almost all skilled jobs did, and skilled trades unions also excluded
them from apprenticeship programs
4)
Most
blacks and women from 1930-1950 didn’t have access to top tier benefits and the
only other option for them were Old Age Assistance and Aid to Dependent
Children benefits.
·
Thus
the Social Security Act was shaped by racial and gender exclusions already in
operation that kept many blacks, Latinos and women from first-tier programs,
while second tier programs were made inferior with blacks in mind—as a result
we got lower provision for all poor, both white and minority
o
southern
Democrats opposed to any program that would grant benefits to blacks and
undermine their economy, which was based on cheap labor and available supplies of sharecroppers and
domestic servants
o
southern
congressmen also insisted on state control of the other SS provisions—unemployment,
ADC..
o
gender
biases reflected assumptions that white women were not considered regular
workers or employees;
o
As
participants in a paid labor force whose conditions increasing got better
through unionization, corporate dominance and monopolies, white men could be
seen as making a public contribution that sustained their entitlement to
benefits of the system
o
During
the postwar, unions and corporations extended private benefits instead of
extending welfare state or universal benefits.
o
Core
corporations, many of which benefited from the military Keynesianism of the
time, accepted social responsibility (or were forced to by the strength of
unions), which resulted in more private benefits.
o
Most
women and blacks and Latinos had a different relationship to the paid labor
force, however. Gender norms and racial
bias excluded them from jobs that provide significant resources. This
encourages their relegation to mean-tested programs and stigmatizes the programs themselves.
o Blacks were at the bottom of the labor market and didn’t get access to the jobs with benefits and security provisions.
·
Women’s
jobs were lower paying, with fewer or no benefits.
·
Womens’
fortunes often required attachment to men for their benefits, or else they were
forced into the mean-tested programs of ADC. Thus the welfare state reinforced
women’s identity as men’s dependents both directly and indirectly.
·
The
fact that women take off from the labor force to have children creates an
automatic bias. And what of women’s contributions to the economy by taking care
of children? Giving welfare to women in the 1930s was seen as a way to provide
for children, but when black women begin to take advantage of ADC in the 1950s,
they are seen as lazy and shiftless rather than providing care for children.
· Thus the welfare state reproduced and reinforced social inequities between groups rather than challenged them.
The factors that made the welfare law so excluding
and so inequitable also contributed to creating the need for welfare because it
shored up a system of race and gender discrimination and class exploitation
that created poverty in the first place. The welfare system created under
the New Deal didn’t create inequality in social citizenship, but solidified it,
with consequences to the present
·
Eligibility
for social insurance from the best programs rested on regular, sustained
employment in covered occupations; those who didn’t have that were thrown into
public assistance programs that were means-tested—you had to prove that you
were worthy, and you were subject to constant checks regarding your
worthy-ness. This was not a right of citizenship, and the benefits were not
enough to sustain health. In addition, because they were eventually defined as
“welfare” while
·
While in the 1930s, all programs financed by government
intervention, from social security retirement to AFDC were thought of as
“welfare”, by the 1950s, only the lower-tier programs are defined as welfare,
and they are the ones subject to cut-backs when blacks, Latinos and other
groups began to gain access to them.
·
White women have always been the leading recipients
numerically of AFDC and food stamps, and these programs historically have taken
a negligible amount of the federal budget, even as they became the source of
great political debate. (Even in 1996, when the welfare bill was passed with
great fanfare – ending “wefare as we know it”-- both AFDC and food stamps took
only 3% of the federal budget outlays).
·
But in the
1950s as more whites get access to well-paying jobs, the means-tested programs
get labeled as welfare, while programs like unemployment and social security
retain the idea that they are legitimate, and not “welfare”.
o
Divisions
between upper and middle-class men and their families, and those who received 2nd
tier “welfare” climbed as taxes
increased. Recipients of the second tier programs became scapegoats.
o
The
rise of private health insurance and pensions after WWII further lessened
middle-class support for a shared social citizenship.
Health insurance as an example of inequalities: Those who worked for large enterprises in stable, full-time jobs after WWII began to get medical insurance. Originally medical insurance was proposed as a part of social security, and President Truman did try to get a national health insurance bill passed in the postwar. However, as medical insurance became available to middle class, and as unions gained it for working class through union provisions, the drive subsided. Those with insurance would then see paying taxes for those without insurance as an effort to rob them of hard-earned money.
n
one
white group after another left for social insurance and other 1st
tier benefits, particularly vets
benefits (see section below) which now are also extended to women as result of amendments;
single mothers w/ children main group left—became the undesterving poor; ;
social insurance drained public assistance of most of the sympathetic or
deserving poor; rising ADC caseload; 333% increase 1950-1970;
o
For
most Americans in 1950s, welfare state seemed remote, even as the
expenditures for 1st tier programs climbed. Middle class
programs were popular and incrementally expanded. Social security, veterans
programs, mortgage deductions, farmers subsidies were not perceived as welfare,
but in fact each program was a transfer of money to identifiable groups.
This continues under Republican administration of Eisenhower, which passes such
bills as disability insurance in 1956, more unemployment insurance in 1958. Perhaps
the most successful “welfare” program of the postwar was the GI Bill.
o
the
largest single domestic spending bill of the postwar era
o
usually
viewed as reward for military service; however, evidence suggests
Congressional coalition came together to pass this were united in their efforts
to stave off efforts toward a full-employment bill. Instead of full
employment, or access to a good job, as a right of citizenship, this bill was
designed as a temporary program for a politically important sector of the
population.
o
A
coalition of southern Democrats and Northern Republicans supported the
1944 bill, in order to reduce the popular push for the
Murray-Kilgore Full –Employment bill (one of the goals of the Economic Bill of
Rights 1944-FDR-see first outline); They did so because the GI bill, while very
generous, was temporary, and would not commit the country to a full-employment
policy.
o
Politically,
passage of the veterans bill took away a large constituency that might have
supported the full employment bill
o
Conservatives
opposed to social policy to raise living standards throughout the country;
southern Democrats and business opposed full employment because they believed
public programs might provide a floor for wages, and thereby bid up the price
of labor and diminish labor discipline
o
also
was clearly an effort to help the
country cope with reconversion; by 1947, ½ of entire college and university
population was receiving this government assistance, and it served to transform
many university systems; helped industry by providing trained workers.
o
The bill was written by the American Legion,
and gave special (affirmative action!) educational opportunities, access to
separate unemployment benefits, guaranteed home and business loans in addition
to usual veteran compensation, service-connected pensions and medical
benefits;
o
not
means-tested—was not dependent on whether vet had volunteered or been drafted,
whether he had gone overseas
o
From
1944-1958, Congress enacted 3 temporary unemployment programs for veterans, as
well as special unemployment programs for railroad workers and seamen. These
programs were at the heart of the postwar welfare state and propelled the
growth of social spending through the 1950s
o
none
of these programs were means-tested; even venereal disease was considered
compensatory disability! (compare women’s provision: In Louisiana in 1960,
state welfare department removed any women who had ever had a legitimate
child from the ADC welfare roles)
·
Southern Democrats were at the forefront of
efforts to increase federal spending on social welfare, but they ensured that
these programs were crafted to exclude blacks; sought to redistribute public
spending on domestic and military spending to the south from northeast-- NOT
opposed to spending, but opposed to a national and universal welfare state;
o
they wanted to industrialize the south
without aiding blacks or labor and without burdening or regulating business.
o
For
example, in 1943, racist amendments were added to education bills that allowed
funding to segregated schools, with local control that allowed whites to
distribute most of the booty to white schools.
o
In
postwar era, 1/3 of social welfare went to 11 southern states, while it had 24%
of national population. Locally controlled public assistance and nutrition programs
were administered in ways that maintained subservience of African-American
sharecroppers while fed. Agricultural policies hastened the mechanization of
farming and undermined sharecroppers ability to earn a living. Federal money
provided money for hospitals, for example, but virtually all were built without
significant black jobs and all were segregated hospitals, denying access to
health care to blacks. Veterans hospitals across the country were rigidly
segregated,so federal funds strengthened segregation, and produced better
services for whites than for blacks.
o
veterans benefits were an
important part of building a new southern middle class. So was defense
spending, which provided industrial jobs with new middle class wage standards.
·
Black vets were often shut out of these benefits. First, they were less
likely to have an adequate education that would enable them to go to college.
Further, they had difficulty getting jobs even with a college education. Labor
market exclusion and private discrimination both north and south meant they had
a great deal less access to the government package. Blacks in the north were
the first to be laid off because of automation
·
The
creation of white middle class jobs for men reinforced social roles—women were
left out of these benefits too.
·
Surge
in homeownership at this time and consequent building boom accounts for a good
deal of the postwar prosperity.
·
The
same type of tiered access to government resources occurred in housing, where
government programs reinforced patterns of racial segregation rather than
challenging them, building white home ownership while following private
patterns of discrimination that relegated blacks and Latinos to racially
segregated ghettos
·
The
National Housing Act of 1934 was passed to stimulate housing market and to calm
fear of bankers that many of their loans wouldn’t be repaid. The act created
the Fair Housing Administration, which
acted a like a conservative bank, implementing red-lining policies, and
also kept lines of segregation in public housing projects.
·
Nostalgic
accounts by many middle class families suggest that it was family savings and
individual determination that accounts for their home purchases. But almost half the housing in suburbia was
dependent on federal financing, and encouraged home purchases at artificially
low down payments and interest rates
o
Even the money that people borrowed to pay
for their houses was not lent to them on market principles;.
o
In addition, it was government funded
research that developed the aluminum clapboards, prefabricated walls and
ceilings and plywood paneling that composed the technological basis of the
postwar housing expansion.
Furthermore,
government and taxpayer dollars helped to create the suburbs in the first
place, which was dependent on expansion of highways in the postwar.
o
Often even the sewer systems were not paid for by
the homeowners themselves. In addition federal and state tax monies routinely
provided water and sewage facilities for racially exclusive suburban
communities. In the 1960s, these areas often incorporated themselves as
independent municipalities in order to gain greater access to federal funds
allocated for “urban aid”
o
Government
tax policies were changed to provide substantial incentives for savings and
loan institutions to channel their funds to long-term mortgages. Usually people
do not think of these as a subsidy, but in terms of the amount of income that
you are allowed to have, it is easy to see this when you compare renters to
buyers. Renters don’t get to keep part of the costs of their rents as income,
but tax policies allow home owners to do so. Many residents of ghettos in the
1960s were paying the same amount in rent that suburban residents were paying
in mortgages (for far-inferior accommodations!) but they were not able to build
the capital in property through that expenditure.
Subsidizing automobile to get to suburbs:
·
Interstate
highway system, begun in 1956, is designed as a subsidization of automobile
(main industry in postwar) and homeownership in the suburbs;
o
this
is the largest public works program in history, providing millions of
construction jobs, mostly to white men.
·
It
is no coincidence that the legislation that provides for this is called the
Interstate and Defense Highway Program; the program was justified as a
defense need, allowing the cities to be cleared in the event of a nuclear
attack
--meanwhile, General Motors systematically colludes
with local governments to dismantle urban transportation system that benefit
those on the bottom of the class spectrum. Only a small % of cities retain
public transportation. Public transportation is gutted, with the idea that it
is a subsidy for the poor, overlooking the larger (by far) subsidy of the
automobile.
·
Housing
and mortgage and tax policy and veterans legislation helped to develop a solid
middle class.
o
Brought
home ownership within reach of millions of citizens by placing the credit of
the federal government behind private lending to home buyers. These solid
citizens didn’t look at their ability to own a home as a subsidy, but they did
look at public housing for the poor as a subsidy
o
government
policies allow people to deduct mortage interest and real estate taxes from
their gross income, but taxes them directly for open space or park purchases;
it subsidizes private purchase of
life’s amenities.
·
Overtly
racist categories in the FHAs “Confidential city surveys and appraisers’
manuals” channeled almost all of the loan money toward whites and away from
non-whites.
o
FHA
denied loans in racially mixed areas.
o
Example:
mostly white St. Louis county secured 5x as many FHA mortgages as racially
mixed city of St. Louis between 1943-1960. Home buyers in the county received
6x as much loan money than those in city.
·
Banks
and savings and loans contributed to the problem by refusing to give mortgages
in black neighborhoods.
o
Lack
of capital for home purchases and improvement meant that many landlords refused
to maintain their properties.
o
Housing segregation was actually worse in the
North than in the south.
·
Discrimination
by private real estate interests who control the system excludes blacks;
government policy shifted resources from urban areas into suburban construction
and expansion; federal governments 2
mortgage institutions FNMA and GNMA made it possible for urban banks to transfer
savings out of the cities into new construction in the south and west,
frequently into suburban developments;
o
Example:
Savings banks in the Bronx invested 10% of their funds in the Bronx only. . At
the same time, postwar urban renewal and highway ocnsturction reduced the
housing stock for urban workers
o
housing
substandard—location of public housing in poorest parts of the central cities
leads to association of public housing with degradation, but there was more
government money and subsidies spent to disperse the affluent to the suburbs
·
At
the same time that FHA loans and federal highway building projects subsidized
the growth of segregated suburbs, urban renewal programs in ciites
throughout the country devastated minority neighborhoods.
o
During
the 1950s and 1960s, local “pro-growth” coalitions led by liberal mayors (like
Mayor Daley) often justified urban renewal as a program designed to build more
housing for poor people, but it actually destroyed more housing than it
created.
o
90%
of the low income units removed for urban renewal were never replaced.
Commercial industrial and municipal projects occupied more than 80% of the land
cleared for these projects, with less than 20% allocated for replacement
housing.
o
Just
59,000 of families relocated by urban renewal 1950-1971; 19% of total were
relocated to public housing
o
Decision
on which neighborhoods to place major highways through had much to do with
whether the neighborhood was lower class/black. Many black and poor
neighborhoods devastated. Cosntruction of freeways displaced residents and
bisected previously connected neighborhoods, shopping districts, political
precincts.
URban
renewal failed as a program fro providing new housing for the poor, but it
played an important role in transforming the US urban economy away from factory
production and toward producer services.
o
Urban
renewal projects subsidized the development of downtown office centers on land
previously used for residences
o
--federal urban aid began to favor
construction of luxury housing units and cultural centers in order to make
cities appealing to high-level executives
--tax abatements granted to
these producer services centers further agggravated the fiscal crisis that
cities faced, leading to tax increases on existing industries, businesses,
residences
Consequences still with us:
o 1990s study showed white neighborhoods still typically experience housing costs 25% less expensivie than would be case if they were black
·
By
1993, 86% of suburban whites still lived in places with a black population
below 1%
·
As more white men and women benefit from first tier programs, the 2nd
tier programs contain higher percentages of blacks, particularly women who benefit
from ADC.
Black men and women’s access to middle class social benefits were undermined in
labor and housing markets, segregated, inferior education and changing economic
fortunes, as automation and changes in southern economy occur (see Harrington).
They find themselves only able to access ADC, which is available to women.
·
Automation
and relocation of unionized industries to the south sharply limited economic
opportunity in the north, where a growing stream of southern migrants, both
white and black, traveled in 1940s and 1950s.
o
Net
result was that black access to permanent fulltime work decreased in 1950s.
o
Unemployment
increased from 18% to 28% in urban areas from 1950-1960;
o
Black
women had even higher rates of unemployment, 2x—this is why their attempt to
gain ADC benefits grows in urban areas. Yet the depictions of black unmarried
women as producers of illegitimate children proliferates at this time
·
During
1940s and 1950s, # of black families receiving ADC increased 46%. This point
important, because it shows that the relative growth of African-American
families on ADC rolls took place prior to the Great society, not because of
it ; the causation was inequality and poverty
o
by
1961-40% of ADC caseload was composed of black families, up from 14% in 139;
59% of these were in northern industrial states;
o
in
Chicago, 91% was nonwhite, in northern cities of 50,000 or more, 85%; similarly
for public housing.
But
blacks still were distriminated against in the 2nd tier system
In
1960—80% of illegitimate non-white children did not receive ADC
only 20% of illegitimate white
children
o
Already
in 1950s, attacks on ADC begin,
particularly in southern states.
Why?
More black women apply for these benefits because of abject poverty, increase
in desperation.
o
While
ADC was originally passed with white widows in mind, later amendments made
single women with children eligible, and single (unmarried, divorced,
separated) women begin to apply.
o
This is when the fury of 1st tier
provisioners begins against “welfare”, and it becomes politically fashionable
to attack the program. Because more
white women are likely to have attachment (father, ex-husband, deceased
husband) who is part of the first tier system, they are getting less of the 2nd
tier and more of the first tier.
Summary: CONSEQUENCES of Tiered welfare-warfare state: WHY
WAS THERE THE “OTHER AMERICA”
A. The
Other America:
·
Whole Segments left out of affluence: some not
covered by private pensions won by unions, or by social security, even when
they worked; luck of who you worked for and whether or not that company was
large corporation with national or world dominance;
·
women and minorities tended to be excluded from these jobs,
worked in sectors of the economy with low pay and low benefits
·
Government policy, in supporting private profits, private
decision making, shifted resources from urban areas into suburban construction
and expansion;
·
encouraged and allowed abandonment of inner cities; real
estate interests allowed who could buy;
·
·private interests in control of government system--no loans
for inner-city housing--higher costs to live in the terrible conditions there;
blacks forced to live there because they could not get into suburbs;
·
·postwar "urban renewal" funds went to large
corporations, not rebuilding the housing of the poor;
·
·dismantled working urban transportation systems--subsidized
automobiles, fostered improvements in private rather than public
transportation, favoring suburban development over the revitalization of urban
life;
·
·At time of unprecedented "affluence" 1/4 of the
population was poor; 3/4 of them were white, but poverty among blacks more
severe--1962 average black income 55% of average white income, same as had been
in 1947-- poorest 20% of population had .05% of wealth, top 20% had 77% of nation's
wealth;
· -uprisings of 1960s simply tried to make this clear,
suffering long endured while in the midst of incredible affluence:
· example:
agriculture and federal policy of subsidization threw large numbers of blacks
off the land in south; they came north in search of work, only to find that
automation, subsidized by government, made jobs unavailable. They were forced
into "ghettos" shut off from larger affluence
Thus, traditional employment patters and corporate policies were devastating in a time of economic deindustrialization (modern scholarship locates deindustrialization to the 1950s not 1970s
o
carmakers
systematically assigned blacks to the least skilled and most dangerous jobs.
One auto company official explained that few whites would work in the
notoriously toxic pain rooms so he gave the jobs to black workers. He admitted that such work "shortens
their lives...but they’re just niggers."
o
Because
black workers were clustered at the industry's lowest skill levels, the growth
of automation in the 50s tended to eliminate
their jobs first.
o
When
plants closed altogether, whites tended to have more senioirty, giving them
greater opportunities to transfer to other factories.
o
Even
during the best years of the 1950s, when virtually all white Detroiters where
working, the black unemployment rate rarely dipped below 10%.
o
The
freefall during the 50s in local manufacturing wiped out entry level positions
in industry--a particular problem for black youths, since they were locked out
of apprentice programs in construction
o
35%
of 19 year old black males were w/out work in 1960s, only 8.9% of white males
wthe same age were.
o
AT
the end of the 50s , Detroit Urban League reported that black job seekers were
becoming increasingly dispirited, developing patterns of boredom and
hopelessness with the present state of affairs
The information in this outline is based in part on the following: Jill Quadragno, The Color of Welfare, Michael Brown, Race, Money, and the American Welfare State, Michael Katz, “The Invention of Welfare,” Journal of Policy History, Vol 10, no. 4, Nov 1998, , Linda Gordon, Women, the State and Welfare, Thomas Sugrue, The Origins of the Urban Crisis., George Lipsitz, The Possessive Investment in Whiteness Some of this is unattributed direct quotes from these works.